Tearing Down Interprovincial Trade Walls: How Close Are We?

The idea of removing trade barriers between Canadian provinces is gaining momentum, especially in light of potential tariffs from the United States. The hope is that by eliminating these barriers, Canada can improve productivity and stimulate its economy.

According to the Business Council of Alberta, it is often easier for Canadian businesses to trade with companies across international borders than it is to operate between provinces. This highlights the need for change within Canada's own economic framework.

The threat of American tariffs has prompted a renewed focus on internal trade. At the end of January, the federal Committee on Internal Trade, led by Minister of Transport and Internal Trade Anita Anand, convened with provincial and territorial leaders to explore strategies for dismantling internal trade barriers. Key initiatives discussed included:

• Establishing mutual recognition of goods and services across provinces, enabling products sold in one province to be available in others without additional hurdles.
• Enhancing labour mobility, allowing registered professionals to work nationwide with minimal delays.
• Improving the Canadian Free Trade Agreement (CFTA) established in 2017 by decreasing exceptions and addressing specific sector needs.

Understanding the Barriers

There are various trade barriers hindering interprovincial commerce, including regulatory issues such as differing licensing requirements. For instance, a nurse or a financial planner must obtain separate licenses to practice in each province. Moreover, there are nearly 600 credentialing bodies regulating different professions throughout Canada, contributing to the complexity.

Inconsistent health and safety regulations also create barriers. A specific example is the requirement for commercial vehicle drivers to undergo a second vehicle inspection when crossing from British Columbia to Alberta.

The Impact of Trade Restrictions

Several products illustrate how trade barriers affect availability and pricing. For instance, alcohol sales are regulated by provincial liquor boards, which makes it challenging for small producers, such as Nova Scotia wineries, to reach markets in other provinces like British Columbia. Similarly, provincial marketing boards control dairy and poultry prices, complicating transactions between provinces.

Other challenges include the obstacles faced by fruit and vegetable producers, who often must adjust their packaging to meet different provincial standards, thereby increasing costs. Additionally, Manitoba beef producers face delays caused by variable inspection protocols when selling into Quebec.

Oddly specific regulations sometimes create unnecessary obstacles: in British Columbia, certain trucks are allowed to operate only at night, while in Alberta, the same trucks can only drive during the day, making cross-border transport difficult.

The Value of Trade Liberalization

The case for reducing barriers extends beyond the threat of tariffs. Protectionist policies can limit competition, leading to higher prices and reduced quality for consumers, as noted in a study by Deloitte Canada. Interprovincial trade accounts for roughly one-fifth of Canada's gross domestic product (GDP), and removing barriers could increase the GDP per capita by about four percent, according to estimates by the International Monetary Fund.

Furthermore, a recent report from the Intergovernmental Secretariat indicates that eliminating trade barriers could contribute an additional $200 billion to the Canadian economy.

Why Change Is Slow

Provincial governments are often reluctant to modify these systems due to local political pressures. While the CFTA outlines frameworks for reducing barriers and enhancing trade, many exceptions remain, and implementation has been inconsistent.

Nevertheless, progress is being made through initiatives like the Regulatory Reconciliation and Cooperation Table, which has endorsed numerous Reconciliation Agreements to streamline regulations across provinces.

To further enhance transparency, the Canadian Internal Trade Data and Information Hub was launched, centralizing information on internal trade and labour mobility. This facilitates better understanding and communication among provinces!

Provincial Initiatives

Some provinces are already making strides independently. The New West Partnership Trade Agreement, which commenced in 2010 among British Columbia, Alberta, and Saskatchewan, later included Manitoba. This agreement has allowed for better standardization and access to energy markets. Meanwhile, Ontario and Quebec established a Trade and Cooperation Agreement focusing on key areas like financial services and labour mobility.

Future Steps

Moving forward, the Canadian Chamber of Commerce emphasizes the necessity for collaboration between provincial and territorial governments, advocating for the mutual recognition of regulations that would enable smoother transit of goods, services, and labor without excessive restrictions.

To motivate provincial reforms, the federal government is encouraged to use conditional funding and set timelines for progression. A cohesive internal market not only shields Canada from external financial challenges but fulfills the original vision of Confederation — a united and prosperous nation.

As unifying sentiment echoes a historical plea, it's time to dismantle these economic walls for a stronger Canada.

Trade, Economy, Barriers