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The Progressive Economics Forum

A Court Challenges Program for Corporate Canada

Brian Lee Crowley used to run the Atlantic Institute for Market Studies. Through the new Macdonald-Laurier Institute, he is now (to paraphrase ZZ Top) not only bad, but also nationwide.

So far, the Macdonald-Laurier Institute has released two papers. I missed the first one in March. The second paper, released on Monday, is entitled Citizen of One, Citizen of the Whole.

It is about “provincial trade barriers.” The cover is a full-page photo of Crowley’s co-author Robert Knox, heralded as a “voice for Canadians’ economic freedom.”

The Barriers

The paper’s first section notes, “Our Founders did not expect to build a sense of nationhood on gaudy rhetoric” (page 6). But that does not stop the authors from building their paper on it: “cooperating economically binds citizens together in fellowship that transcends materialism” (page 7).

After a couple pages of gaudy rhetoric, the paper spends one page identifying alleged provincial trade barriers. As the authors acknowledge, it is a federal statute (not a provincial barrier) that prohibits importing wine from another province. Quebec’s ban on yellow margarine and the difference between Alberta and BC hay-stacking rules have been removed.

Citizen of One presents just three current inter-provincial differences: cream container sizes, Ontario accounting standards, and bus brake regulations. The authors offset this lack of significant examples by repeatedly asserting that there are too many barriers to count: “so immense that no one has ever come close to cataloguing them all” (page 9), “so numerous and varied that no one has managed even to list them all” (page 10) and “no one can count them all” (page 12).

The Cost

For the cost of these unnamed barriers, the authors pick a number out of the air: half a percent of GDP or $8 billion, a figure dutifully and uncritically repeated by The Toronto Sun and National Post. They then relapse into gaudy rhetoric about “the dynamic effects of greater economic freedom” (page 12).

Footnote 18 (page 10) states, “John Whalley of the University of Western Ontario did two studies, in 1983 and 1995, suggesting it was comparatively small, between one-tenth and one-fifth of a percentage point of GDP. In 1984 the famous ‘Macdonald Commission’ suggested a much higher number, around 1.5 percent of GDP.”

I have no idea what the authors are referring to. First, the Macdonald Commission reported in 1985 not 1984. Second, Whalley’s first estimate was prepared for the Macdonald Commission. Third, the estimate was one-twentieth of one percent (0.05%) of GDP. Fourth, most of the barriers examined back then have since been removed.

The Proposal

In response to this nonexistent problem, the Macdonald-Laurier Institute wants the federal government to legislate an “Economic Charter of Rights” to enable legal challenges of alleged provincial barriers (page 21). Of course, as the authors acknowledge, Canada’s Constitution already places interprovincial trade under federal jurisdiction. The courts already can and do strike down genuine provincial trade barriers, which likely explains why the authors found so few examples.

The more substantial and pernicious proposal is to establish a federal “Economic Freedom Commission” to initiate and finance such legal challenges (page 22). However silly it may be that different provinces mandate different sized cream containers, it would be even sillier for the federal government to take provincial governments to court over the size of cream containers.

The greater risk is that a new bureaucracy devoted to challenging provincial barriers may not be satisfied focussing on trivial matters like cream containers. Business interests would probably use the “Economic Freedom Commission” to challenge public-interest regulations that are stronger in some provinces than others and can thus be characterized as “interprovincial barriers.” Under this regime, provincial officials would be even more reluctant to set standards above those in other provinces.

The Citizen of One proposal is comparable to the Court Challenges Program, which financed legal cases on equality rights. The federal Conservatives de-funded that program. Now a conservative think-tank is advocating federal funding of a court challenges program for corporate Canada. Not surprisingly, a group of corporate lawyers and business lobbyists has already signed on in support of this scheme.

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