Interprovincial Trade Rules Have Agricultural Implications

It is that time of year again. It’s planting time, except for the fact that it’s been cold almost since last November. In the Deep South west of Ontario where I farm, it’s the mildest part of Canada but this spring has been anything but. This past week heavy ice and snow and the air temperatures continue to be close to zero hit much of southern Ontario. It seems more like February or March instead of April 19th. Ditto across much of the American Midwest.

We will get the corn planted, we always do. The marketplace will be there to and of course December 2018 corn is not near were most of us would like it. It might cause some of us to drink our sorrows away. If so, you better make sure those suds were bought in the province that you live in. This past week we saw the Supreme Court of Canada come down hard on a New Brunswick man who had imported his booze from Quebec to save a few bucks. He was promptly arrested once he got back to New Brunswick.

He took his case all the way to the Canadian Supreme Court. This case tested the provincial restrictions on the amount of alcohol people could transfer across provincial borders. However, it had agricultural implications, as the Canadian wine industry has been restricted from selling their wine across some provincial borders. There are also implications for Canadian supply management. Needless to say, the top court struck the challenge down and maintained the status quo.

The case centered on New Brunswicker Gerard Comeau. In 2012 he bought 14 cases of beer, two bottles of whiskey and one bottle of liquor in Qu├ębec and transported it back to New Brunswick. He was fined $292.50 for such a transgression. He took the case all the way to the Supreme Court where the court said Section 121 of the Constitution Act prohibited laws restricting interprovincial trade, but only where restricting trade is the law’s main purpose. In other words, you still can’t do what he did and ditto for wine and our supply managed commodities we produce in Canada.

From a distance it doesn’t make sense. The Prime Minister was asked about this in a press scrum in London England where he is attending the Commonwealth leaders conference. He responded by saying they had tried to take down interprovincial trade barriers, but it is difficult. Yes it is. It seems so bizarre that interprovincial trade or even the transport of goods across provincial borders seems so difficult.

Free traders and independent business thinkers are decrying the decision. I can understand that. However, I learned a long time ago that the free market really doesn’t exist. In Canada, our economy is hybridized, partly running as a free market in conjunction with government investment and regulation. I have seen free markets run amok and get mired down into corruption. The no money down mortgages in the US a few years ago is an example of that. So everything is not as it seems and the Canadian Supreme Court struck the law down for legal reasons it saw fit. This is Canada and there are jurisdictions with tax revenue to protect.

It gets complicated and it affects almost everything. For instance, in Canada there is so much dairy production. This dairy production is split up across the country with quotas being part of each provinces production. Everybody stays in their lane with regard to that production and their quota. If suddenly that changed, where rules were broken, it wouldn’t work very well for farmers. At the end of the day, that’s usually my measurement. Of course, not everybody feels that way, and that makes for some lively debate.

Simply put, rules are important for markets, for provinces and for countries. The Supreme Court decision last week is just the latest decision to uphold those rules. Commodity market exchanges like we have at the CME have rules, which are enacted stringently. There also are a plethora of trade rules in agreement such as CPTPP, CETA and NAFTA, which set the course for commerce and economic activity between nations. Of course there’s been a heated discourse about all of those rules over the last several months between the American administration and everybody else. Some people simply don’t like the rules.

So if you have any grand visions of a free trade world devoid of impediments, think again. It’s not totally a fair thing, far from it, but it is a Canadian thing for sure. Our federal and provincial leaders say they are working on it. Some of our agricultural leaders are retrenching their positions. However, the Supreme Court decision says what it says. Everybody needs to stay in their lane.

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