The Past Speaks

I’m feeling a little bit guilty, albeit only a little bit. Canada is in a really difficult situation right now thanks to Trump’s plan to impose 25% tariffs on its exports to the US. I think that if I had been more proactive back in 2015-2017, Canada might be in slightly stronger bargaining position today. That sounds very arrogant and conceited but please hear me out.

Here’s the background as to why I feel a bit guilty. I’m a dual citizen of Canada and the UK and I feel a strong sense of loyalty to both countries. I feel a greater sense of debt to Canada because that’s where I grew up. My formative experiences there included a tremendous sense of material abundance that just wouldn’t be paralleled here in the UK. I doubt that I would have had the luxury of becoming an academic had I grown up in Britian. Canada invested in me (I’m thinking of various scholarships funded by private donors and taxpayers, research fellowships, nice juicy research contracts, etc) so I feel a sense that I should pay it back.

In 2015, I had the opportunity to do precisely that. I was the star expert witness in a Canadian constitutional court case that had the potential to reverse a historical miscarriage of justice in a way that would resulted in the dismantling of internal trade barriers and a boost to Canada’s economic output. Had my side in the court case prevailed, I think that Canada would today have interprovincial free trade, a higher standard of living, and greater bargaining power in the face of Donald Trump’s threats.  Many observers, including the OECD and the IMF have said that Canada’s internal trade barriers are dragging down productivity and living standards. Getting rid of them could boost GDP per capita by up to 4%.

Here is a summary of the court case and my role in it. R v Comeau was a fascinating case about beer, borders, and the Canadian Constitution. It started when when Gerard Comeau, a New Brunswick resident, was stopped by police immediately after crossing an interprovincial border. He was charged with buying cheap beer and liquor in Quebec and bringing it home, thus violating a New Brunswick statute that severely limits on how much alcohol residents can import from other Canadian provinces. Comeau’s lawyers, who were supported by a non-profit foundation, argued that this violated section 121 of the Constitution Act, 1867, which says that goods should be “admitted free” across provincial lines. I testified about the historical context and motivations for section 121 in the summer of 2015. (You can read my expert witness report here). The case was widely covered in the Canadian media and, because it coincided with a federal general election, was commented on by all but one of the party leaders. (see media coverage here, here, and here). In 2016, a trial judge delivered his verdict and agreed with our side, ruling that provincial trade barriers were unconstitutional. However, the Supreme Court of Canada overturned this decision in April 2018, ruling that provinces have the right to regulate goods crossing their borders, as long as the primary purpose isn’t to block trade.

At the heart of the case were competing views of section 121. Comeau’s legal team, and I, argued for a broad interpretation—that the section bans any provincial law that impedes free trade between provinces. That’s the interpretation of the section that is most consistent with the values of the free trading Victorian lawyers and politicians who created it. (See analysis of my arguments here, here, and here). On the other hand, the New Brunswick government and Canada’s top court leaned on a narrower reading, arguing that section 121 only prohibits outright tariffs on interprovincial trade, not non-tariff trade restrictions, such as sending the police out to arrest people who import beer from the next province.

You can read about my involvement in the case in this academic article and in a McGill-Queen’s University Press book that won a number of awards.

My involvement in the court case was primarily at the initial trial stage, when it was being litigated in New Brunswick. I flew to New Brunswick from Paris where I was then living with my family (LONG STORY), testified for several days, came back to Europe, and was then gratified to read the news that judge had found my interpretation of the Canadian constitution to be persuasive. Having discharged my contractual obligations, I then basically stopped doing any work related to the case, aside from penning a short opinion piece in the Globe and Mail newspaper. Perhaps I should have invested more time in the trying to create awareness in Canada in the constitutional issues at stake, for instance by writing more about it or speaking about in the Canadian media. However, I had other fish to fry. My employer, a UK university, wouldn’t have been that pleased had a spent a significant amount of time on doing media work that wasn’t connected to a REF Impact Case. (For various bureaucratic reasons, my expert witness work couldn’t be classified as Impact work for the purposes of the REF. The REF is the system by which research performance, including societal impact, is measured and incentivized in UK universities). So, I didn’t do much with respect to the Comeau case after the week I spend in New Brunswick. In invested my research time in other projects, including the production of articles to be published in journals in the famous FT50 journal list. Basically I did the rational thing and focused my research time on the activities that are rewarded the most in the UK academic labour market. I said above that I feel only a little bit guilty, not really guilty. That’s because it was necessary for me to focus on my own career. I’m now working on other REF Impact Case projects that are unrelated to Canada and which focus on disseminating knowledge to non-academic research stakeholders here in the UK.

I suspect that if I had done more to educate the Canadian public about the original intent for section 121 of the Canadian constitution, the Canadian Supreme Court might have ruled differently. Judges are socially situated and they can’t ignore the prevailing climate of thought in their society as they interpret the evidence presented in court. Its ruling, which was delivered unanimously and was apparently written by the Chief Justice, quoted extensively from my expert witness report but ultimately sided against my interpretation. Had the Supreme Court sided with me, the interprovincial trade barriers would have been declared unconstitutional—after further litigation and transition costs as inefficient producers went out of business, GDP in per capita would almost certainly have been higher. And Canada would have been in a stronger position to deal with Trump.

The US, Canada’s adversary in the current struggle over tariffs, does not hobble itself with internal trade barriers: over the last two centuries, state politicians have tried to create internally protectionist barriers (it’s a perennial temptation) but because their Supreme Court has consistently upheld the original intent behind the Commerce Clause, the unity of the American internal market has been largely maintained.  In the U.S., free trade between states is guaranteed by the Commerce Clause or Article I, Section 8 of the Constitution. It gives Congress the power “to regulate commerce… among the several States,” which has been interpreted to prevent individual states from restricting trade or discriminating against out-of-state goods and businesses. Over the years, the Supreme Court has reinforced this principle through the “Dormant Commerce Clause” doctrine, which basically means that even when Congress isn’t actively legislating on interstate trade, states still can’t pass laws that unfairly burden commerce between them. This clause has had a huge economic and social impact—it helped create a truly national market, allowing businesses to grow beyond state borders and preventing economic fragmentation like we see in Canada with cases like R v Comeau. So, while provinces in Canada still fight over interprovincial trade barriers, the U.S. system—thanks to the Commerce Clause—has largely prevented that kind of economic balkanization.

In recent weeks, the threat of US tariffs has caused Canadians to discuss the subject of internal free trade with renewed vigour. There has been a lot of talk about eliminating these trade barriers through the expansion of existing interprovincial compacts (see here, here, here, and here), such as the New West Partnership. In my view, these initiatives are nice but their potential benefits are small relative to those that would come from a clear reversal of the position the SCC adopted in interpreting s. 121 in the Gold Seal case.

Don’t get me wrong. There are many other things that Canada had done to put itself in a weak bargaining position. For instance, it failed to follow up the splendid Canada-EU trade agreement it negotiated by building the east-west infrastructure (what I called Laurentian infrastructure in a nod to the Laurentian thesis associated with the late Donald Creighton) that would have allowed it to really take advantage of this paper agreement. I’m thinking in particular of the unbuilt pipelines to bring natural gas to Canada’s Atlantic ports, where it could have been liquified and sent to Europe. However, failure to bring about internal free trade has made a bad situation worse.

Perhaps a future Canadian government will have a policy of only appointing Supreme Court justices who agree with the view that Section 121 should be interpreted broadly rather than narrowly.