Title: Thirteen Economies, One Country: How the Highest Court Undermined a National Canadian Economy

Date: Monday, October 6, 2025

Description: Canada is one country, but economically it is a patchwork of 13 regional economies. Interprovincial trade barriers cost billions in lost productivity and innovation. As federal and provincial governments work to dismantle these internal walls, the question remains: why do they exist and why have they persisted?

The roots of Canada’s fragmented market lie not only in politics or provincial protectionism, but also in constitutional interpretation. Confederation’s framers envisioned a strong federal role in commerce, but the Supreme Court narrowed federal trade powers and expanded provincial authority over property and civil rights.

This lecture explores how judicial choices shaped Canada’s patchwork economy, why past decisions are difficult to overcome, and why today offers the best chance in generations to build a freer national market.

Speakers:

• Virginia Torrie

Podcast: 

Transcript: 

00:00:00
So welcome everyone to the annual Law 80 Lecture in Business Law, funded by the generosity of the class of 1980.
00:00:08
Thank you to everyone joining us today, both online and in person.
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Those of us in the room are gathered on the traditional territory of the Anishinaabeg and Haudenosaunee peoples.
00:00:18
And these nations engaged extensively in trade and other economic activities on this territory and across North America prior to colonization and continue to play a significant role in interprovincial and international trade today.
00:00:31
So now I'd like to introduce our speaker this year, Professor Virginia Torrey, who's a leading expert in banking, insolvency, and financial law, and a highly regarded legal historian.
00:00:42
In addition to delivering the annual Law 80 lecture here at Queen's today, Professor Torrey is a visiting business law scholar.
00:00:49
And during her visit, she's teaching a seminar course on the legal history of business regulation and advancing her research on farm restructuring in emerging economies.
00:00:58
Professor Torrey was previously Associate Professor at University of Manitoba Faculty of Law, where she served as Associate Dean and Chair of the De Soto Centre for Private Enterprise and the Law.
00:01:08
She has also held appointments at the University of Saskatchewan, Australian National University, University of Cape Town, and the National University of Singapore.
00:01:16
Her scholarship, which includes A landmark study of the Companies' Creditors' Arrangements Act and influential work on federalism in Canadian insolvency law, has been cited by appellate and lower courts across Canada.
00:01:27
She currently serves as editor-in-chief of the Banking and Finance Law Review, where she has led several international initiatives to support emerging scholarship in fintech and financial regulation.
00:01:37
And I'll do a quick pitch for the upcoming fintech issue, which has featured papers, one paper written by a former student of mine.
00:01:46
So
00:01:46
So check that out.
00:01:47
Virginia is also very active on LinkedIn, so you can learn about it there.
00:01:52
So once again, this year in terms of this year's Law 80 lecture, we have a talk reflected in the current news headlines, you know, even today.
00:02:01
So today's talk is titled 13 Economies, One Country, How the Highest Court Undermined a National Canadian Economy.
00:02:09
And I think Dr.
00:02:10
Tory is also going to tell us what we should do about it.
00:02:12
So please join me in welcoming Professor Tory.
00:02:20
Thank you very much, Professor Henderson, for that introduction.
00:02:24
It's my sincere pleasure to be here today to share some initial thoughts on the, I guess, the interprovincial trade discussion that we've been having nationally.
00:02:35
Usually these talks sort of for me would be based on a paper and it's been a really great exercise to get something out, some analysis out a little more quickly than that.
00:02:45
And I hope this will spark questions and comments.
00:02:49
And if you come away today with one little insight that you didn't have before you walked into this room, I feel like I've contributed value and I look forward to continuing the conversation.
00:03:00
So in our time today, I have structured this talk.
00:03:04
as three main sections.
00:03:06
So first, a little bit about US and Canadian political history.
00:03:10
And then I'm going to pivot and talk about the BNA Act, or what's now called the Constitution Act, 1867, and how that's been interpreted by the highest court.
00:03:20
And then pivot again and talk about interprovincial trade in 2025.
00:03:25
and then end with a bit of a synthesis that I think helps to make a bit of sense about what we're seeing and why I think there's a reason for optimism that we can have greater economic integration.
00:03:36
So as you can probably tell from this agenda, I'm covering things in broad strokes.
00:03:41
But I think the synthesis that comes through from that approach will be accessible for everyone, no matter what your background.
00:03:49
and also is enlightening in its own way.
00:03:53
So as Shakespeare said, what's past is prologue.
00:03:56
So we're not beginning interprovincial trade discussions with like a clean slate and no prior history.
00:04:01
And so that history really very much influences the table as it's set today.
00:04:07
So I want to just talk briefly about American and Canadian history.
00:04:12
And so beginning in the 1700s,
00:04:15
is where we're going to begin our story.
00:04:17
And this point is really, I think, underappreciated.
00:04:21
But in roughly 17, or in 1760, France surrenders.
00:04:25
And this leaves most of the North American continent controlled by the British, right?
00:04:29
So you kind of have, there's no American or Canadian distinction.
00:04:33
It's all kind of under British rule.
00:04:36
And then in 1765, and for about 10 years after that, there are protests in some of these colonies.
00:04:43
in the American colonies in particular.
00:04:46
And this leads to a revolutionary war.
00:04:49
And the Americans are supported by France in their efforts.
00:04:53
And they even try to incite rebellion in Quebec, in Canada, although they're not successful in that initiative.
00:04:59
But they do want these other colonists that are under British rule to join them because they find this rule oppressive.
00:05:05
for a bunch of reasons.
00:05:06
It's also annoying, it's insulting, they have all their reasons, and they, but not everyone feels that way.
