This paper has long called on Canadian provinces to eliminate interprovincial barriers to trade. Since the election of Donald Trump and his fixation on imposing tariffs on the United States’ largest trading partners—including the threat of a whopping 25 percent on imported Canadian goods and services—the need to eliminate those barriers has never been greater.
To those who are not in the economic loop, interprovincial trade barriers are restrictions that prevent the free movement of goods and services between Canadian provinces and territories. These barriers can include sector-specific regulations, as different provinces and territories have different regulations for things like vehicle weight and dimensions, or regulatory and administrative barriers such as businesses needing to obtain permits if they have operations in multiple provinces—including licenses and other paperwork.
When it comes to doing business in Canada, one size does not fit all.
The Canadian Federation of Independent Business (CFIB) asserts that it is “easier to do business in the US than in another part of Canada.” The business organization goes on to claim that bringing down inter-provincial trade barriers could result in immense benefits to Canadian consumers. One study estimates that the existence of such barriers has resulted in the price of consumer goods and services in Canada being higher on average by eight to 15 percent than they would be in the absence of those barriers.
The study argues that if interprovincial trade barriers were removed, there would be an improvement in Canadian productivity of between three and seven percent—that’s no small change to a country with a notoriously poor productivity level, but that number is also in the lower end of some estimates.
In terms of the impact on the economy, removing those barriers could result in $50-$130 billion dollars in increased economic prosperity in this nation—in terms of how that could impact the weekly paycheque, they suggest the figure would be about $200 billion, or $5,100 per person. Some estimates go even further, suggesting that removing interprovincial barriers could add $50–$130 billion to Canada’s GDP, or more than $7,500 per household per year.
The Canadian government has taken some steps to reduce trade barriers, including the removal or narrowing of 17 federal exceptions as well as launching the Canadian Internal Trade Data and Information Hub, an online stakeholder portal for sharing insights on trade barriers—but the spectre of interprovincial trade barriers continues to bedevil our economy.
Alcohol, one of Premier Doug Ford’s favourite policy targets is a case in point. Alcohol prices vary dramatically across Canada due to differences in regulations, that’s the infamous “red tape” that our premier likes to boast about removing.
We suspect most wine producers in this province could go head-to-head with much of the world’s product, let alone those of our Western neighbours in BC’s Okanagan vineyards.
When the Fathers of Confederation sat down to hammer out the terms of the British North America Act, the precursor to the Canadian Constitution, they envisioned the four founding provinces would enjoy unfettered passage of goods and services. Ensuing populist measures in each province soon put paid to that ideal as each generation added their own protectionist measures.
Our western neighbours have instituted the New West Partnership Trade Agreement 14 years ago, with BC, Alberta and Saskatchewan; Manitoba was added in 2017. Ontario and Quebec can boast of their Trade and Cooporation Agreement, signed the year before in 2009 that focussed on financial services, public procurement and labour mobility.
But those efforts fall far short of what is needed in these days of labouring in the shadow of The Donald and his oligarchs.
Our nation sends one third of our international trade to the US—recession will be inevitable if the incoming POTUS follows through on his “beautiful” 25 percent tariff threat. The message should be clear, we need to hunker down and get busy in our own shop—especially in the realms of sectors such as auto, energy (80 percent of our oil is shipped to the states where they refine it and sell it on at a premium) and agriculture.
Scott Crockatt, vice president of the Business Council of Alberta, has been quoted as saying that thousands of jobs will be in jeopardy. He predicts up to 150,000 Canadian families could be out of work just from the 25 percent tariff impact (small wonder Alberta Premier Danielle Smith recently travelled to visit The Donald at his Mar-a-Lago lair). Oddly, Americans are facing perhaps an even larger number of job losses should he follow through.
When it comes to our politicians’ efforts to get the toothpaste back in the tube, it’s been all hands on deck—including opposition leaders and a host of provincial premiers, but truth is we are likely to have little influence on someone who sees a trade imbalance (largely due to oil and energy imports into the US) as a “subsidy” to our economy—piercing his reality bubble will likely prove beyond any of them.
So that leads us to the conclusion that we need to take a two-pronged approach within our own bailiwick. First and foremost, deal with interprovincial trade barriers and second, get serious on diversifying markets for our goods and services.
The bright spot in all of this is that, with the inevitability of targeted economies hitting back on the US with their own countervailing tariffs, the world may well be our oyster in that department.
Let’s roll up our sleeves and get to work.
