Section 91(2) of the Constitution Act, 1867

In Canadian constitutional law, section 91(2) of the Constitution Act, 1867 provides the federal government with the authority to legislate on matters related to the regulation of Trade and Commerce. This power is generally balanced against the provincial power over property and civil rights under section 92(13) as well as "matters of a local nature" under section 92(16).

The trade and commerce clause was first examined in Citizen's Insurance Co. v. Parsons (1881). The Privy Council identified two branches of the clause. A matter could fall under the inter-provincial branch if it concerned "international and interprovincial trade", or in the alternative, it could fall under the general trade branch if it concerned the "general regulation of trade affecting the Dominion as a whole".

Inter-provincial trade

Initially the scope for inter-provincial trade was set very narrowly by the Privy Council. In the Board of Commerce case, the Privy Council suggested that the trade and commerce power only applied as an ancillary power to some other valid federal power. This principle was eventually rejected in Toronto Electric Commissioners v. Snider, but the power was still read strictly. In R. v. Eastern Terminal Elevator Co. (1925), a federal law regulating trade of provincially produced grain destined entirely for export was found not to be within the meaning of inter-provincial trade. Similar marketing schemes were held to be invalid on the same basis

Many federal laws were struck down on the basis that it regulated transactions that took place solely within the province.

With the abolishment of appeals to the Privy Council the interpretation of the power became broader. In Caloil Inc. v. Canada (1971) the Court upheld a law prohibiting the movement of imported oil as a form of regulating inter-provincial trade.

The most significant decision was the Reference re Agricultural Products Marketing Act (1978) where the Supreme Court upheld a federal egg marketing scheme that imposed quotas of different provinces. This was a particularly broad interpretation of inter-provincial trade as it included even egg producers who did not export their products.

The Court has also considered the effect of provincial law on the trade and commerce power. In Carnation Co. v. Quebec Agricultural Marketing Board, the Court held that provincial regulations that had an incidental effect on inter-provincial trade was valid. However, if the provincial scheme limits the free flow of trade between provinces than it will be struck down.

General trade

The general trade branch was considered in General Motors of Canada Ltd. v. City National Leasing. The Court listed five indicia of a valid law under the general trade branch. In this case it was found that the inquiry must consider whether the law was part of a regulatory scheme, whether there was an agency to oversee the scheme, whether the matter concerned trade as a whole, whether the provinces could have been incapable of enacting such a scheme, and whether the failure of a province to participate would jeopardize the scheme.

The regulation of general trade must be broad and sweeping, and cannot single out a particular trade or industry. In Labatt Breweries v. Canada (1979), the Court held that the regulation of the composition of "light beer" under the Food and Drugs Act was invalid as it was too narrow to be directed towards trade.

The federal Personal Information Protection and Electronic Documents Act was upheld under the general trade branch of the trade and commerce power. Consequently, the Act is applicable to all commercial enterprises, including provincially incorporated companies.

See also

• Commerce Clause - US Constitutional equivalent.