00:05:12
So there's actually estimates that roughly 15 to 20% of people in the American colonies remain loyal to the British crown.
00:05:23
And about half of those moved to what is now Canada after the revolution.
00:05:27
So they don't want to be part of this new country called the United States.
00:05:31
So
00:05:32
The point here is that there's really sort of this one group of people, these settlers that are under one British power, and then there's different viewpoints of whether that's a good or bad thing, and then there's like this bifurcation, right, in the history of the two countries.
00:05:48
So the US then goes on to adopt A federalist system, and because they didn't like this top-down sort of power structure that they were under,
00:05:58
under the British rule, they contrast that and they move to a more decentralized system where states hold a lot of the power.
00:06:05
So this is in contrast to the system that they kind of chafed under.
00:06:11
And that ends up being significant to a later part of the story.
00:06:15
But first, we're going to now pivot to the War of 1812.
00:06:18
This is America's we're all grown up war.
00:06:21
We don't like some of the things that the United Kingdom or the Great Britain is doing.
00:06:27
There's trade restrictions.
00:06:28
There's the impressment of American seamen into the Royal Navy and a host of other reasons why they feel they need to have this war.
00:06:37
There's a very, quote, possible desire to annex Canada.
00:06:40
But as you can see, there's kind of a laundry list of reasons.
00:06:44
And so the War of 1812 breaks out.
00:06:47
The US tries to invade Canada.
00:06:49
They do that multiple times.
00:06:50
Canada goes to the US.
00:06:52
They burn down the White House.
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And
00:06:54
Not a lot of consequence really comes out of this in terms of political boundaries.
00:06:58
It's sort of a draw.
00:07:00
But there is this desire to uphold the national honor, and this is their kind of all grown up war.
00:07:05
And this sort of theme of American expansionism is another theme that we see coming back even today.
00:07:12
So that, you know, history doesn't repeat itself, but it rhymes or it echoes, as they say.
00:07:18
And so you'll see how these
00:07:20
These themes play out again in the history between the US and Canada.
00:07:25
And then we get to another war.
00:07:29
And this one is also extremely significant from a Canadian perspective.
00:07:33
And this is the American Civil War from 1861 until 1865.
00:07:39
So I'm sure most people are broadly familiar with the reasons for the US Civil War.
00:07:45
The most immediate cause is the question of slavery.
00:07:47
Southern states want to continue slavery.
00:07:50
There's efforts to abolish that, and there's the non-slave states, and there's the slave-owning states.
00:07:55
And for a while, they were able to kind of keep this issue from over-boiling by bringing states into the federation, two by two.
00:08:04
One slave state, one non-slave state, or four by four in some cases, to preserve this sort of status quo in terms of the different viewpoints on this issue.
00:08:15
But fundamentally, the issue is how much power should the states have, right?
00:08:19
That's really what it comes down to.
00:08:22
And eventually, Lincoln's elected and that sort of precipitates, he's anti-slavery that precipitates a lot of the southern states to secede.
00:08:33
And this is a pretty significant moment because less than 100 years after the United States is formed, it looks like this grand experiment of a federalist republic has failed.
00:08:44
And this has failed right on Canada's doorsteps and in some of the bloodiest terms of any U.S.
00:08:49
conflict.
00:08:50
So this chart shows the number of casualties in the U.S.
00:08:53
Civil War.
00:08:54
It was about 2% of the population.
00:08:56
This is not necessarily shot on a battlefield, but you might have been wounded and died from the infection, or you might have been a civilian, you know, and you were killed or injured in the course of a raid.
00:09:10
If you put that into today's terms, that's like 6.8 million Americans losing their lives.
00:09:15
And that is the single greatest rate of casualty of any US conflict.
00:09:21
And it actually supersedes World War I and II combined.
00:09:25
And I think what I've read is it's
00:09:27
It's the bloodiest conflict up until Korea in terms of like cumulatively, that's how many people died.
00:09:34
And this is really significant in Canada, because right around this time is when the discussions are starting about should we confederate, should we form a country?
00:09:44
And as they're talking about what that might look like, it's, you know, you have this model of everything in chaos south of the border.
00:09:51
And that sort of factors into how the framers go about crafting the Canadian Constitution.
00:09:59
So I said I was speaking in broad terms, so in very broad terms, in Canada from the beginning, there is more, I would say, bias toward pluralism.
00:10:10
And the example I'll give here is that Quebec is this distinct society and culture, right?
00:10:15
So that's sort of baked in from the beginning.
00:10:19
And I think you can also think about Canadian Confederation as almost this ongoing conversation.
00:10:26
We have 4 provinces join exactly in 1867.
00:10:29
And then in the years that follow, some more provinces join, some territories are created.
00:10:36
But look at Saskatchewan and Alberta, they join in 1905, or they're created in 1905.
00:10:42
I mean, that's
00:10:43
like 35 years after the first provinces came together.
00:10:48
And depending how broadly you want to conceive of the idea of confederation, even things like separatist sentiment in 1995 might be an ongoing dialogue point in that broader conversation.
00:11:03
But as I said, in terms of the framing of the BNA Act, the thought about, how are we going to structure this to divide power between provinces and territories on the one hand, the federal government on the other hand, as we think about this, watching, you know, what's happened in the United States with their civil war and in those early years in that aftermath.
00:11:23
And so the first Canadian constitution is the British North America Act.
00:11:28
And this really, at a very high level, gives the balance of power to the federal government with more limited powers extended to the provinces.
00:11:37
So roughly kind of the opposite of what the US had done.
00:11:42
And if you just read it outside of, like if you kind of deleted everything you knew about history and the state of affairs today,
00:11:49
and you just read sections 91 and 92 for what they say, the words on the page, the national government has given a lot of powers necessary to build a national economy.
