Following up on the last post, this is from a recent report by Canada's Standing Senate Committee on Banking, Trade and Commerce, seeking to have the Canadian Supreme Court clarify the free trade provisions of the Canadian Constitution:
While the committee would prefer a renewed and effective AIT, it is possible that negotiations may continue for an unacceptably long period of time or that a renewed AIT would not have the six key characteristics identified earlier. In either of these cases, the federal government must have another course of action to pursue as it exercises a leadership role in breaking down the walls of internal trade barriers.
B. A Contingency Plan
With Confederation in 1867, attempts were being made to build a national economy while using the strengths of the various regions of the country and benefitting from interregional trade. To that end, section 121 of the Constitution Act, 1867 prohibits explicit barriers to trade and commerce between the provinces, stating: “All Articles of the Growth, Produce or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.”
At the same time, the committee is aware that Canadian federalism – in respect of which the division of powers are predominantly outlined in sections 91 and 92 of the Constitution Act, 1867 – was designed to respond to Canada’s diversity, with inevitable differences in specific social, economic and political arrangements. The federation provides a system of government that allows the expression of such differences.
Furthermore, trade in services was not a concept that was envisioned in 1867. Consequently, section 121 does not specifically refer to trade in services. Given the recent growth of trade in services, and the expectation that growth will continue, the committee believes that the Fathers of Confederation, if they were alive today, would amend section 121 such that it would clearly apply to internal barriers in relation to trade in services.
Given that the deadline for a renewed AIT has passed, and that the Committee on Internal Trade has not announced a new deadline, the committee believes that the federal government has a responsibility to plan, not only for the implementation of a renewed AIT, but also for the possibility that a renewed agreement may not be reached in a timely manner or may be inadequate.
C. Committee’s Recommendation
The federal government has a clear leadership role to play in ensuring that progress continues to be made in eliminating internal trade barriers, and – as required – should use the tools at its disposal to determine the way in which section 121 should be interpreted. For that reason, the committee recommends:
that, if a renewed Agreement on Internal Trade is not concluded by July 1st, 2017 or if the renewed agreement is inadequate, the federal government pursue – through the Governor in Council – a reference of section 121 of the Constitution Act, 1867 to the Supreme Court of Canada.
Any such reference should focus on two questions: whether sections 91 and 92 must be read in the context of section 121; and whether section 121 applies to internal trade in services.