Interprovincial battles over booze have been a long-standing feature of the Canadian federation. Most famously, in 2018, the Supreme Court upheld a fine against New Brunswicker Gérard Comeau, who had brought alcoholic beverages from Quebec into his home province. The high court ruled that the Constitution doesn’t guarantee free trade between provinces in every circumstance.
But in July, British Columbia and Alberta went against this tide when they inked an agreement that restarted direct sales from the vineyards of the Okanagan Valley to well-heeled Alberta wine-lovers – those who want their B.C. pinot gris delivered by the box.
It was only a baby step in knocking down interprovincial trade barriers that politicians and policy makers have been lamenting for decades. And certainly, going product-by-product, or province-by-province, is inefficient when talking about the much larger economic picture. Economists believe a broad removal of internal Canadian trade barriers could add around four per cent to the country’s now-weak gross domestic product.
But amidst the hand-wringing over Canada’s worrisome slide in productivity, and given the lack of progress the country has made in enacting more sweeping change, a series of small-scale but palatable deals can be a realistic path to progress.
Danielle Smith, for one, says she wants more of these petite, bilateral deals.
“I don’t know if it’s all that fruitful to try to get it all done with 10 premiers and three territorial premiers all at the table, trying to focus on the multitude of issues,” the Alberta Premier said at the University of Calgary School of Public Policy’s productivity summit last week.
“I think by doing it province-by-province, we may have a bit more success.”
Ms. Smith used the resolution of this year’s B.C.-Alberta wine skirmish as an example of what can work.
Alberta has privatized liquor stores, but the importer of alcoholic beverages is a government agency called Alberta Gaming, Liquor & Cannabis (AGLC). In January, AGLC sent an unwelcome letter to B.C. wineries, saying it had been investigating the practice of Alberta consumers ordering directly from them instead of buying it in the province’s retail stores. These type of direct orders destined for Alberta, existing in some kind of legal grey zone, have been commonplace for years.
AGLC apparently had had enough, because they said in the letter they would no longer accept shipments from B.C. wineries that also engaged in direct shipping. The agency said these suppliers were contravening provincial legislation, bypassing Alberta’s private liquor retailers and threatening to reduce the flow of markup revenues to provincial coffers for government spending. A lawyer hired by B.C. vintners countered that Alberta was trying to impose its own regulations on another province, and enforcement actions were to be brought against individual consumers, not wineries.
But the summer agreement between Ms. Smith and B.C.’s David Eby – sealed with a bottle of rosé – ended the dispute. The two agreed to allow B.C.’s 327 wineries to sell directly to Alberta consumers (with Alberta’s 16 wineries, somewhat optimistically, also included in the deal). Pointedly, the two provinces agreed to establish an online system to enable Alberta to collect markup and fees for winery-direct sales of B.C. wine. Brandon Aboultaif, a spokesman for Service Alberta, said late last week that the system is about to go live.
At the summit, Ms. Smith suggested the deal could be a pathway for more direct access to B.C. consumers for Alberta‘s robust beer and spirits sector. “We’ve got to start somewhere,” she said, adding she’s also trying to get a direct sales agreement with Nova Scotia Premier Tim Houston to bring his province’s wine to Alberta, and ship beer and spirits there.
But a focus on bilateral deals could be seen as sideswiping more ambitious change, including the freer movement of energy and workers – items that could provide a truly significant economic boost. Alberta’s current Premier is not as ambitious as her predecessor, Jason Kenney, who scrapped most of the province’s interprovincial restrictions on trade. Goldy Hyder, chief executive of the Business Council of Canada, said at the policy school’s summit that the low-hanging fruit is to get Ontario to join the New West Partnership, a free-trading zone which at this point includes only the four western provinces.
But discussion of broader trade liberalization – or recognition of interprovincial professional credentials – still often gets bogged down when provincial leaders realize the downside for their own workers or businesses. There always will be winners and losers.
In the absence of big moves, small ones could do. The July agreement between Canada’s two most westerly provinces wasn’t of great importance. But neither was it insignificant for the dozens of B.C. winemakers who count on the revenues from direct shipments across the Rockies.