00:12:00
So they have the regulation of trade and commerce, weights and measures, currency banking, bills of exchange, interest, legal tender, bankruptcy and insolvency, navigation and shipping.
00:12:10
So that's a pretty broad list of the sorts of things you would need to have in place for a federal government to really lead on an economic front.
00:12:19
And Section 92, as I'm sure you all know, gives power to the provinces.
00:12:23
And they do have economic powers too.
00:12:26
These are generally limited to within their territorial borders.
00:12:29
So things like local works and undertakings, companies with provincial objects.
00:12:34
And I'm sure everyone's familiar with the property and civil rights power if you've taken con law.
00:12:39
And this is a power that's interpreted quite broadly and on its face could be interpreted quite broadly.
00:12:46
So at a high level, that's sort of what the courts have to deal with in the early days.
00:12:52
And now I want to pivot a little bit and talk about how this act gets interpreted in the highest courts.
00:12:59
It's one thing to have the words on paper, but as we saw from this list, you know, trade and commerce is potentially an extremely broad category, right?
00:13:07
Potentially that could incorporate a lot of things, just like property and civil rights.
00:13:12
So there's,
00:13:14
maybe not vagueness, but a certain ambiguity about what does this mean in practice.
00:13:19
And in our system, courts end up being the arbiters of those meanings in a significant way.
00:13:29
So if you've been to law school, you're probably familiar with the Judicial Committee of the Privy Council.
00:13:34
This is the apex court for Canada from 1867 until roughly 1939.
00:13:41
There's a few cases that come out after that, but roughly that's the cutoff.
00:13:46
So lower courts, including the Supreme Court of Canada, are bound by the rules of precedent.
00:13:50
They can't overturn themselves.
00:13:52
And the judicial committee itself is, you know, they don't issue dissents and majority opinions.
00:14:00
They tended to be very short
00:14:04
statements that kind of just resolve the legal matter before them.
00:14:08
And this court has had a really big role in shaping Canadian federalism through its interpretation of the BNA Act, as well as other areas of law.
00:14:18
And in broad terms, they tended to interpret the property and civil rights power in the provincials pretty broadly at times, but it was undoubtedly
00:14:41
their businesses or their affairs.
00:14:46
And Peter Hogg, late Peter Hogg and Professor Peter Hogg and Wade Wright have this quote, which I thought was quite interesting.
00:14:55
So there's, as I said, there was the controversial court.
00:15:01
which were two people on the Privy Council, the wicked stepfathers of Confederation, for the way that they interpreted the British North America Act, and particularly the and the provinces.
00:15:17
In English Canada, these judgments were often criticized, not so much in French Canada, though.
00:15:22
So that's an interesting element to it.
00:15:26
And this kind of controversy of giving wide reading to provincial powers
00:15:31
kind of leads to a bit of a boiling point in the 1930s around the time of the Great Depression.
00:15:38
It's not really clear to me why the courts interpreted the provincial powers so broadly.
00:15:43
One possible reason, and
00:15:46
I'm sure my con law colleagues probably have more insightful things to offer here, but one possible reason is that they were trying to preserve and guard provincial jurisdiction from the inherent dominance that the federal government might otherwise have, given how the BNA Act was drafted.
00:16:04
Maybe they were concerned about distinct culture and society in Quebec.
00:16:10
It's hard to say, maybe it just that was what fit with the narrow legal issues that came before them.
00:16:15
But in the 1930s, we have this very significant moment of dissatisfaction with the Privy Council judgments, which leads to sort of further decentralization in Canadian federalism.
00:16:28
And actually, their judgments here sparked such outrage that it led to the end of overseas appeals, but it didn't really reverse this trend toward decentralization, even though the final court became the Supreme Court of Canada.
00:16:43
So I want to talk just briefly about these new deal cases.
00:16:47
I think it's a, they're very significant in terms of, leading to the end of overseas appeals, but it's also a very significant moment for Canadian federalism.
00:16:58
The Great Depression basically broke Canadian federalism, as it was understood up until that time.
00:17:04
And this is an argument made by historians Barry Ferguson and Rob Wardhaw, who have a book on the Royal-Sirois Commission, or the Royal Commission on Dominion-Provincial Relations.
00:17:17
And like in a very small nutshell, the provinces had held the jurisdiction over social programming, like unemployment relief, but none of the money to fund any of these things.
00:17:28
And so they ended up being conduits for federal relief monies.
00:17:31
And we kind of see that pattern play out today where the feds will fund stuff and it goes to the provinces and they dole it out.
00:17:38
But you can't really overstate the gravity of the Great Depression on the Canadian economy and just the inability of government to respond.
00:17:46
So all Western provinces are basically bankrupted by the Great Depression.
00:17:51
In addition to the privation that they're experiencing with poor agricultural conditions,
00:17:56
And Prime Minister Bennett, admittedly in a last ditch effort to win the 1935 election, introduces some legislation inspired by Franklin Roosevelt's New Deal in the United States.
00:18:10
This is an interesting backstory here because his brother-in-law was like in Washington and would like report back to Bennett about what they're doing in the United States.
00:18:18
And is there anything we can learn from that here in Canada?
00:18:21
And so Bennett also goes on the radio and announces this program.
00:18:25
Some of the legislation's already passed.
00:18:27
By the time he announces it, it's kind of like his window dressing around some legislation.
00:18:33
And the idea here is that we'll try to carefully craft some legislation to deal with issues on the ground, and we might need provinces to cooperate in some cases.
00:18:45
And this legislation is criticized for two things.
