1 CONSTITUTIONAL LAW 14 REGULATION OF TRADE AND COMMERCE: INTERNATIONAL AND INTERPROVINCIAL TRADE Shigenori Matsui

2 INTRODUCTION S. 91(2) of the Constitutional Act, 1867 “regulation of trade and commerce” What is the scope of the trade and commerce power?

3 I SCOPE OF THE TRADE AND COMMERCE POWER Citizen Insurance Company v. Parsons (1881)

The Privy Council held that the rights arising from contract is included in the civil rights that belong exclusively to provincial legislature under s. 92(13). As a result, the provincial legislature has an exclusive power to regulate trade and commerce.

The Privy Council concluded that the authority of the parliament “to legislate for the regulation of trade and commerce dose not comprehend the power to regulate by legislation the contracts of a particular business or trade, such as the business of fire insurance in a single province.”

The Privy Council held that the power of the parliament to regulate trade and commerce “include political arrangements in regard to trade requiring the sanction of parliament, regulation of trade in matters of inter- provincial concern, and it may be that they would include general regulation of trade affecting the whole Dominion.”

7 The Privy Council followed Parsons and adopted very narrow reading of the power AG Ontario v. AG Canada (1896)(Local Prohibition reference)

“The object of the Canada Temperance Act of 1886 is, not to regulate retail transactions between those who trade in liquor and their customers, but to abolish all such transactions within every provincial area in which its enactments have been adopted by a majority of the local electors. …In that view, their Lordships are unable to regard the prohibitive enactments of the Canadian statute of 1886 as regulations of trade and commerce.”

9 The Privy Council came to strip away any independent content from the power Reference re The Board of Commerce Act [1922] Toronto Electric Commissioners v. Snider [1925]

“the language of s. 91(2) could have the effect of aiding Dominion powers conferred by the general language of s 91. But that was because the regulation of the trading of Dominion companies was sought to be invoked only in furtherance of a general power which the Dominion Parliament possessed independently. Where there was no such power in that Parliament,…the authority of the Dominion Parliament to legislate for the regulation of trade and commerce did not, by itself, enable interference with particular trades in which Canadians would…be free to engage in the Provinces.” –Board of Commerce Act case

“It is, in their Lordship’s opinion, now clear that, excepting so far as the power can be invoked in aid of capacity conferred independently under other words in s. 91, the power to regulate trade and commerce cannot be relied on as enabling the Dominion Parliament to regulate civil rights in the Provinces.” --Snider

12 The Supreme Court of Canada also adopted very narrow reading The King v. Eastern Terminal Elevator Co. [1925]

“It is undeniable that one principal object of this Act is to protect the external trade in grain…It does not follow that it is within the power of Parliament to accomplish this object by assuming, as this legislation does, the regulation in the province of particular occupation, as such, by a licensing system and otherwise, and of local works and undertakings, as such, however important and beneficial the ultimate purpose of the legislation may be.”

14 The Privy Council came to affirm the independent content under the power Proprietary Articles Trade Association v. AG Canada [1931]

“Their Lordships merely propose to disassociate themselves from the construction suggested in argument of a passage in the judgment in the Board of Commerce case under which it was contended that the power to regulate trade and commerce could be invoked only in furtherance of a general power which Parliament possessed independently of it. No such restriction is properly to be inferred from that judgment.”

Yet, it still affirmed the holding of the Parsons case that the Parliament cannot regulate particular business. AG British Columbia v. AG Canada [1937](Natural Products Act) “But the regulation of trade and commerce does not permit the regulation of individual forms of trade or commerce confined to the Province.”

17 After the New Deal, the courts came to grant a little bit broader power to the Parliament. Murphy v. Canadian Pacific Railway [1958]

“it appears to me to be too clear for argument that the Canadian Wheat Board Act in so far as its provisions relate to the export of grain from the province for the purpose of sale is an Act in relation to the regulation of trade and commerce within the meaning of that expression in s. 91. This being so, in my opinion the fact that of necessity it interferes with property and civil rights in the province of the nature referred to in head 13 of s. 92 is immaterial. …

The Queen v. Klassen (1959)

20 Trade and commerce power (1) Inter-provincial and International Trade and Commerce (2)General regulation of Trade Affecting the Whole Dominion

21 II INTER-PRONVINCIAL AND INTERNATIONAL TRADE AND COMMERCE It is settled that the Parliament can regulate international or interprovincial trade and commerce. The question is often raised as to whether the Parliament should be allowed to regulate intraprovincial trade in order to regulate international or interprovincial trade.

22 Caloil Inc. v. A.G. of Canada, [1971] S.C.R. 543

The regulation “clearly shows that the policy intended to be implemented by the impugned enactment is a control of Canadian oil resources…Therefore the true character of the enactment appears to be an incident in the administration of an extra-provincial marketing scheme… Under the circumstances, the interference with local trade restricted as it is to an imported commodity, is an integral part of the control of imports in the furtherance of an extra-provincial trade policy and cannot be termed as unwarranted invasion of provincial jurisdiction.”

