Customer Matt Oliver shops in the craft beer section of the NB Liquor store attached to the old Fredericton Railway Station in Fredericton, N.B., on Friday, June 16, 2017. A Supreme Court of Canada ruling that provinces have the right, with limits, to enact laws that restrict interprovincial commerce represents a “missed opportunity” to free up trade within Canada, industry observers say.THE CANADIAN PRESS/Stephen MacGillivray

Supreme Court ruling corks B.C. vintners’ hopes for free trade of Canadian wines

VANCOUVER — The Supreme Court of Canada ruling upholding interprovincial trade laws may have other implications for trade, including for the Trans Mountain pipeline expansion, says a lawyer who represented some British Columbia wineries at the trial.

Shea Coulson said the unanimous decision issued Thursday in Ottawa is “going to shape our federation in many ways that we don’t yet know.”

The ruling upholds Section 121 of the Constitution Act, 1867 which says anything grown or produced in one province should be “admitted free” into any other province.

The decision restores a $240 fine and fees issued to New Brunswick resident Gerard Comeau under that province’s Liquor Control Act for being in possession of a large amount of alcohol he bought outside the province and was trying to bring home.

In confirming the penalty, the Supreme Court supports provincial legislation that Coulson said has a higher purpose of controlling liquor supplies and protecting health and safety.

He said it is important to distinguish between the finding against Comeau and the court’s comments about the constitution in general.

The decision is “progressive” Coulson said, because its wording liberalizes safeguards “against the kind of protectionist behaviour that we have been seeing lately in B.C. and Alberta in their (pipeline) disputes.”

Coulson said the high court has created a test that will help determine if a province is creating a trade barrier that is a tariff or similar to one.

“If the primary purpose of the law is to create a trade barrier, or to punish another province or to protect a local industry, then that would not be permissible,” he said of his interpretation of the ruling.

“I think Trans Mountain was in their mind because at paragraph 111 of the judgment … they explicitly say that punishing another province is probably not okay,” he said, adding he has never seen such wording in previous decisions.

Attorney General David Eby said he read the ruling with interest for the way it might affect not only B.C. wine producers, but also the province’s pipeline dispute with Alberta.

“It just confirms our analysis of their bill as being completely unlawful and unconstitutional,” Eby said, of Alberta’s proposed legislation that would allow its government to limit the flow of fuel leaving its province.

“The court specifically noted that provinces are not allowed to impose tariffs, or rules like tariffs, to punish other provinces. That’s exactly what we’ve been saying in response to Alberta’s proposed legislation, that it is unconstitutional, that they are not allowed to use their oil resources to punish other provinces.”

But the Supreme Court of Canada’s examination of Section 121 appeared to shy away from venturing into federal jurisdiction such as pipeline regulations.

“While this Court has in previous decisions proceeded on the basis that federal laws may engage (Section) 121 …, no federal law is properly at issue in the present appeal and so the question need not be resolved here,” the judgment said.

The court said the application of Section 121 may be different according to whether it is provincial or federal legislation that is involved “because what may amount to a tariff or customs duty under a provincial regulatory statute may not have that character at all under a federal regulatory statute.”

Coulson said he believes the decision has positive implications for the five B.C. wineries he represented in the court.

He said it aims to limit a province from offering more favourable treatment to local businesses at the expense of any outside its boundaries. As an example, he pointed to Ontario’s refusal to allow B.C. wineries to sell directly to Ontario consumers, while Ontario vintners don’t face the same limits.

“The judgment explicitly says protecting your local industry can be a strong indicator that you are creating a trade barrier that is impermissible,” said Coulson.

However, the president and chief executive officer of the British Columbia Wine Institute, which represents all B.C. wineries, called the decision a disappointment.

Miles Prodan said the institute had hoped the high court would instead clear the way for B.C. wineries to begin shipping their products directly to consumers in other provinces.

“We are going to have to continue to work with the provinces and the federal government to come up with a solution. We can’t rely on the court to impose that,” said Prodan, in an interview Thursday from Kelowna, B.C.

Coulson questioned the institute’s expectation of a court-imposed resolution to interprovincial trade difficulties, saying the justices could not make significant policy decisions on matters that should be resolved by politicians.

John Nater, Conservative Shadow Cabinet Secretary for Interprovincial Trade and the Sharing Economy, echoed the call for a political response.

“Given the Supreme Court’s decision, it is now more important than ever for Prime Minister Trudeau to renegotiate the Liberals’ inadequate Canadian Free Trade Agreement,” Nater said in a news release.

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