00:18:48
It doesn't go nearly far enough to resolve the crisis, and it's all ultravirus as being beyond federal jurisdiction.
00:18:55
So just to give you an idea of how difficult it is to thread that needle, it's criticized for being
00:19:01
two polar opposite things at the same time.
00:19:04
And there's this sort of belief in the back of people's minds at least that like no matter how squiggly this line might be between federal and provincial jurisdiction, if there's like unanimity, like if all the provinces and the federal government, if everyone agrees and kind of contributes their respective jurisdiction, it can't be ultravirus in that case, right?
00:19:25
Like how can it be?
00:19:27
the Privy Council took a different view.
00:19:29
And even in that case, said, no, it has to follow this squiggly line.
00:19:35
Everybody has to be on side.
00:19:37
And all but one piece of legislation is struck down in whole or in part.
00:19:43
And this affirms that decentralization trend that I've talked about within the Canadian Federation.
00:19:49
It leads to a lot of things.
00:19:51
The irony is this Bennett New Deal that was basically struck down, Canadians spend the next 50 years enacting everything into law, and sometimes that required constitutional amendment.
00:20:02
So employment insurance becomes section 91 2A of the BNA Act or the Canadian Constitution Act, because basically only the feds can fund unemployment relief at a grand scale.
00:20:16
And
00:20:17
And then there's some other amendments as well.
00:20:19
And in other cases, they sort of solve this by the feds fund and the provinces distribute, right?
00:20:25
So that in itself kind of affirms the decentralization in terms of jurisdiction, even if that jurisdiction is kind of meaningless unless you have the money to actually fund it.
00:20:35
So this kind of idea of cooperative federalism.
00:20:39
So this is like a very important moment.
00:20:41
It's A reworking of the Canadian Federation.
00:20:44
This Royal-Sirwa Commission, if any of my students want to do a paper on this, there's an excellent book and it's also a very long and interesting commission where they kind of assess what led to the Great Depression and how the federal system needs to be revised in order to address various needs.
00:21:02
But it also leads to such outrage with the Privy Council that it leads to the end of overseas appeals not very long after that.
00:21:11
And that brings me to a very high level treatment of the federal trade and commerce power.
00:21:17
And I'm going to touch on one other power that I think is relevant to this discussion today.
00:21:23
So as we looked at that BNA Act and just sort of the powers that the federal government was given,
00:21:29
Trade and commerce is like potentially very broad.
00:21:32
Like that could be potentially a very broad power.
00:21:36
It could potentially mean that like provincial attempts to regulate in this space are just like not valid because, you know, there's this federal power and we know federal will take precedence over provincial, all else being equal.
00:21:50
And the Citizens and Parsons case becomes one of the first cases in 1881 to interpret this power.
00:21:57
And then we get a lot more cases, and I won't go through all of them because I thought that would be a little too much like your con law class and a little doctrinal, but they're very interesting cases.
00:22:06
And at a high level, we have kind of two branches of this power.
00:22:10
We have international and interprovincial on the one hand, and then we have this general regulation of trade.
00:22:17
on the other hand.
00:22:18
And as we kind of move through time and through various cases, like the criteria get more refined, there's certain indicia that have to be met.
00:22:28
From con law, you might be familiar with a bunch of these cases.
00:22:31
From securities law, you might be familiar with the last two on that list.
00:22:35
But this is very much sort of an ongoing dialogue.
00:22:39
Unfortunately, there doesn't seem to be a ton of room for the federal government to act under that trade and commerce power.
00:22:46
So under this first branch, interprovincial and international, this basically means parliament has the authority to regulate cross-border trade and integrated national marketing schemes, even if there's some incidental effects on local transactions.
00:23:01
Notably, some provincial attempts at interprovincial marketing schemes have been struck down.
00:23:08
And then branch 2, basically here the guardrail is the feds can't regulate a single industry.
00:23:16
In practice, this makes it challenging to operationalize a general trade and commerce power or to remove barriers to harmonize in a provincial trade if you look at it at an industry by industry level, right?
00:23:31
So if the province has jurisdiction over, say, a professional certification,
00:23:37
then, they might, Ontario might talk to Alberta and say, let's harmonize our requirements here and the certification and facilitate kind of cross-border movement of people in this profession.
00:23:51
But there's not like a huge role necessarily for the federal government in that conversation.
00:23:57
And it's difficult to conceive of, I mean, I guess it's theoretically possible, like some omnibus sort of piece of legislation that touches on enough professions
00:24:07
or industries that you would get away from this can't regulate a single industry approach.
00:24:13
And securities regulation is another example where there was an attempt to have a federal securities regulator, which unfortunately didn't go as had hoped.
00:24:21
So we still have 13.
00:24:23
I think we're one of like 3 countries in the world that have more than a single securities regulator.
00:24:29
Professor Henderson can correct me if I'm wrong about that.
00:24:33
So this creates some challenges in terms of building a modern, integrated national economy.
00:24:40
What's interesting here, though, and this is where sort of the rest of the talk will be headed, is the efforts to overcome some of these challenges tend to reinforce provincial jurisdiction.
00:24:55
So you'll have like a cooperative opt-in scheme, for example.
00:24:58
They're not like federal regulation superseding in most cases.
00:25:05
And that also relates to the fact that there's usually some kind of an interest group, probably at the provincial level, right, who might have an interest in keeping things the way they are for one reason or another.
00:25:16
And there's not necessarily a federal interest group trying to get things to happen at the federal level.
00:25:23
I think at a broad level, this tends to diminish federal authority over economic matters.
00:25:29
And so I think we can think of examples and that certainly brings some nuance to the conversation.