24 Dominion Stores Ltd. v. The Queen [1980]

“The allocation of the power with respect to regulation of trade and commerce in this country under the British North America Act has been settled, until now at least... Under the interpretation placed upon s. 91(2) of the British North America Act in these decisions, the power of Parliament with reference to the regulation of trade and commerce is limited to trade in the international and interprovincial sense and Parliament is not empowered thereby to regulate local trade simply as a part of a scheme for the regulation of international and interprovincial trade.”

26 To what extent should the Parliament be allowed to regulate the intraprovincial trade in order to regulate interprovincial trade?

27 III Limits of Provincial Power to Regulate Interprovincial Trade There must be limit on the power of the provincial legislature to regulate interprovincial trade. Marketing board cases Natural resource cases

28 Marketing Board cases Carnation Co. Ltd. v. Quebec Agricultural Marketing Board [1966]

”it is not the possibility that these orders might affect the appellant’s interprovincial trade which should determine their validity, but rather, whether they were made in relation to the regulation of trade and commerce. I am not prepared to agree that, in determining that aim, the fact that these orders may have some impact upon the appellant’s interprovincial trade necessarily means that they constitute a regulation of trade and commerce with s. 91(2) and thus renders them invalid.

30 Manitoba v. Manitoba Egg and Poultry Association [1971]

“it is my opinion that the plan now in issue not only affects interprovincial trade in eggs, but that it aims at the regulation of such trade. It is an essential part of this scheme, the purpose of which is to obtain for Manitoba producers the most advantageous marketing conditions for eggs, specially to control and regulate the sale in Manitoba of imported eggs. It is designed to restrict or limit the free flow of trade between Provinces as such, because of that, it constitute an invasion of the exclusive legislative authority of the Parliament of Canada over the matter of the regulation of trade and commerce.”

32 Burns Foods Ltd. v. AG Manitoba [1975]

“If the federal Parliament cannot regulate local trade because it would be more efficient to regulate it together with the extra-provincial trade, a fortiori a provincial Legislature cannot regulate interprovincial trade in a given product because this appears desirable for the effective control of intra-provincial trade.1 In other words, the direct regulation of interprovincial trade is of itself a matter outside the legislative authority of any province and it cannot be treated as an accessory of the local trade.” 33

34 Reference re Agricultural Products Marketing Act [1978]

It is axiomatic in constitutional law that the courts will look through any scheme in order to strike down all attempts to do indirectly what cannot be done directly: regard must be had to the substance and not to the mere form of the enactment, so that "you cannot do that indirectly which you are prohibited from doing directly"... Being of opinion that adjustment levies are within provincial jurisdiction, it follows that federal legislation on the subject is invalid. 35

“In my view, the control of production, whether agricultural or industrial, is prima facie a local matter, a matter of provincial jurisdiction. Egg farms, … are local undertakings subject to provincial jurisdiction under section 92(10) B.N.A. Act…In my view the Carnation case …is conclusive in favour of provincial jurisdiction over undertakings where primary agricultural products are transformed into other food products. In that case, the major portion of the production was shipped outside the province... In view of the reasons given, the conclusion could not be different even if the whole production had been going into extraprovincial trade.” 36

37 Natural resource cases Canadian Industrial Gas & Oil Ltd. v. Saskatchewan [1978]

38 In considering this issue the important fact is, of course, that practically all of the oil to which the mineral income tax or the royalty surcharge becomes applicable is destined for interprovincial or international trade. … Provincial legislative authority does not extend to fixing the price to be charged or received in respect of the sale of goods in the export market. It involves the regulation of interprovincial trade and trenches upon s. 91(2) of the British North America Act.”

39 Central Canada Potash Co. Ltd v. Government of Saskatchewan [1979]

40 What is evident …is that the Government of Saskatchewan had in view the regulation of the marketing of potash through the fixing of a minimum selling price applicable to the permitted production quotas. The only market for which the schemes had any significance was the export market. the legislation is directly aimed at the production of potash destined for export, and it has the effect of regulating the export price

41 To what extent provincial legislatures should be allowed to regulate interprovincial trade?

42 IV WHAT SHOULD BE THE SCOPE OF THE POWER OF THE PARLIAMENT In U.S., Congress is given a power to regulate interstate commerce Even though the U.S. Supreme Court gave narrow interpretation to this power during New Deal, it came to allow broad power to the Congress.

43 Congress can regulate: (1) interstate movement of goods and services (2) intrastate activity which affects the interstate commerce (3)intrastate activity if it is necessary for the interstate regulation

44 There is limit on the state power to regulate trade and commerce; The dormant commerce clause doctrine Regulation of interstate commerce is not allowed if it is discriminatory against other states or if it imposed undue burdens on interstate commerce

45 Is the Canadian approach appropriate to the Constitution Act, 1867?