The political economy of Canadian constitution-making: the Canadian economic-union issue

The central thrust of this paper is that the Canadian economic-union issue played a criticial background role in the process of redesigning the Canadian constitution. This is not to claim that it necessarily featured prominently in the series of late-night deliberations that led to the nine provinces and Ottawa coming to the November 5, 1981, Accord on the Constitution. However, even here, last-minute concessions by Ottawa on the mobility rights probably facilitated the eventual compromise. Despite the fact that the Constitution Act, 1982, may in some respects represent a backward step in terms of securing an internal common market, the issue is far from dead. The Senate of Canada recently tabled a bill that would prohibit a provincial government or any of its agencies from acquiring more than 10% control in any company involved in interprovincial transportation. The specific rationale for the bill was to prevent the Quebec pension fund from acquiring a sizable share position in Canadian Pacific. The underlying rationale was to prevent federal jurisdiction over transportation from being undermined by provincial ownership, ownership that would presumably be used to divert companies' activities in a direction that served the special interests of the province. Over the longer horizon another set of forces will come into play. Specifically, the new Canadian Charter of Rights and Freedoms may well transform the nature of the parliamentary system. The British tradition of the supremacy of Parliament no longer holds with respect to these fundamental rights: there are certain areas where no legislature may infringe on the rights and freedoms of Canadians. In this sense the Charter may play the role of “republicanizing” the Canadian polity and correspondingly erode the set of customs and traditions associated with the parliamentary system. If this is indeed the case, then these same citizens may quickly come to realize that both levels of government are abridging their “economic rights.” Hence, the pressures for a more integrated economic market will likely intensify. Moreover, these pressures are apt to be directed against all levels of government so that any lessening of internal barriers will be binding not only at the provincial level. Already there is a broadly-based move afoot to amend the Constitution in order to reinsert the right to hold and acquire property as part of the mobility-rights provision. Now that the constitution provides for an amending formula requiring a measure of provincial consent and also provides an “opting out” provision, achieving an amendment to secure the Canadian economic union will be difficult, and even if it is successful its application may not be uniform. This is in sharp contrast to the situation in 1980. Finally, there may well be a sleeper or two in the Canadian Charter of Rights and Freedoms that will have implications for securing the Canadian economic union. For example, the equality-rights section of the Charter (“Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination...”) may be construed in a way that would limit such powers as the ability of the federal government to discriminate regionally with respect to personal income taxation. In the immediate future, the Canadian economic-union issue will occupy center stage in terms of the deliberations of the Royal Commission on the Economic Union and Development Prospects for Canada. In the words of Prime Minister Trudeau, the terms of reference “are perhaps the most important and far-reaching that have ever been assigned to any commission in our history” (Trudeau, 1982). In addition to mounting a massive research effort, the Commission will be undertaking public hearings across the country. Running throughout its terms of reference is the theme of adjusting existing institutional and governmental arrangements to meet the challenges of the future and at the same time preserving the integrity of the Canadian economic union, e.g., qu]The study includes an examination of and a report on ...the integrity of the Canadian economic union as it relates to the unity of Canada and the ability of all Canadians to participate in increased economic prosperity. (Government of Canada, 1982) In a very real sense, therefore, the Constitution Act, 1982, represents only the beginning of what promises to be an intense national dialogue on the Canadian economic union—a dialogue which has the potential for redefining what it means, in economic terms, to be a Canadian and for fundamentally altering the nature of the Canadian federation. At the more general level, considerable interest attends the Canadian experience since major reworkings of federal constitutions are rare in peacetime. Are there any lessons of a comparative nature to be learned from the Canadian experience? At one level the answer is probably no. Few if any federations now find themselves in a position where their constitution is an act of a foreign Parliament. Moreover, the election of the Parti Quebecois and the subsequent referendum on “sovereignty-association” are arguably the political equivalents of civil war. Interestingly enough, the federal government has clearly recognized the uniqueness of the situation. The ink was barely dry on the new constitution when Ottawa established the Royal Commission. As of the summer of 1983, several thousand persons and organizations have asked to submit briefs to the Commission. By scheduling hearings across the country, the Commission is attempting to plant its roots firmly in all segments of the population. In other words, it is acting very much like a “constituent assembly.” Even though the Commission is a creature of the federal government, the provinces will inevitably be drawn into its orbit. The effort may ultimately founder. But it seems to me that the Commission is operating in an environment in which people, while possibly not receptive to further changes, are at least fully aware of the issues at stake and are more than willing to contribute to the process. Like the internal common-market issue, this initiative, too, is a brilliant maneuver by the federal government. The “strike-the-iron-while-it's-hot” nature of this exercise may carry an important message for constitutional reformers in other federations. Copyright Martinus Nijhoff Publishers 1984