It’s time we bring free trade home to the provinces

Canadians can be forgiven for scratching their heads in disbelief when they hear about provinces setting up trade barriers to prevent their fellow citizens from purchasing products or transporting those products across provincial boundaries.

The Agreement on Internal Trade (AIT), between all Canadian jurisdictions, that came into effect in 1995 was specifically aimed at reducing and eliminating barriers to free movement of persons, goods, services, and investment within Canada. That didn’t work out as planned and a lot of trade barriers remained firmly entrenched on the Canadian economic landscape.

Quebec placed barriers on labour coming from Ontario to work in that province to the outrage of labourers, skilled and otherwise, in Canada’s largest province.

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The situation created a great deal of frustration—particularly out west where they decided to take matters into their own hands. So, Alberta and British Columbia signed the Trade, Investment, and Labour Mobility Agreement (TILMA) in 2006 with the avowed goal of creating a seamless economic region between the two provinces by eliminating many of the existing interprovincial barriers.

Yes, that’s right. The two provinces currently engaging in the first salvoes of a trade war set up their own little free trade zone, but at the first sign of trouble, out the window it goes and there will be no tippling of Okanagan’s finest by the wine lovers of Alberta until British Columbia stops throwing roadblocks up to Alberta’s crude. Crude, yes, but nothing new in the Canadian experience. Even the TILMA has its many exceptions, including regulated marketing and supply management of poultry, dairy and eggs—easy hurdles to overcome.

So the federal government and the provinces rolled up their shirt sleeves and negotiated the Canadian Free Trade Agreement (CFTA), trumpeted with great fanfare last April. It was a new deal touted to co-ordinate trade across interprovincial borders and replace limited rules put in place two decades ago that were no longer up to the job. It created a formal and binding process for cutting the myriad of trade barriers that currently exist; catching up to what provinces and territories offered Europeans in the Canada-EU trade deal, opening up, not just the same access to government contracts, but better access and it improved the dispute resolution system currently in place between jurisdictions as well, making it faster and simpler to start and doubling potential fines payable if jurisdictions can’t justify regulations.

But there is a catch. Any government that doesn’t like the national compromise that’s reached can opt out—so inconsistencies will persist, particularly where local interests are strong enough that political expediency trumps national interests.

That’s what’s allowing Alberta to boycott BC wine just now. This example is ample demonstration that Canada and its provinces must do better because interprovincial trade barriers are simply a ridiculous albatross on our national prosperity by both hampering our own competitiveness and in how they complicate the lives of our negotiating teams who are trying to build better trade relations in global markets.

Students of Canadian constitutional law can recall the absurd situation that existed in this country regarding the regulation of trade in the nation’s early years. At one point in time, while the Judicial Committee of the Privy Council in Britain served as our highest court, provinces could not regulate any product, part of which was for export and the federal government could not regulate any product, part of which was for internal consumption. As a trading nation, that pretty much left the Canadian economy a wide open free-for-all, because there were few products that did not fall into both categories—even more so today. This was a great boon for the major merchants of the day, primarily British, of course. Thankfully, that nonsense was dealt with. But as a federation of provinces, we still had a plethora of parochial mindsets to deal with. ‘Cleavages’ in the jargon of political scientists.

So we come to the present day, where trade barriers continue to bedevil us and the us vs. them mentality is still far too ascendant in our polity and economy.

It’s not that we can’t find solutions that could work as there are plenty to be found on the global stage. Canada is not the only federal system that has had to face these issues. Australia springs quickly to mind, where in 1993 an agreement was put in place that allowed for the free movement of goods and services between that country’s provinces (territories) as long as those products met the standards of one province. Simply put, if you can sell it in one territory, you can sell it in another.

Before alarm bells ring out too loudly, let us consider that most Canadian provinces have very similar requirements and regulations to protect the health and welfare of their citizens.

Interprovincial trade must be fully removed from the arsenal of politicians seeking favour with the electorate in their individual provinces if we are to fully meet our potential as a G7 economic powerhouse. It is in all of our interests.

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