The Comeau Case: a Compendium of Resources

28 11 2017

fathers

As long-time readers of this blog will know, I was the expert witness at a 2015 court case (Comeau) about the constitutionality of internal trade barriers in Canada. (I wrote a number of blog posts about this case at the time– see here and here). This test case involved a New Brunswick man who was charged with driving into Quebec, buying some beer, and then bringing it back to New Brunswick, which has a government monopoly on liquor sales. In Quebec, of course, you can buy beer in convenience stores and it is cheaper. The Comeau case has important ramifications for a number of industries, not just beer, since there are many interprovincial trade barriers in Canada that go against the constitution’s provision that there should be free trade between Canada’s provinces. For instance, there are restrictions on interprovincial free trade created by marketing boards. These restrictions serve to increase the price of milk and other commodities.

comeau-cbc-900x675

Canada’s subnational governments, the provinces, impose many restrictions on interprovincial trade that are protectionist in intent and effect. (Canada isn’t the only country to have such internal trade barrier—see here for a gateway into the academic literature on this subject).  Canada’s internal trade barriers appear to conflict with section 121 of the 1867 Canadian constitution, which explicitly provides for free trade between Canadian provinces. This constitution is the British North America Act, 1867 (UK), which was retroactively renamed the Constitution Act, 1867 by the Constitution Act, 1982 . [Most academic historians continue to refer to the text by its historical name]. Since I wrote a PhD thesis and book on the political economy of the 1867 constitution, I am considered to be well qualified to speak about the motivations of the creators of section 121. You can read the expert witness report I wrote for the Comeau case here.

I believe that section 121 was included in the Canadian constitution because the framers of this document wanted the new Dominion of Canada to be a single market without fetters on interprovincial trade. These framers included the Fathers of Confederation- a group of British North American politicians- as well some senior British politicians (especially the Earl of Carnarvon but also Adderley, Watkin, and others), and a handful of very accomplished civil servants and lawyers in London.

150 years later, trade barriers are still in place. For those who don’t wish to read my entire expert witness report, this 2015 CBC article gives a summary of the views I presented in “The Historical Origins of Section 121 of the British North America Act: a Study of Confederation’s Political, Social, and Economic Context”

In April 2016, the judge in the Comeau case made his ruling, which found that New Brunswick’s restrictions on the importation of beer from Quebec were incompatible with section 121. (You can download Justice Leblanc’s ruling, which was 194 paragraphs in length, here or here).

The Comeau case has now made its way to the Supreme Court of Canada, which will hear it on 6 and 7 December. In the last few weeks, the Canadian media have begun to carry a range of stories about the case and associated issues, such as the constitutionality of the provincial government monopolies on marijuana that will be created in 2018, when recreational marijuana becomes legal in Canada. There are literally dozens of stories on this topic, so I will content myself with linking to just a few (see-here, here, here, and here).  I was quoted in a recent Toronto Star story on marijuana and the constitutionality of interprovincial trade barriers.

I thought I would take this opportunity to share links to a series of online resources for people who are interested in this case and the various issues it raises.

The Supreme Court of Canada’s website has a section with a range of documents related to the Comeau case. For convenience, I have put links to them here.

As you can see, the Comeau case has attracted the attention of a wide range of interest groups!

Think tanks have published some interesting pieces about the case. For a perspective from the C.D. Howe Institute, see here. Also check out this 2013 report by the C.D. Howe institute,  “Beer, Butter, and Barristers: How Canadian Governments Put Cartels before Consumers”. (That report wins the prize for best title!)

In the wake of the lower court’s ruling in the Comeau case, the Canadian Senate Standing Committee on Banking Trade and Commerce has published a data-rich report on interprovincial trade barriers.

In the academic and legal blogosphere, the case has attracted some attention, particularly from those who are interested in whether “originalism” is the right way to the interpret constitutional documents (see here, here, and here). (I blogged some thoughts about originalism some time ago). Bradley Miller, a legal and constitutional historian at the University of British Columbia, published a much more eloquent piece about originalism in January that has recently been brought to my attention.

The implications of the Comeau case for the Canadian drinks industry have been discussed on Alcohol and Advocacy, a specialized legal blog maintained by Dan Coles, a litigation lawyer at Owen Bird Law Corporation in Vancouver, British Columbia.

