It’s time to put an end to trade wars between the provinces
Montreal, February 15, 2018 – The best way to avoid provincial trade wars is to bring down the barriers that still exist between the provinces. The Comeau case, which the Supreme Court is currently studying, could normalize the free movement of goods and services from coast to coast to coast and help put an end to harmful disputes like the one between Alberta and British Columbia currently making headlines, says the MEI.
“As Canada renegotiates NAFTA with the United States and Mexico in order to preserve the benefits that free trade has brought all Canadians, it’s unfortunate to see two provinces trying to make each other poorer with trade sanctions,” argues Michel Kelly Gagnon, President and CEO at the MEI.
On January 30, the B.C. government announced its intention to conduct further consultations on the transport of oil from Alberta, which could further delay or effectively block the federally-approved $7-billion Trans Mountain pipeline expansion project. Alberta responded by suspending negotiations on the purchase of electricity from its neighbour and by banning the sale of wine from British Columbia within its borders.
“At first glance, such a trade fight can seem logical from the point of view of a politician, who can score points by waving the provincial flag. But from the point of view of consumers, it’s a no-win situation, since trade is mutually beneficial for both parties. The less we have, the poorer we are,” says Howard Anglin, Executive Director of the Canadian Constitution Foundation (CCF).
Indeed, the Supreme Court is studying a historic case that could help bring down the numerous trade barriers that persist between the provinces. The highest court in the land must decide if Canadians have the right to transport legally purchased goods from one province to another, as the New Brunswick Provincial Court ruled last year in the Comeau case, named for a resident of New Brunswick who was stopped five years ago for having “imported” too much alcohol from Quebec.
“If the Court rules in favour of the free movement of goods between the provinces, many trade barriers could disappear, and even the provincial alcohol monopolies could be called into question. Their disappearance would make it much more problematic for a province that wanted to block another province’s wine, as is currently happening,” explains Marco Navarro-Génie, President and CEO at the Atlantic Institute for Market Studies (AIMS).
Canadians are unequivocal: 89% of them think they should be allowed to bring any legally purchased product from one province to another, according to an Ipsos poll commissioned by the MEI, CCF, and AIMS.
These trade barriers cost Canadians tens of billions of dollars each year. Economists have estimated that the liberalization of interprovincial trade could add around $100 billion to GDP, which represents more than $2,700 per Canadian.
“The Comeau case is a golden opportunity to get rid of these harmful rules that have dogged us for too long. Let’s hope the Court will rule in favour of Canadian consumers in order to help unite the country under a single, pan-Canadian common market,” concludes Michel Kelly-Gagnon.
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MEI, CCF, and AIMS have decided to make common cause in order to defend free trade for all Canadians.
The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.
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