Trade and Commerce

• Author: Patrick J. Monahan/Byron Shaw/Padraic Ryan
• Pages: 286-323

286

CHA PTER 9

TR ADE AND COMMERCE

A. INTRODUC TION

As discussed in Chapter 7, the decision of the Privy Council in Cit izens’

Insurance Co. v. Parsons1 is the starting point for the federal tr ade and

commerce power under section 91(2) of the Constitution Act, 1867.2 In

Parsons, t he Privy Council held that there were two branches of the t rade

and commerce power: (1) the regulation of interprovincial and inter-

national trade; and (2) “general regulation of trade affecting the whole

dominion.” In neither of these categories, however, could the federal

power over trade and commerce extend to the regul ation of the contracts

of a particular t rade or business within a province.

As previously discus sed, the Privy Council severely restricted the

scope of the second branch of the trade and commerce power. Early

cases held that t he trade and commerce power was effectively limited

to the regulation of goods, persons, or activities crossing provinci al

borders. This chapter exam ines the extent to which the Supreme Court

has departed from the Privy Council’s restrictive approach and broad-

ened the ambit of the trade and commerce power, particularly in rela-

tion to the second branch of Pars ons .

1 (1881), 7 App. Cas. 96 (P.C.) [Parson s].

2 The Constitution Act, 1867 (formerly the British North Ame rica Act, 1867) (U.K.),

30 & 31 Vict., c. 3.

Trade and Commerce 287

B. INTER NATIONAL AND INTER PROVINCIAL

TR A DE

1) The Scope of Federal and Provincial Authority

A key distinction in the t rade and commerce jurisprudence is between

“interprovincia l and international trade” on the one hand and “local tr ade”

on the other. Parliament has exclusive legislative authority to reg ulate

international and inter provincial trade — the regulation of goods, per-

sons, capital, or serv ices crossing provincial or Ca nadian borders for a

commercial purpose. Provincial jurisd iction is limited to the regu lation

of trade within a provi nce. The text of section 92 of the Constitution Act,

1867 limits the provinces to the regulation of transactions, activities, or

persons “in the province.” Provincial power over local trade is derived

from section 92(13) “Property and Civil Rights i n the Province” and sec-

tion 92(16), “Matters of a merely local or private Nature in the Provi nce.”

Accordingly, the provinces have no jurisdiction to regulate transactions,

activities, or persons enter ing or leaving the province.3

Parliament has exercised its authority to regulate imports, exports,

and interprovincia l trade in a wide variety of contexts for various policy

objectives.4 Few doubts have ever been raised about the constitutional

validity of these en actments. However, doubts have been raised about

Parliament’s ability to regulate local or int raprovincial trade.

In the Margarine Refere nce,5 for example, the Supreme Court

of Canada considered the val idity of federal legislation banning the

manufacture, importat ion, or sale of oleomargarine. It was conceded

that oleomargarine was substantially as nutritious and f‌it for human

consumption as butter. According to the Supreme Court, the purpose

of the legislation was “to give trade protection to the dairy industry in

3 See Ont. (A.G.) v. Can. (A.G.), [1896] A.C. 348 (P.C.), holding that the provi nces

have no power to prohibit the i mportation of intoxicating l iquor into the prov-

ince. Importat ion of liquor is regulated by Parli ament under the Importation of

Intoxicating Liqu ors Act, R.S.C. 1985, c. I-3. See also: Canadi an Industrial Gas &

Oil Ltd. v. Saskatchewan (1977), [1978] 2 S.C.R. 545.

4 See, for example, Ene rgy Eff‌iciency Act, S.C. 1992, c. 36, s. 4 (prohibiti ng inter-

provincial t ransportation or imp ortation of energy-using product s unless product

complies with appl icable standard); Meat Inspecti on Act, R.S.C. 1985 (1st Supp.),

c. 25, ss. 6–9 (prohibit ing export, import, a nd interprovincial t ransportation of

meat products th at do not comply with applicable standa rds); and Motor Vehicle

Safety Act, S.C. 1993, c. 16, ss. 4 & 5 (prohibiting importat ion and interprovincia l

shipment of motor vehicles un less applicable standa rds are met).

5 R eference Re Validity of s. 5(a) of Dairy Industr y Act (Canada), [1949] S.C.R. 1

[Margarine Re ference].

CONSTITUTIONA L LAW288

the production and sale of butter as against substit utes”6 and “to benef‌it

one group of persons as against competitors in busi ness in which, in

the absence of the legislation, the latter would be free to engage in the

provinces.”7

The legislation considered in the Margarine R eference did not merely

ban the importation of oleomargar ine; it also prohibited its local manu-

facture and sale. The Supreme Court held that the federal prohibition

on manufacture and sale was i nvalid, since it amounted to regulation

of property and civil rights in the province. However, the Court stated

that the legislation would have been upheld if it had been re stricted to

a prohibition on importat ion:

There is next the prohibition of impor tation of these substa nces . . . .

Such scope of action is clearly nece ssary to the n ation’s jurisdiction

over trade with othe r states. Only Parliame nt can deal with foreign

commerce; provincia l power cannot in any mode, aspe ct, or degree

govern it: and it would be anomalous t hat the jurisdict ion to which

regulation is comm itted, which alone can act, and wh ich in this seg-

ment of trade is in subst ance sovereign, should be powerless to e m-

ploy such an ordinar y measure of control.8

In the result, the Court upheld the portion of the legislation banning

importation on the basis t hat it could be severed from the invalid at-

tempt to regulate local manufacture or sale.

The Supreme Court drew a similar dist inction between interprov-

incial and intern ational trade on the one hand and i ntraprovincial

trade on the other in R. v. Dominion Stores Ltd.9 The case concerned

the constitutionality of Part I of the Canada Agricultural Products Stan-

dards Act, which established and regulated the use of grade names for

various classes of agricultural products. Part I of t he Act applied to the

local sale and posse ssion of agricultural products. Part II of the Act

compelled the use of the same grade names in the export and inter-

provincial movement of agricultura l products. Part I was held to be

unconstitutional in its application to intraprovincial trade. However,

the validity of Part II was both conceded by the party chal lenging the

legislation and assumed by t he Court.10 While Parliament could not

6 Ibid. a t 27–28.

7 Ibid. at 50.

8 Ibid. at 52 –53.

9 [1980] 1 S.C.R. 844 [Dominion Stores].

10 Ibid. at 849, La skin C.J. Although Laskin C.J., di ssenting, would have upheld

Part I, he obser ved that the validity of Par t II of the Act had been conceded by

the appella nt. This observation was not que stioned by the majority.