In October 2017, Christopher Moore, a Toronto-based historian, published a paper that offers an interpretation of Section 121 that is very different from that which I offered in my 2015 report. You can read his paper Federalism, Free Trade within Canada, and the British North America Act, S.121 here.  Moore argues that Section 121 was not intended to eliminate non-tariff trade barriers between Canadian provinces, only tariff barriers.

There are many statements with which I disagree that appear in Christopher Moore’s paper. His paper motivated me to write a report that focuses on those of these statements that appeared in parts II and III of his paper. The most important of these points is his claim was that the creators of the British North America Act would not have been thinking about non-tariff barriers when section 121 was composed since nineteenth century people had not yet started to worry about non-tariff trade barriers. His argument is that paying attention to non-tariff trade barriers is a very comparatively recent development and one that dates from after 1970.  It is likely that Chris Moore has been misled by secondary sources that date from around the time of the GATT’s Tokyo and Uruguay rounds that declare that the focus on non-tariff barriers is totally new and without precedent.

Now it is certainly true that non-tariff trade barriers became a more important issue in trade diplomacy in the 1970s and 1980s than they had been in the 1950s. However, there is abundant evidence that the creators of the British North America Act and nineteenth-century people in general were indeed interested in non-tariff Western tariff barriers. The 1860 trade agreement between the UK and France, the famous Chevalier-Cobden agreement,  included sections that dealt with what we would today call non-tariff trade barriers.  (The WTO website has a good explainer that can act as an introduction to the academic literature on this agreemen and there is an equally good discussion of this treaty on the University of Exeter’s Imperial and Global Forum blog. Unfortunately, I can’t share an electronic copy of the text of this treaty here for copyright reasons).

Why is the Chevalier-Cobden agreement relevant here? The British parliamentarians who passed the British North America Act, Section 121 and all, were doubtless familiar with the provisions of the 1860 treaty, which they also debatedthey also debated. Most importantly, Francis Savage Reilly (1825-1883), the individual who actually wrote the British North America bill, also would have been familiar with the 1860 Anglo-French treaty, even though I haven’t been able to find out whether he actually read this document in his capacity as a lawyer who took on lots of British government work in the 1860s.   Reilly was the real architect of section 121 and my sense was that his drafting of it was informed by his knowledge of European commercial diplomacy.  Reilly literally wrote books on diplomacy and arbitration, as his WorldCat author entry shows! Moreover, we know from nineteenth-century US Supreme Court rulings that contemporaries in North America were aware of the potential to non-tariff barriers to impede trade between jurisdictions even in the absence of tariffs (i.e., fiscal levies imposed at ports of entry).

I discuss all of the problems with Moore’s interpretation in a new paper called A Critical Response to Christopher Moore’s “Federalism, Free Trade within Canada, and the British North America Act, S.121. Those who wish to read this as-yet unpublished paper can do so by emailing me on my University of Liverpool email address.


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Does the Canadian Supreme Court Display a Pro-Business Bias?

15 07 2013

I recently blogged about some research on whether the United States Supreme Court has become friendlier to Big Business in recent decades. I asked if anyone had done a similar analysis of Supreme Court of Canada rulings.

 

A reader of this blog kindly emailed me to tell me about Donald A. Songer, The Transformation of the Supreme Court of Canada (University of TorontoPress, 2008). Songer runs the numbers on SCC rulings in recent decades to see how business has fared.

 


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Is the Supreme Court Pro-Business?

4 07 2013

In the last couple of weeks, the US legal blogosphere has been filled with discussion about whether the current Supreme Court is more or less pro-business than its predecessors. (See here, here, and here). (The current Chief Justice is a Republican appointee, as are six of the other nine justices). Although “culture-wars” court cases such as DOMA tend to get the most media attention, the cases dealing with economic issues are arguably much more important in shaping everyday life.

The debate about the pro-business bias of SCOTUS has been kicked off by a recent academic paper that crunches the numbers to track the Court’s fluctuating attitude toward Big Business.

Lee Epstein, William M. Landes, and Richard A. Posner. “Volume 97 Lead Piece: How Business Fares in the Supreme Court.” Minn. L. Rev. 97 (2013): 1431-1507.

This paper was based on the “Business Litigant Dataset, [which] consists of the 1759 cases that  were orally argued in the Supreme Court’s 1946 through 2011.”  They also used the Business versus Business database, which consists of  255 cases orally argued in front of SCOTUS in the same period.