00:25:37
But I'm struck by how one of the federal approaches we've been hearing about in these last months is, well, the feds will just kind of get out of the way and eliminate their federal requirements, right?
00:25:47
So we don't have duplicative requirements.
00:25:51
And that I can see making sense as a way, like expediency wise and in a way to move things forward.
00:25:57
But it kind of, I mean, today we're at an interesting moment, but sort of if you fast rewind until to 2024, inter-provincial trade is kind of championless in a little, in a sense, because the Fed is, Feds are limited in terms of what they can do.
00:26:14
And so what's interesting is that while the BNA Act has vested like reserve power with parliament in practice,
00:26:21
The property and civil rights power kind of functions like that reserve power in a lot of ways, just because you can tie so much down to property and civil rights.
00:26:30
And my point here isn't doctrinal, it's more, it's kind of socio-political.
00:26:36
And I think that's sort of just an interesting and kind of ironic twist to the story.
00:26:40
What's interesting is in the US context,
00:26:42
They almost had the reverse, where they intended to have a lot of state power at the outset, and yet they've kind of migrated to more centralized power over time.
00:26:53
Okay.
00:26:53
And then there's this other provision in the BNA Act, which I could not mention.
00:26:58
This is probably one that you've heard about anytime someone tries to bring a lot of beer from one province to another.
00:27:05
And this provision says
00:27:07
All articles of the growth, produce, or manufacture of any of the one provinces shall from and after the union be admitted free into each of the other provinces.
00:27:18
So historians have argued that the intention behind this provision was interprovincial trade that was free from tariff and non-tariff barriers or non-customs barriers.
00:27:28
And they've cited debates and statements made by historical figures at the time of Confederation.
00:27:34
But the courts have not taken that viewpoint.
00:27:38
In Gold Seal v.
00:27:39
Alberta from 1921, this provision is interpreted to mean you can't charge customs or tariffs when goods move from one province to another.
00:27:49
But that doesn't necessarily mean you can't have other kinds of barriers.
00:27:53
And in Como, which is a more recent decision from 2018, the lower court originally did sort of side with the historians and give a broader reading.
00:28:03
But at the Supreme Court level, they held that the Section 121 shouldn't trump valid exercises of provincial powers like the right to control the supply of liquor in one of the provinces.
00:28:18
So by this point in the lecture, I hope you're identifying a few themes.
00:28:24
Provincial jurisdiction is a very important theme in this whole story, as is, to an extent, regionalism and local monopolies even.
00:28:33
And these are, you might have these themes in any given country, but I think the way in which they come together in any one country will always be a little bit unique.
00:28:43
And that certainly helps to explain a little bit of the Canadian story.
00:28:47
So I want to now sidebar just a little bit and look at Canadian economic development, because this is also a very important piece of backdrop into the themes that we're sketching out here, but also tacitly into some of the case law.
00:29:04
So Canada's economy up until roughly World War I is mainly regional, with not that many companies operating across the whole country.
00:29:14
And part of this is related to the entry of provinces and territories into confederation, for example, right?
00:29:21
So Newfoundland joins in 1949.
00:29:24
So obviously, you know, there would be no one operating in Newfoundland prior to that, and that wouldn't be like a transnational corporation.
00:29:31
And this is really important to the development of a lot of the federal economic powers.
00:29:35
My colleague, Professor Telfer, has written a book on how we got our first permanent bankruptcy law, which is passed in 1919.
00:29:45
And he's linked that to the fact that there weren't really national creditor groups until that point in time would benefit from this system.
00:29:53
And it's only when you got creditors operating across the country,
00:29:58
this practice of, the debtor just prefers the local creditor.
00:30:01
So they're broke.
00:30:02
They just, I lent from like the shopkeeper in my town.
00:30:06
I'll just pay them 100%.
00:30:08
And, the bank that's based out east, will just be out on its ear, essentially.
00:30:15
Well, the national credit groups didn't like that very much.
00:30:17
And so that kind of that interest group gained traction and managed to overcome a lot of the moral debates around whether we should even have a bankruptcy law.
00:30:25
So that's one example.
00:30:27
But it's an important piece of the backdrop here.
00:30:32
And also Canada has a very resource-centered economy, which it still does, and it's later to industrialize than the Great Britain or the United States.
00:30:41
And mechanization and industrialization really happens kind of from World War II onward.
00:30:47
So these are some of the unique attributes that I think factor into the types of business disputes that make their way to courts.
00:30:54
So we have a strong sense of regionalism,
00:30:56
This is influenced by our geography as well, just places being very spread apart at the time of confederation.
00:31:04
And even now, there's a very strong role of local and provincial government.
00:31:08
Like a lot of the things that affect us most in our day-to-day lives tend to be provincial jurisdiction in one way, shape, or form.
00:31:15
And so there's like very unique mixes of politics at the provincial level.
00:31:22
And we have this staggered entry of provinces into confederation, then also, respect for distinct cultures and society, as in the case of Quebec.
00:31:31
So all of that, I think, kind of feeds into this idea that there's not, at the time of confederation, when the courts are first starting to decide these cases,
00:31:40
they might have a case come to them, might be about insurance, for example.
00:31:45
But it's very unlikely that any of those players are like a national company that's operating in multiple jurisdictions and might, for their own reasons, want like simplified federal regulations so they don't have to comply with 13 different jurisdictions regulation.
00:32:00
Whereas today, if you snapshot today, there's big companies who would like, feel like they would benefit.
00:32:06
They'd be able to be more efficient if there was more standardization.
00:32:09
across provinces, or even just a single federal regulation with which they needed to comply.
