Feds, most provinces get top marks on internal trade — but more work to be done

Prime Minister Mark Carney speaks at a meeting with premiers in Ottawa on Thursday, Jan. 29, 2026. THE CANADIAN PRESS/Justin Tang

OTTAWA — The federal government has gone from a C student to top of the class in its work to advance internal trade between provinces, says the Canadian Federation of Independent Business.

In the federation’s latest annual report card on internal trade, the federal government jumped to an A-plus from the C grade it got in 2025.

The report card released Wednesday by the advocacy group for small businesses said Canada has made unprecedented progress toward breaking down internal trade barriers long considered a self-imposed drag on the domestic economy.

The International Monetary Fund estimates that removing internal trade barriers could boost Canada’s real gross domestic product by $210 billion over the long term.

Most other provinces and territories also received an A or A-, with the exception of Nunavut, which received a C-. Newfoundland and Labrador wasn’t assigned a grade, owing to the recent change in government after the 2025 provincial election.

“Governments across the country really have made more progress on internal trade in the last two years than we’ve seen in over a decade,” said Keyli Loeppky, the Canadian Federation of Independent Business’s senior director of Alberta and interprovincial affairs.

But despite the recent progress, members of the small business federation report they’re seeing little on-the-ground change in terms of their ability to sell across provincial or territorial lines.

Ottawa’s progress on the file is owed in large part to the leadership it deployed in getting the provinces and territories to the table and making removing internal trade barriers a political priority, Loeppky said.

One of the early landmark pieces of legislation under Prime Minister Mark Carney’s government, the One Canadian Economy Act, eliminated a series of redundant federal regulations holding up trade across provincial borders when it became law on June 26, 2025.

The federal government also removed all of its exceptions to the 2017 Canada Free Trade Agreement, which largely irons out wrinkles in procurement processes.

Ontario led the way in removing its own barriers under the agreement, but progress was mixed in other provinces. Quebec added new internal trade exemptions under the pact, the CFIB report noted.

The main reason for the better grades in this year’s report card is the fact that the governments agreed to adopt mutual recognition policies — which allow goods sold in one province to be sold in another without needing to go through additional applications or approvals.

The Canada Mutual Recognition Agreement was signed by all provinces in November 2025 and was expected to be implemented by June.

Loeppky said not all provinces have put the mutual recognition agreement in place yet, but she noted the report card didn’t take full implementation into account.

“When we first developed the report card methodology five years ago, we were falling on completely deaf ears when it came to reducing internal trade barriers,” she said. “The bar was low.”

The methodology of the 2027 edition of the report will get a “complete overhaul” to push for more progress on outstanding internal trade issues, she said.

The federation says it wants to see the mutual recognition pact expanded to cover services and labour.

And while many provinces have applied the mutual recognition agreement to the sale of goods, it doesn’t necessarily apply to their use. A chainsaw manufactured in Alberta could be sold in British Columbia but might not be eligible for use on a B.C. work site, for example.

There are also long-standing obstacles to direct-to-consumer sales of alcohol and food from one province to another.

Despite public commitments to facilitate wider sales of alcohol, only Manitoba and New Brunswick have so far fully opened up the sale of booze across the country, says the federation.

While Loeppky praised the federal government’s leadership on the internal trade file to date, she said she’d like to see penalties put on the table for provinces and territories that are not living up to their word on dropping trade barriers.

“We’ve come a long way but there’s lots to be done,” Loeppky said.

“So if governments are not moving quickly over the next year to implement some of these pieces that they’ve talked about, we will see the grades drop.”

Some 62 per cent of businesses told the CFIB in a recent survey that they’ve looked to other domestic markets or suppliers to offset the loss of markets from U.S. tariffs and a shifting geopolitical landscape.

Despite some early wins in the elimination of interprovincial trade barriers, most of the small- and medium-sized businesses surveyed said they’ve seen little change in on-the-ground realities. Some 17 per cent said it has actually become harder to trade goods across the country.

“Progress on paper is not the same as progress in practice. So while we’ve had a lot of news conferences and a lot a shaking of hands and signing of agreements, it’s really the implementation that’s going to make the difference,” Loeppky said.

More than a quarter of those surveyed said getting rid of internal trade obstacles could help them offer more competitive pricing, and a similar share said their customers could expect a to see richer selection of goods on offer.

CFIB’s internal trade survey data are based on responses from more than 1,000 member businesses polled between March and May of this year.

The Canadian Research Insights Council, an industry organization that promotes polling standards, says online surveys cannot be assigned a margin of error because they do not randomly sample the population.

Craig Lord, The Canadian Press