Section 91(2) of the Constitution Act, 1867

The Court has also considered the effect of provincial law on the trade and commerce power. In Carnation Co. v. Quebec Agricultural Marketing Board, Martland J. held that provincial regulations that had an incidental effect on extraprovincial trade were valid:

The view of the four judges in the Ontario Reference was that the fact that a transaction took place wholly within a province did not necessarily mean that it was thereby subject solely to provincial control. The regulation of some such transactions relating to products destined for interprovincial trade could constitute a regulation of interprovincial trade and be beyond provincial control.

While I agree with the view of the four judges in the Ontario Reference that a trade transaction, completed in a province, is not necessarily, by that fact alone, subject only to provincial control, I also hold the view that the fact that such a transaction incidentally has some effect upon a company engaged in interprovincial trade does not necessarily prevent its being subject to such control.

I agree with the view of Abbott J., in the Ontario Reference, that each transaction and each regulation must be examined in relation to its own facts. In the present case, the orders under question were not, in my opinion, directed at the regulation of interprovincial trade. They did not purport directly to control or to restrict such trade. There was no evidence that, in fact, they did control or restrict it. The most that can be said of them is that they had some effect upon the cost of doing business in Quebec of a company engaged in interprovincial trade, and that, by itself, is not sufficient to make them invalid.

However, as held in Attorney-General for Manitoba v. Manitoba Egg and Poultry Association et al., if the provincial scheme limits the free flow of trade between provinces than it will be struck down.[2] As noted by Laskin J. (as he then was) in the latter case:

There may be a variety of reasons which impel a province to enact regulatory legislation for the marketing of various products. For example, it may wish to secure the health of the inhabitants by establishing quality standards; it may wish to protect consumers against exorbitant prices; it may wish to equalize the bargaining or competitive position of producers or distributors or retailers, or all three classes; it may wish to ensure an adequate supply of certain products. These objects may not all nor always be realizable through legislation which fastens on the regulated product as being within the province. That is no longer, if it ever was, the test of validity. Just as the province may not, as a general rule, prohibit an owner of goods from sending them outside the province, so it may not be able to subject goods to a regulatory scheme upon their entry into the province. This is not to say that goods that have come into a province may not, thereafter, be subject to the same controls in, for example, retail distribution to consumers as apply to similar goods produced in the province.

Assuming such controls to be open to a province, the scheme before this court is not so limited. It embraces products which are in the current of interprovincial trade and, as noted at the beginning of these reasons, it embraces them in whatever degree they seek to enter the provincial market. It begs the question to say that out-of-province producers who come in voluntarily (certainly they cannot be compelled by Manitoba) must not expect to be treated differently from local producers. I do not reach the question of discriminatory standards applied to out-of-province producers or distributors (that is, the question of a possibly illegal administration of the scheme as bearing on its validity) because I am of opinion that the scheme is on its face an invasion of federal power in relation to s. 91 (2).

There are several grounds upon which I base this conclusion. The proposed scheme has as a direct object the regulation of the importation of eggs, and it is not saved by the fact that the local market is under the same regime. Anglin J. said in Gold Seal Ltd. v. Dominion Express Co.[3] that “it is common ground that the prohibition of importation is beyond the legislative jurisdiction of the province”. Conversely, the general limitation upon provincial authority to exercise of its powers within or in the province precludes it from intercepting either goods moving into the province or goods moving out, subject to possible exceptions, as in the case of danger to life or health. Again, the Manitoba scheme cannot be considered in isolation from similar schemes in other provinces; and to permit each province to seek its own advantage, so to speak, through a figurative sealing of its borders to entry of goods from others would be to deny one of the objects of Confederation, evidenced by the catalogue of federal powers and by s. 121, namely, to form an economic unit of the whole of Canada: see the Lawson[4] case. The existence of egg marketing schemes in more than one province, with objectives similar to the proposed Manitoba scheme, makes it clear that interprovincial trade in eggs is being struck at by the provincial barriers to their movement into various provincial markets. If it be thought necessary or desirable to arrest such movement at any provincial border then the aid of the Parliament of Canada must be sought, as was done through Part V of the Canada Temperance Act,[5] in respect of provincial regulation of the sale of intoxicating liquor.

A significant decision with impact on Canadian federalism was made in 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 extraprovincial trade as it included even egg producers who did not export their products. In endorsing the federal-provincial scheme that had been established, Pigeon J. stated:

We are not called upon to decide in the present case whether the federal Parliament could assume control over egg farms devoted exclusively to the production of eggs for extraprovincial trade. Under the present circumstances such farms are, like any other farms, local undertakings subject to provincial authority, irrespective of the destination of their output. I can see no reason why such legislative authority would not extend to the control of production as to quantity just as it extends undoubtedly to the price to be paid for raw materials.