00:32:22
So I'm kind of foreshadowing some of the theory I'm going to talk about a bit later, but this was a natural point at which to kind of snapshot where we're at and how some of these things sort of work together in cycles.
00:32:36
So you have, a given moment in time, early in Confederation, where you have a set constitution, you have economies that are largely regional and the interest groups and politics that goes into that.
00:32:50
And then you have judicial decision-making that when there is a conflict, you know, has submissions from these different groups and parties.
00:33:02
and not necessarily like a federal interest group or a champion for interprovincial trade, which informs their decision-making, of course.
00:33:12
I'm not saying this is the only thing that informs their decision-making, but as those decisions are decided and the rule of precedent comes into play, there is a bit of a self-reinforcing quality to some of that decision-making.
00:33:26
And this diagram is just meant to capture some of what's going on there.
00:33:32
Okay, so we've talked about US and Canadian history.
00:33:38
We've talked about, at a high level, some of the constitutional case law.
00:33:43
I'm now going to pull us in another direction, talk about inter-provincial trade in 2025.
00:33:47
And I hope I haven't lost anyone in the high level survey we've been doing up until now.
00:33:54
But I think that this discussion we're having as a body politic about interprovincial trade in 2025 is actually a really good object lesson and why history matters.
00:34:04
Because we're not beginning this with a clear slate.
00:34:08
There's sort of existing precedents, there's existing ways of doing things, there's existing interest groups, there's existing politics.
00:34:14
And some of that might be overtaken for the moment, but I think a lot of it still does factor in to what we're seeing today.
00:34:24
So just to recap, in case anyone has not watched the news in the last, I guess, 10 months, in 2025, after he's inaugurated, President Trump suggests Canada should become the 51st state.
00:34:41
He says the dividing line between Canada and the US is artificial and makes various comments along these lines.
00:34:49
This, I don't know that this consciously harkens back to previous US invasions of Canada, but as the historian, I couldn't help but be reminded of some of these earlier attempts.
00:35:00
The asterisks there indicate US-based non-government groups that invaded Canada, but these are the instances in which, you know, US expansionism has sort of become an invasion or an incursion of sorts.
00:35:14
So I think this theme of US expansionism, though, is
00:35:17
maybe more psychologically or emotionally threatening to Canadians.
00:35:22
And there's a desire to maintain a distinction from the US.
00:35:27
And so that's sort of one thing that begins to change in our political rhetoric.
00:35:32
And then the US shifts its policy on trade and introduces a whole bunch of tariffs.
00:35:37
These are very wide-ranging.
00:35:39
They also tend to shift a lot week to week.
00:35:42
steel, auto, et cetera, sometimes brought import categories, sometimes specific countries, sometimes brought blanket tariffs across many countries.
00:35:54
And while we have the KUSMA agreement, many, but not all Canadian sectors are exempted from these tariffs.
00:36:02
And this policy shift has large economic and political impacts in Canada.
00:36:07
Most spectacularly, it completely revived the fortunes of the federal Liberal Party, which looked like it would definitely lose the next election.
00:36:16
And instead, with a new leader, it's re-elected with this mandate to deal with the tariff situation.
00:36:23
So those are some pretty large shifts that
00:36:26
certainly didn't look predictable at all from a 2024 perspective, certainly not from before President Trump was elected.
00:36:36
And now I think just a little snapshot on where we're at with interprovincial trade in Canada.
00:36:42
And then I promise I'm going to pull this all together with a little bit of theory, because I think I've had you guys going in a lot of different directions up until now.
00:36:50
But I'd be remiss if I didn't talk about the fact we do have a free trade agreement for Canada for inter-provincial trade.
00:36:58
And the idea here was to reduce barriers in goods and services, investment and labor mobility.
00:37:03
But there are many exceptions.
00:37:06
There can be opt-outs, regulatory variances, et cetera.
00:37:09
So goods certified in one province, for example, might face additional non-tariff barriers in order to be sold in another province.
00:37:18
such as labeling, certification, inspection, et cetera.
00:37:22
I think we would all feel pretty safe if we woke up tomorrow in British Columbia and wanted to buy some consumer product.
00:37:28
Like all of these standards are acceptable, but they're not necessarily interchangeable, if that makes sense.
00:37:37
So the Liberal Party, now government's platform, estimates that
00:37:43
If we can eliminate all, or nearly eliminate these inter-provincial trade bureaus, this could increase our GDP by $200 billion.
00:37:52
So pretty substantial numbers there.
00:37:55
And so the hope is that by reducing or eliminating these, this will help to spur economic growth domestically and counteract some of the uncertainty that we're seeing with trade with the US.
00:38:09
And so the federal government has launched several initiatives to remove interprovincial trade barriers, removing federal exceptions, for example, from the CFTA.
00:38:18
Provinces and territories have engaged in mutual recognition efforts for various goods and worker credentials.
00:38:25
There's also efforts to process professional credential recognition faster.
00:38:31
And then the provinces and territories are also removing and narrowing provincial exceptions.
00:38:37
And if you've watched the news, you've seen a lot of this is happening bilaterally between provinces with like mutual recognition, for example, as well as under CFTA.
00:38:49
Okay, so now that your head is full of information, let's sort of pull some of this together in a bit of a theoretical way that I hope will give you a bit of a new perspective and maybe some insight.
00:39:04
So for this book on the Companies' Creditors Arrangement Act, which is a bankruptcy statute, I pulled together some different ideas and theories to look at law as a socio-political phenomenon in a long historical context.
00:39:18
I'm not suggesting that this sheds light on each and every situation, but it was the thing that first came to my mind when I started watching just the news cycle and how things have unfolded over the last 10 or so months.
00:39:31
So modern institutionalists have a particular view of history.
