Talk of tearing down interprovincial trade barriers was once relegated to the halls of economic think tanks across this country, but U.S. tariffs have pushed the issue into the limelight during this federal election campaign.
Some estimates suggest overhauling the system could counter the effects of the threats from the neighbours to the south, and give a massive boost to the economy, but some say the benefits are greatly exaggerated by politicians.
“It is not to say there are zero issues, it’s to say they are fairly small,” says Marc Lee, senior economist with the Canadian Centre of Policy Alternatives (CCPA).
“I think politicians need to greatly lower their expectations about what is possible from this, and my sense is they already know this, that this is largely a lot of political theatre.”
‘We can’t cross borders’
A pork producer from the Ottawa region, Bruce Hudson of Panmure Farms, told CTV News that while he currently sends 80 per cent of his pigs to the U.S. each year, American tariffs would make business with the U.S. unsustainable in the long run. But he also added that turning to neighbouring provinces is not an option.
When it comes to going next door to Quebec, “We can’t cross borders,” said Hudson. “You have to be a federally inspected plant before you can cross borders.”
The movement of goods and workers across Canada is regulated by fourteen different jurisdictions, including Ottawa.
“Aside from geography or infrastructure, a lot of barriers being spoken about arise from regulatory differences that exist between provinces,” says Daniel Teeter of Queen’s University, who studies interprovincial trade.
Rules on the movement of alcohol across provincial barriers have made headlines over the years. Distilleries and vineyards can’t ship their products directly to customers but instead must sell their alcohol to liquor boards.
Experts say there has been a lot of progress in the free flow of goods and services over decades, and that some exemptions to the Canada Free Trade Agreement enacted on July 1, 2017, could easily be removed. Those include local content requirements that compels wineries in Ontario, for instance, to use at least 25 per cent of Ontario grape content in their product.
But those would lead to relatively small economic benefits for Canada. Teeter says the issue of recognition of credentials and professional certification that has been a barrier to the movement of some workers, like nurses or engineers, would provide a far greater economic advantage.
Offsetting the effects of tariffs
Liberal leader Marc Carney has said removing trade barriers would offset the effects of U.S. tariffs.
“Removing barriers to the free movement of workers and services could add 250 billion dollars to the economy,” he said last month.
That number has come under scrutiny, with some accusing politicians citing economic studies on the topic of cherry-picking data.
“The idea that this is going to translate into 250 billion dollars of economic growth is politicians grossly exaggerating,” says Lee.
Some provincial governments have announced they have taken steps on issues like alcohol sales and on cutting red tape for recognition of workers’ credentials so nurses and engineers can move across the country more freely.
But not all barriers would be knocked down, For instance, Quebec’s French language protections and some issues of specific regional concerns are harder to address.
“British Columbia has different trucking regulations than Saskatchewan because we have mountains, we have huge climbs and descents, not valleys,” says Lee. He adds that Canada is already a free trade zone, an economic union, but that in areas where exemptions exist, federal regulations could be brought in and uphold high standards across the country.
“That approach of upwards harmonization could make sure we have environmental protection, consumer protections and health and safety for workers across the country,” says Lee.
Other experts agree more studies are needed to pinpoint the exact benefits, but that many businesses welcome tearing down more sections of interprovincial barriers.
“All these are quite burdensome for small and medium enterprises,” says Teeter.
