Columnists
Provincial trade barriers
In 2012, New Brunswick resident Gérard Comeau travelled to Quebec to buy beer at a lower cost than in New Brunswick. He was fined nearly $300 for possessing liquor not purchased from the New Brunswick Liquor Corporation.
When he contested the ticket, the case ended up before the Supreme Court, in what came to be known as the “Free the Beer” case. The Supreme Court came down on the side of provinces being allowed to regulate the liquor trade, allowing New Brunswick to maintain its provincial monopoly.
The Supreme Court basically said in its ruling, it’s up to the provinces to do their work to open up the market a little bit more.
As talk of international trade tariffs fill the news, maybe more focus ought to be put on our own provincial trade barriers.
The Canadian government does not make life easy if you make and sell alcohol, a highly regulated controlled substance. Even within the province in which the wine is made, it is subjected to many different rules and regulations from grape to glass. Not to mention some of the highest taxes in the world.
In fact, some rules make it easier for larger producers such as Peller (owner of The Wine Shop and brands such as Wayne Gretzky Estates, Copper Moon and Honest Lot) to bottle foreign wines labelled as product of Canada, making it even more difficult to buy Canadian.
Now, if you want to try and buy and sell wines from another province it is nearly impossible— and in some cases illegal—to do so without an agency facilitating the trade.
Imagine that you won a gold medal at the Paris Olympics last summer and wanted to celebrate with a bottle from Champagne, a region less than two hours away. The Canadian equivalent would be impossible and in some cases, illegal to do so under the rules we are governed by in Canada.
The Buy Canadian slogan, though noble in its intent, when it comes to alcohol, is really difficult and not very inclusive.
For example, if you want to buy an easydrinking rose for $15 a bottle from British Columbia, the LCBO will treat it as an imported product and add their 72-per-cent taxes to the wholesale price from the winery, so it becomes $25. And because you would need an agency to facilitate the transfer of alcohol across provincial borders they will add their 30 per cent mark-up making that wine closer to $32. In order to be reasonably profitable, that bottle would need to be sold in a shop for around $60 or in a restaurant closer to $80 or $90. That is a steep price for a simple bottle of rose!
I am sure that the local producers in our own backyard would welcome other markets within Canada to sell their wines. And with over 300 wineries in British Columbia, consumers here would equally welcome a larger variety of selection from other provinces.
So when we wave a flag, lets not make it provincial, lets make it Canadian.
Quebec has the most exemptions at 36, while Alberta has the least at 8, to the free trade agreement between Canadian provinces.
These exemptions affect a range of areas, including the alcohol and transport sectors, and even race horses.
These restrictions are estimated to be equivalent to an average tariff of 21% on the goods and services targeted by Canadian provinces.
For Quebec, these restrictions are estimated to be equivalent to a tariff of 25%.
Interprovincial trade barriers range from differing health and safety regulations and inspection obligations to the basics of what ingredients a product needs to meet each province’s definition of that product. All of these factors can get in the way of business between provinces. An example of just how stupid most of these exemptions are is that Nova Scotia and New Brunswick have a difference of 1,000 lbs on how much a transport truck can carry between the provinces.
The bureaucracy needed to enforce these tariffs (because that’s what they really are) is an added financial burden to commerce, each province and territory.