00:39:35
And so I adopted some of this framing by scholars like Douglas North and Paul Pearson.
00:39:42
And you look at sort of institutions like a court, like JCPC, or it could be sort of a parchment institution, right?
00:39:48
Like the BNA Act.
00:39:50
These are things that don't tend to change or vacillate radically over time.
00:39:54
They kind of contribute an element of stability.
00:39:57
And then how they mediate law can be very influential for how that law is perceived by the people that are impacted by it.
00:40:05
And taken together, this can produce path dependence for a certain way of interpreting something, for example, or a certain way of doing something.
00:40:13
And that means it's difficult to sort of switch, even if something objectively better were to come along.
00:40:21
Institutions also have a certain inertia that can be, that needs to be overcome for change to happen.
00:40:27
And then another kind of component about this is more of the socio-political side is sort of how social patterns reproduce themselves, right?
00:40:36
So this is, you might have a path dependent process, but it's like, well, what makes that process path dependent?
00:40:43
In law, one of the ways in which things can develop path dependence is this reproduction of case law precedents, right?
00:40:50
So an apex court decides something in a certain way, lower courts are bound by that.
00:40:55
So you get that kind of rule repeated over and over again over long stretches of time.
00:41:01
Now, an apex court can overturn itself, right?
00:41:03
Like, you know, some time could pass, circumstances could change, and they might reverse themselves or sort of
00:41:10
add a layer of nuance that people didn't appreciate was there.
00:41:14
But they don't do that sort of year to year on a given subject, right?
00:41:17
They're trying to set a course that provides stability and certainty for all of those who are impacted.
00:41:27
Another way to look at this, just if you take it outside of the purely legal context and you look at it more in a sociopolitical light,
00:41:35
There's this concept of recursivity of law that sociologist Professor Baumgartner had kind of developed, and then sort of socio-legal scholars, Halliday and Caruthers, had kind of adopted in a bankruptcy-specific context, but there's some portability there.
00:41:52
And basically, they're looking at the sort of law on the books versus law in practice, right?
00:41:57
And then how law on the books gets mediated into practice, whether it's through courts or if you're a solicitor, it might be through
00:42:05
how you interpret contract law doctrines and incorporate those into the contracts you draft for your clients.
00:42:12
And the idea here is that there is this implementation step.
00:42:16
The law principle doesn't really necessarily tell us how to get from point A to B.
00:42:22
And so there's a role of professionals or legal actors in sort of mediating that implementation.
00:42:27
And that in turn can then feed back because however it's implemented,
00:42:31
a given contract, but that's the thing that will be challenged if there's a, if a court case right now, the court kind of weighs in on that.
00:42:36
And you look at how interest groups and other actors kind of influence sort of different ends of the implementation loop.
00:42:45
So what does that all mean here?
00:42:48
Basically, once you're sort of set on a certain path and you have something like chronic reproduction of case law precedents or the recursivity of law or vested interest groups,
00:42:59
There's a lot of positive feedback for that path, which makes it very difficult to switch to another path, even if there was unanimity, for example, that other path was better, even if that other path might be objectively better based on some kind of scientific evidence.
00:43:17
And so we see this with, it doesn't mean things never change, but we see how difficult it was to switch course.
00:43:23
So the Canadian New Deal cases, even under the strain of the Great Depression, it didn't really change the Privy Council's mind about where the division of powers fell, even when all the provinces potentially agreed.
00:43:36
Reference Free Securities Act was like another moment where through the courts, a different sort of
00:43:43
they could have overturned themselves.
00:43:44
They could have charted a different course in terms of opening up possibility for a federal securities regulator.
00:43:50
The R.V.
00:43:51
Como case about transporting beer from Quebec to New Brunswick was like another moment when they could have interpreted things differently.
00:44:00
Through cases, there's like a lot of possibility for new ideas to influence judging.
00:44:05
And in some cases, we see that really taken up.
00:44:10
Sometimes not in every case, though.
00:44:14
So pulling that all together, and these are my kind of, I guess, evolving thoughts on kind of theorizing interprovincial trade in light of this framework.
00:44:30
At a high level, I think we have sort of wide provincial jurisdiction, which has been reinforced through court decisions, as well as sometimes provinces and provincial interest groups who have been strong proponents.
00:44:44
We have a decentralization in the federation, which is sort of a path-dependent process in itself.
00:44:50
And in all of this, we have things like mechanics like stare decisis or the recursivity of law reinforcing that path.
00:44:57
I think the federal power over trade and commerce as a result is a little narrower than maybe was first intended.
00:45:06
And certainly the free trade provision also could have potentially been read in a broader light.
00:45:13
And some of this might be related to just this lack of a political champion for interprovincial trade, although I think we're now at a point where we maybe do have such a champion.
00:45:22
But the point here is resetting onto a new path that has eliminated barriers, both tariff and non-tariff, for interprovincial trade, it's possible
00:45:32
but it's difficult.
00:45:34
You need sort of a sea change in the current conditions to open up the possibility for that resetting process.
00:45:43
And so I want to sort of avert to the theories here because it's early days, it's hard to know exactly how this will play out.
00:45:51
But looking at the sociopolitical theories I discussed before and some others, there's a few kind of identifiable ways about how change happens, like how you switch from a path-dependent process to a new track.
00:46:04
One of these ideas is called punctuated equilibrium.
00:46:08
It actually comes from studying evolution, but it's been adopted into a sociological context by Professors Baumgartner and Jones.
00:46:16
And basically it's a moment when you might have a path dependent process or something that's very resilient to change.
00:46:23
But for some reason, the status quo becomes untenable.
