Lower the beer barrier

How ironic that as Canada haggles with other global economies for a Trans Pacific Partnership free trade deal, some provinces are still clinging to parochial, protectionist barriers.

The provincial booze trade impediment was brought into the light with the announcement that New Brunswicker Gerald Comeau, 62, is mounting a constitutional challenge over the right to buy lots of beer from Quebec for his personal use without being charged and fined for committing an importing violation.

Comeau was caught up in an October 2012 sting during which the RCMP, apparently enjoying some free time from dealing with real criminals and serious crime, rounded up 16 drinkers who violated the New Brunswick Liquor Control Act.

Their crime?

Venturing into Quebec, buying more than the allowed 12 bottles of beer, and importing the contraband into their home province, the only jurisdiction in the country that makes this a crime.

New Brunswick adds an almost 90% mark-up to the base price of beer. In Quebec, where beverage producers deal directly with retailers, the price is roughly $19 cheaper.

Little wonder the felons were making the trip to La belle province.

Comeau, caught with 12 cases of 12 and three bottles of alcohol, was fined $292, which he is declining to pay, and good for him!

Why shouldn’t he be free to buy his libations of choice, or anything else, in any province he chooses? His case is based on what the Fathers of Confederation had to say on the matter with Section 121 of the Constitution Act, which specifies “goods, produce and manufacture should be free into all other provinces.”

The CFO of Moosehead Breweries, the province’s oldest brewer speaking for the prosecution, offered some lame reasoning for maintaining a legislated cross-border limit. Dropping it might lead to increased bootlegging.

New Brunswick’s concern in this case is purely dollars and cents. Alcool NB Liquor (ANBL) makes about $165 million a year from its distribution monopoly. A senior vice-president testified if Comeau wins his case based on a constitutional challenge, it would take no time at all for producers to set up their own distribution, which would eventually put ANBL out of business.
What speculative nonsense.

Prime Minister Stephen Harper, on the campaign trail, called the provincial restrictions ridiculous, and noted the federal government brought in legislation to make the movement of beverages easier. But the provinces need to adopt the legislation too. And herein lies the problem. Provincial inertia is preventing all trade barriers from coming down. For example, marketing boards (a hot topic in the TPP discussions) continue to dictate where you get your chicken, eggs and dairy, and it’s still easier to get a French Merlot in Ontario than some BC vintages. By the way, let’s not overlook how restrictions on alcoholic beverages stifle the development of craft brewers and vintners who could be expanding their markets across Canada.

Karen Selick, litigation director for the Canadian Constitution Foundation, which is supporting Comeau’s case, says a favourable ruling would have implications beyond the trade of alcohol. Good. Protectionist barriers and the red tape they create are of no value. They sap productivity, stifle investment and they’re of no benefit to consumers.

Indeed, Selick suggests revenues might increase if the tax was reduced. That’s what happened when Manitoba opened its borders in 2012.

Last word goes to Comeau who questions why he should have to pay such a hefty surtax just to fill the government’s pocket. “If the province wants people to buy beer here it can put the price down.”

That’s how it’s supposed to work in a free market.