Trade and Commerce

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

286

CHAPTER 9

TRADE AND COMMERCE

A. INTRODUCTION

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 trade 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 trade or business within a province.

As previously discussed, the Privy Council severely restricted the

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

cases held that the trade and commerce power was effectively limited

to the regulation of goods, persons, or activities crossing provincial

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 Parsons.

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

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

30 & 31 Vict., c. 3.

Trade and Commerce287

B. INTERNATIONAL AND INTERPROVINCIAL

TR A DE

1) The Scope of Federal and Provincial Authority

A key distinction in the trade 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 regulate

international and interprovincial trade — the regulation of goods, per-

sons, capital, or services crossing provincial or Canadian borders for a

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

of trade within a province. 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 entering 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 enactments. However, doubts have been raised about

Parliament’s ability to regulate local or intraprovincial trade.

In the Margarine Reference,5 for example, the Supreme Court

of Canada considered the validity of federal legislation banning the

manufacture, importation, 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 business 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 oleomargarine; it also prohibited its local manu-

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

on manufacture and sale was invalid, 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 restricted to

a prohibition on importation:

There is next the prohibition of importation of these substances . . . .

Such scope of action is clearly necessary to the nation’s jurisdiction

over trade with other states. Only Parliament can deal with foreign

commerce; provincial power cannot in any mode, aspect, or degree

govern it: and it would be anomalous that the jurisdiction to which

regulation is committed, which alone can act, and which in this seg-

ment of trade is in substance sovereign, should be powerless to em-

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 that it could be severed from the invalid at-

tempt to regulate local manufacture or sale.

The Supreme Court drew a similar distinction between interprov-

incial and international trade on the one hand and intraprovincial

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 the Act applied to the

local sale and possession of agricultural products. Part II of the Act

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

provincial movement of agricultural 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 challenging the

legislation and assumed by the 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].

10Ibid. 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.