As international trade barriers continue to be removed, it’s odd that trade barriers should exist between Canadian provinces. Premier Christy Clark and the premiers of Alberta and Saskatchewan are on the right track in urging other premiers to co-operate in dismantling trade barriers within Canada.
In 1994, Canada’s premiers signed the Agreement on Internal Trade that was supposed to liberalize interprovincial trade and prevent new barriers. It isn’t working — provinces continue to enact regulations that protect local commerce, industry and jobs from competition with out-of-province Canadians. Federal Industry Minister James Moore wants to revive talks with the provinces to create a true free-trade zone within Canada. The western premiers support that initiative.
Shielding local businesses and industry from outside competition is shortsighted. It tends to stifle growth and innovation, while competition can sharpen skills and increase efficiency.
The internal barriers are harmful to the whole country, says Perrin Beatty, former Conservative cabinet minister and now president of the Canadian Chamber of Commerce.
“Businesses are operating today in an intensely competitive global economy,” Beatty said in a 2013 Globe and Mail interview. “It is important for them to have a market at home in which they can build their scale. We are a comparatively small economy to begin with, and if we balkanize our economy and turn it into 13 regional ones, then it is much more difficult for Canadian companies to get the scale that they need to be able to be globally competitive.
“Also, from the perspective of Canadian consumers and customers of businesses, it limits choice and drives up costs.”
The barriers are likely invisible to most Canadians, but cross-country truck drivers become keenly aware of them as they encounter layers of regulation as they move from one jurisdiction to another.
Owners of B.C. wineries are aware of the barriers. While B.C. allows consumers to order and have shipped directly wine from other provinces for personal consumption, other provinces do not reciprocate. B.C.’s wines are earning a favourable reception abroad, but it’s difficult to sell the wine elsewhere in Canada.
There are no tariffs or duties on goods travelling between provinces, but many barriers still exist that make it difficult for companies to ship products or services across Canada.
Provinces need to co-operate to form standard rules on such things as truck weights and dimensions. Current restrictions hamper the ability of transport companies to operate in multiple jurisdictions. Standards on regulations concerning industrial equipment vary from province to province.
Some attempts have been made to remove barriers to labour mobility, but tradespeople and professionals still have to be licensed, registered or certified in their new province when they move.
Local and provincial governments still give preferential treatment to regional suppliers on some government contracts. This stifles competition and does not ensure the best prices and services to taxpayers.
National regulation of securities has been debated for decades, but Canada still has 13 securities regulators.
Provincial governments, often through Crown corporations, are liquor monopolies, restricting the listing of out-of-province products. Federal legislation to allow cross-border wine transport has not yet been fully implemented.
Producers of poultry, eggs and dairy products are protected by supply-management rules and marketing boards that limit the movement of these products from province to province.
Moore says these restrictions are costing Canada tens of billions of dollars a year in lost business and jobs. The Organization for Economic Co-operation and Development says internal restrictions are a key factor in low productivity and performance among Canadian businesses.
In this era of global trade, it is inconceivable that trade is restricted in Canada. Provinces need to change their protectionist ways.