The authors looked at all cases involving one or more businesses and coded the litigants. They examined the outcome of cases in which individuals fought corporations to look for patterns in the Court’s decision to “side with the little guy.” For lawsuits involving two corporations, they looked at the size of the corporations to see whether the Court favoured Big Business over Small(er) Business.  After analysing cases back to 1946, they found that the Roberts Court has been the most business-friendly and that Roberts and colleague Samuel Alito the two most business-friendly justices. (Roberts’s father was a corporate executive).

My question for my readers is: has anybody done a similar analysis of the decisions of either the Supreme Court of Canada or the Judicial Committee of the Privy Council?

I’m a business historian so this is obviously something I should know about. However, I’m not a legal historian and am therefore unfamiliar with the secondary literature. [I’ve read Peter George and Philip Sworden. “The Courts and the Development of Trade in Upper Canada, 1830-1860.” The Business History Review (1986): 258-280 but don’t know of other sources]. I’d like to draw on the expertise of the readers of the Canadian legal history blog here.


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AbitibiBowater, Danny Williams, NAFTA, and the Future of Canadian Federalism

25 02 2010

The Grand Falls Pulp and Paper Mill as it Appeared in the 1950s

The inside of the mill

AbitibiBowater has filed a $500-million free trade complaint over the expropriation of some of its resource assets by the Newfoundland and Labrador government. In 2008, the company announced it was shutting down a pulp and paper mill in Grand Falls. Newfoundland’s Premier, Danny Williams then announced that it was going to nationalize the mill. Danny Williams was then dubbed Danny Chavez by the media, a somewhat inaccurate comparison with the leftwing and anti-American leader of Venezuela, Hugo Chavez.

Danny Williams

The company, which was incorporated in Delaware, announced that it was going to sue the provincial government under a provision of NAFTA that protects the property rights of American and Mexican firms in Canada. For the benefit of US readers, I should point out that Canada’s constitution does not protect property rights. In Canada, the theory is that all property is the gift of the Crown (i.e., the government) and can be taken back if needs be.

To make the politics of this case even more complex, the government of Quebec is now considering buying a stake in AbitibiBowater, which is now bankrupt and in court protection. The governments of Newfoundland and Quebec have never been able to get along. There is bad blood going back to a border dispute in Labrador.

I don’t think that Williams was right to expropriate AbitibiBowater’s assets without fair compensation. Seizing the asset in this way may discourage future foreign investment in the province. However, one thing about this story really disturbs me as a constitutional historian. The federal government, which had nothing to do with the provincial government’s seizure of the mill, yet it is Ottawa rather than the provincial government is being sued by the company.

The apparent thinking is that the federal government has a responsibility to foreign nations to control sub-national units. The problem with this is that management of Crown land and property and civil rights are clearly a matter of provincial jurisdiction. If the federal government can gain control over matters of provincial jurisdiction simply by signing a treaty with a foreign power, the authority of the province’s will be eroded. This is a case with momentous implications for Canadian federalism.

In the late 1930s, the JCPC, which was then Canada’s highest court of appeal was called upon to rule on the constitutionality of the Bennett New Deal, a package of federal legislation that dealt with matters previously considered to be provincial. Louis St-Laurent (see left), the future Prime Minister who was the federal government’s lawyer in this case argued that the federal government had acquired the right to legislate in this field by virtue of Canada being a member of the League of Nations, an organization that had set standards regarding working conditions. St-Laurent concocted an argument based on section 132 of the British North America Act, which gives the federal parliament authority to implement imperial treaties, in this case the labour aspects of the 1919 Treaty of Versailles.

In 1937, this argument was, essentially laughed out of court by the law lords of the Privy Council. Actually, what Lord Atkin said was that the mere assumption by Ottawa of an international obligation under a treaty did not alter the distribution of powers in the Constitution. Atkin said : “While the ship of state now sails on larger ventures and into foreign waters she still retains the watertight compartments which are an essential part of her original structure.” For the ruling see here.

One wonders how the Supreme Court of Canada would rule on a case in which the federal government claimed authority over a provincial matter by virtue of the NAFTA treaty.

As far as I can tell, no observer in the media has commented on the possible implications of this case for the constitutionality of federal policy under a future climate-change treaty. However, the connection between s. 132 of the constitution and the Kyoto Accord has been discussed by Chris Kukucha, a political science professor in Alberta.  Many in Alberta have argued that Canada’s decision to sign the Kyoto Protocol was unconstitutional because only the provinces have the power to limit greenhouse gas emissions and to sign agreements related to them.


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