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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.



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Comments

1 Comment » for Lower the beer barrier
  1. Joel Levesque says:

    Sir: I was disappointed to read your interpretation of the recent trial of a New Brunswick man who was charged with illegally bringing Quebec beer into his province. I am a retired Moosehead Breweries’ executive and have an excellent understanding of inter-provincial trade rules and regulations — something I would assume a person in your position would also possess. Your editorial completely misinterpreted the testimony of Moosehead’s CFO, Patrick Oland. In court Mr. Oland clearly stated that he “understood” why NB residents buy beer in Quebec. He then went on to explain how every province in Canada has internal trade barriers in place that restrict cross-border beer shipments. These tariff and non-tariff barriers are usually designed to protect each province’s own brewers. It’s a complex subject that cannot be oversimplified by sanctimonious statements like, “Little wonder the felons were making the trip to La belle province.” Mr. Oland also explained in court that wholesale bootlegging of beer in NB is already taking place, not by average consumers who are just trying to save a few dollars, but by others who buy beer in Quebec by the trailer and truck load and resell it throughout the province. The primary point of Mr. Oland’s testimony was t that harmonization of provincial beer regulations would be in everyone’s best interests, not to protect his company’s market share. And, by the way, you have also misrepresented the markup structure applied to beer by the Province of NB’s liquor corporation. A 90 per cent markup (which equals about half the retail price of beer) is the standard in just about every Canadian jurisdiction except Quebec. In fact, as you know, most goods sold at retail are marked up similarly. That beer profit is then used to pay for schools, hospitals and highways. Naturally brewers would like to see those markups lowered, but the fact remains as a country that provides social programs to its citizens the money must come from somewhere. Finally, as editor of a magazine that bills itself as wanting to advance Canadian manufacturing, you should understand that so called “free trade” must work for all parties. As a former boss of mine was fond of saying, “free trade is only free trade if it’s free for everyone”. I respectfully suggest you do your homework before opining about critical issues such as inter-provincial trade.
    Joel Levesque
    Quispamsis, New Brunswick

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