This does not mean that such power is unlimited, a province cannot control extraprovincial trade, as was held in the Manitoba Egg Reference and in the Burns Foods[6] case. However, “Marketing” does not include production and, therefore, provincial control of production is prima facie valid. In the instant case, the provincial regulation is not aimed at controlling the extraprovincial trade. In so far as it affects this trade, it is only complementary to the regulations established under federal authority. In my view this is perfectly legitimate, otherwise it would mean that our Constitution makes it impossible by federal-provincial cooperative action to arrive at any practical scheme for the orderly and efficient production and marketing of a commodity which all governments concerned agree requires regulation in both intraprovincial and extraprovincial trade. As early as 1912, it was asserted by the Privy Council that “whatever belongs to self-government in Canada belongs either to the Dominion or to the provinces”.[7] I do not overlook the admonition in the Natural Products Marketing Act case,[8] that the legislation has to be carefully framed but, when after 40 years a sincere cooperative effort has been accomplished, it would really be unfortunate if this was all brought to nought. While I adhere to the view that provinces may not make use of their control over local undertakings to affect extraprovincial marketing, this does not, in my view, prevent the use of provincial control to complement federal regulation of extraprovincial trade.

In so far as the producer quotas are to be viewed as marketing quotas rather than as production quotas, it seems to me that their validity is established by the principle of the Willis[9] case. Those quotas are fixed by the provincial board so the total will equal what the plan, established under the federal Act, provides for Ontario in respect of extraprovincial trade in addition to what comes under intraprovincial trade. The Board is properly empowered by provincial authority to regulate the intraprovincial trade and it has delegated authority from the federal in respect of the extraprovincial trade. I fail to see what objection there can be to overall quotas established by a board thus vested with dual authority, unless it is said that our constitution precludes any businesslike marketing of products in both local and extraprovincial trade except under a federal assumption of power, something which I think, is directly contrary to the basic principle of the B.N.A. Act.

There has been discussion as to whether Canadian jurisprudence ought to adopt an approach similar to the dormant commerce clause doctrine in the United States, in order to better address conflicts between the federal and provincial jurisdictions.[10]

In General Motors of Canada Ltd. v. City National Leasing, Dickson C.J. listed five indicia of competence for the Parliament of Canada to legislate:

• the impugned legislation must be part of a regulatory scheme;
• the scheme must be monitored by the continuing oversight of a regulatory agency;
• the legislation must be concerned with trade as a whole rather than with a particular industry;
• the legislation should be of a nature that provinces jointly or severally would be constitutionally incapable of enacting; and
• the failure to include one or more provinces or localities in a legislative scheme would jeopardize the successful operation of the scheme in other parts of the country.

The regulation of general trade must be broad and sweeping, and cannot single out a particular trade or industry. In Labatt Breweries v. Canada, Estey J. 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.

Such post-General Motors analysis is still considered to be vague and problematical in many respects, as it does not lend itself easily to either categorical or balancing styles of analysis.[11]

How a matter becomes one of national concern is governed by the principles stated by Le Dain J. in R. v. Crown Zellerbach Canada Ltd.:

The national concern doctrine is separate and distinct from the national emergency doctrine of the peace, order and good government power, which is chiefly distinguishable by the fact that it provides a constitutional basis for what is necessarily legislation of a temporary nature;

The national concern doctrine applies to both new matters which did not exist at Confederation and to matters which, although originally matters of a local or private nature in a province, have since, in the absence of national emergency, become matters of national concern;

For a matter to qualify as a matter of national concern in either sense it must have a singleness, distinctiveness and indivisibility that clearly distinguishes it from matters of provincial concern and a scale of impact on provincial jurisdiction that is reconcilable with the fundamental distribution of legislative power under the Constitution;

In determining whether a matter has attained the required degree of singleness, distinctiveness and indivisibility that clearly distinguishes it from matters of provincial concern it is relevant to consider what would be the effect on extra‑provincial interests of a provincial failure to deal effectively with the control or regulation of the intra‑provincial aspects of the matter.

The general trade branch was also considered in 2011 in Reference re Securities Act, where the Court was asked to give its opinion on the Federal Government's proposal to federalize the regulation of the securities industry in Canada. In dismissing the attempt as being unconstitutional as currently drafted, the Court noted:

[122]... Canada’s problem is that the proposed Act reflects an attempt that goes well beyond these matters of undoubted national interest and concern and reaches down into the detailed regulation of all aspects of securities. In this respect, the proposed Act is unlike federal competition legislation, which has been held to fall under s. 91(2) of the Constitution Act, 1867. It would regulate all aspects of contracts for securities within the provinces, including all aspects of public protection and professional competence within the provinces. Competition law, by contrast, regulates only anti-competitive contracts and conduct — a particular aspect of economic activity that falls squarely within the federal domain. In short, the proposed federal Act overreaches the legislative interest of the federal government.