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CONSTITUTIONAL LAW
14 REGULATION OF TRADE
AND COMMERCE:
INTERNATIONAL AND
INTERPROVINCIAL TRADE
Shigenori Matsui
1
INTRODUCTION



S. 91(2) of the Constitutional Act, 1867
“regulation of trade and commerce”
What is the scope of the trade and commerce
power?
2
I SCOPE OF THE TRADE AND COMMERCE
POWER

Citizen Insurance Company v. Parsons (1881)
3

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 interprovincial concern, and it may be that they
would include general regulation of trade
affecting the whole Dominion.”

The Privy Council followed Parsons and
adopted very narrow reading of the power

AG Ontario v. AG Canada (1896)(Local
Prohibition reference)
7

“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.”

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]
9

“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

The Supreme Court of Canada also adopted
very narrow reading

The King v. Eastern Terminal Elevator Co. [1925]
12

“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.”

The Privy Council came to affirm the
independent content under the power

Proprietary Articles Trade Association v. AG
Canada [1931]
14

“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.”

After the New Deal, the courts came to grant
a little bit broader power to the Parliament.

Murphy v. Canadian Pacific Railway [1958]
17


“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)

Trade and commerce power
 (1) Inter-provincial and International Trade and
Commerce
 (2)General regulation of Trade Affecting the
Whole Dominion
20
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.
21

Caloil Inc. v. A.G. of Canada, [1971] S.C.R.
543
22

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.”

Dominion Stores Ltd. v. The Queen [1980]
24

“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.”

To what extent should the Parliament be
allowed to regulate the intraprovincial trade in
order to regulate interprovincial trade?
26
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
27

Marketing Board cases

Carnation Co. Ltd. v. Quebec Agricultural
Marketing Board [1966]
28

”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.

Manitoba v. Manitoba Egg and Poultry
Association [1971]
30

“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.”

Burns Foods Ltd. v. AG Manitoba [1975]
32

“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

Reference re Agricultural Products Marketing Act
[1978]
34

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

Natural resource cases
 Canadian Industrial Gas & Oil Ltd. v.
Saskatchewan [1978]
37

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.”
38

Central Canada Potash Co. Ltd v. Government of
Saskatchewan [1979]
39


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
40

To what extent provincial legislatures should
be allowed to regulate interprovincial trade?
41
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.
42

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
43

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
44

Is the Canadian approach appropriate to the
Constitution Act, 1867?
45