00:46:27
So if the status quo is untenable, change is inevitable in that context.
00:46:32
And often this is attributed to like a big exogenous shock of some kind.
00:46:38
But sometimes it's like a lot of little things leading to a tipping point.
00:46:42
So this picture is the Berlin Wall.
00:46:44
The Berlin Wall falling is more of this tipping point process, right?
00:46:47
A lot of little things building.
00:46:50
A big exogenous shock is more like we wake up one morning and the US has fundamentally changed its tariff policy.
00:46:57
That's not a made in Canada problem.
00:47:00
It's hard to really solve that exact problem in Canada, but it might be a moment where we have to adapt.
00:47:07
Another way kind of getting at a similar phenomenon is this critical juncture theory, which has a different set of sociologists and modern institutionalists.
00:47:17
And this basically gets at the idea of a path dependent process can change when there's a big discontinuous change of some kind.
00:47:25
So maybe a big exogenous shock, maybe something kind of crumbles.
00:47:30
And then in that immediate moment after, there's like increased contingency, because you don't really know what the solution or the new state of affairs is going to be just yet.
00:47:39
And there's an opening for change, although you're not necessarily sure what direction it's going to go.
00:47:45
But as a, quote, solution comes to the fore, there'll be kind of a rallying around that solution effect, which tends to then contribute to the path dependence of that new path.
00:47:57
So it's not a question of a path-dependent process ceases to be path-dependent and now is kind of like a nothing or a free agent situation, at least not for very long.
00:48:08
It's more of a path-dependent process being disrupted and then things are reset on a new and different path-dependent process that likely has some of that self-reinforcing characteristics.
00:48:20
And therefore, these moments have really big long-term effects, right?
00:48:24
It might seem like a very small difference now, but you know, a few degrees
00:48:27
can set you off in a really different direction.
00:48:32
Okay, so is 2025 a critical juncture or a punctuated equilibrium?
00:48:38
The historian in me always hesitates to draw conclusions in real time or even just very shortly after things have happened.
00:48:48
However, right now I'm talking about socio-political theories, so I can offer some preliminary thoughts with the caveat that if we wake up tomorrow and there's like a fundamental realigning, all of this might not hold true.
00:49:01
But I do think that this US tariff policy shift and the disruption that's caused for the trading relationship between Canada
00:49:10
in the US is one of these big exogenous shocks or this unsettling.
00:49:17
That means the status quo is no longer going to beat the status quo.
00:49:20
Like change of some kind here is inevitable.
00:49:23
And so this is forcing Canada to adapt, like by diversifying trade away from the US and looking for other ways to increase GDP.
00:49:33
Interestingly, this is as much an issue for the provinces as for the federal government.
00:49:37
And we've seen the big shift in public sentiment as well as political fortunes domestically just in the last several months.
00:49:45
So I think for the moment, there's this idea that there's a common threat that's sort of overtaking some of the interest group politics or the inertia that otherwise might have existed and explain why provinces have kept non-tariff barriers in place over a long time.
00:50:03
I would say there's still a lot of uncertainty about exactly what the path forward will look like.
00:50:08
I think there is an element of we're going to try things and some of them will work and some of them won't.
00:50:15
But whatever solution or solutions end up coming forward, it seems likely there'll be something that comes to the fore that people end up rallying around.
00:50:26
And that will make it, if that continues, progressively harder to change course as months and years go by.
00:50:33
Interestingly, the solution is seemingly more political than legal, and it seems to reinforce this decentralization or strong provincial jurisdiction.
00:50:44
in an effort to sidestep an otherwise narrow view of the federal trade and commerce power and this free trade provision.
00:50:51
So you're seeing bilateral moves between provinces.
00:50:55
The federal government is sort of being this champion for interprovincial trade.
00:50:59
So I wouldn't say we're championless right now, but a lot of what they do is facilitatory because there is so much provincial jurisdiction and it's difficult to kind of regulate federally without legal challenge.
00:51:15
Okay.
00:51:16
Last comments.
00:51:18
Oh, good.
00:51:19
I have enough time.
00:51:20
So high level.
00:51:22
We've talked about a lot of stuff today.
00:51:24
Thank you for coming with me on a journey that began in 1760 and is ending in 2025.
00:51:32
At a high level, what I hope you're going to take away is that U.S.
00:51:35
political developments continue to lead to big shifts in Canada, and that's not in itself a new phenomenon.
00:51:43
and just, have a new lens on this thread of US expansionism, even if that expansionism is more rhetorical.
00:51:51
But I think we've seen how that has led to this surge of patriotism and overcome, at least temporarily, some of the internal agreements that have bogged down progress in the idea of integrating a national economy.
00:52:03
And I hope by looking at some of those theories, I've shed a little light on some of the mechanics or given a bit more of a
00:52:11
mechanical way to think about how all of those pieces fit in.
00:52:17
And despite, I think ironically, as an historian, I'm always struck by despite the intention of this strong central government with jurisdiction over this wide range of economic matters and free trade, we still maintain a pretty decentralized federation.
00:52:32
I think that even though we're having this moment where interprovincial trade might reset onto a new path, I don't
00:52:39
see signs that regionalism or the decentralization that we see in Canada is resetting onto a new path.
00:52:47
I think those things are actually interestingly being reinforced to the political solutions that we're seeing.
00:52:54
And so I think that's unlikely to change, even if we do arrive at a place where we have more economic integration, that's going to be through cooperation rather than
00:53:05
Paramountcy, for example.
00:53:07
So it's interesting to sort of track some of these themes.
00:53:10
They're layered.
00:53:11
And just because one change doesn't necessarily mean another is going to change.
00:53:17
Thank you very much for your time.