By R. Bruce Striegler

Erin McGrath-Gaudet, Canadian Federation of Independent Business (CFIB) Director of Provincial Affairs for Prince Edward Island, says the largest issue to resolve on interprovincial trade is to modernize the Agreement on Internal Trade. “That is the big piece and that’s up to the Premiers and their trade ministers to get around a table and negotiate a modern agreement on internal trade.” Two decades after Ottawa and the provinces signed the Agreement on Internal Trade (AIT) to reduce interprovincial trade barriers, Canada remains a country of sometimes impenetrable economic walls. At their meeting in June, the premiers committed to a new internal trade regime by March 2016, advancing the agenda for revising the Agreement on Internal Trade, which has governed interprovincial trade since 1995.

As provincial premiers and their trade ministers met in Toronto, CFIB released a report showing that 87 per cent of Canadian small business owners say the premiers must reduce trade barriers between provinces. Representing more than 109,000 small business owners across Canada, CFIB has acted for these businesses at all three levels of government to attain tax fairness, reasonable labour laws and a reduction of regulatory burdens. Among the issues raised at the June meeting were labour mobility, transportation shipping standards and costs, provincial liquor laws which block wine and beer from other provinces as well as establishing a trade dispute mechanism.

Ms. McGrath-Gaudet says that a new agreement would include the concept of negative listing, the idea that everything is covered unless it has been excluded.” She says this would change the dynamic. “So rather than provinces debating and negotiating every single item for inclusion, they should just focus on what is important to exclude.” A second part of these changes would involve something called ‘mutual recognition’. McGrath-Gaudet explains that this is an idea that is similar to negative listing, “But rather than sit around a table to harmonize every single rule every province has, a very bureaucratic and lengthy process, this simply says that if a regulation is good enough for Nova Scotia, it’s good enough for Quebec, Saskatchewan or any other province.”

Interprovincial trade barriers cost billions

Examples of effective regional trade agreements do exist, such as the New West Partnership agreement between British Columbia, Alberta and Saskatchewan. CFIB’s report notes that while these regional agreements have expanded beyond the scope of the AIT, a comprehensive national approach is long overdue. As an example, Ms McGrath-Gaudet cites first aid kits. “Every province has its own unique regulations on what has to go into a first aid kit that a business must have. Rather than negotiate the details and debate the merits of one item over another, it makes sense to simply acknowledge that if the first aid kit used in Ontario is adequate there, it will be equally acceptable in say, Manitoba.”

The list of barriers is a long one, and includes provincial electrical utilities (usually monopolies) which block customers from buying power at the best available rates. The result is to discourage the most efficient use of the country’s energy resources. It is a similar story in the liquor business, where provinces obstruct interprovincial trade through powerful and highly lucrative distribution monopolies. It also doesn’t help that the federal government oversees a system (supply management) that allocates strict provincial production quotas in the dairy, poultry and egg sectors, both on farms and in the processing industry. The result is smaller and less-efficient farms, significant barriers to the free movement of goods and disincentives to invest in new processing capacity. In financial services, both Quebec and Alberta continue to block federal efforts to create a single national securities regulator.

Quoted in reports at the time of the June provincial ministers meeting, Glen Hodgson, Chief Economist at the Conference Board of Canada said, “Beer, wine and gasoline are chief among the products that have trouble passing through provincial borders.” Gasoline blend requirements are different for each province,” Hodgson said, meaning refiners can’t produce single batches that can be shipped across the country. “This is all about regulation and a lack of a common standard across the country. Why would Manitoba and Saskatchewan have different regulations on the blending of ethanol into gasoline? Apparently they do,” he said. While there are no tariffs or levies that apply to the vast volumes of general merchandise that move across provincial borders every day, trade flow is hindered by a slew of different transportation rules in each province. What constitutes a wide-load on highways in Saskatchewan and Alberta is different from one province to another. Differing truck weights and dimension, even tire sizes, create headaches for logistics firms and makes for bumps in the economic road, experts say.

Professional services also suffer from barriers

In professional services, such as dentistry or accounting, people in those or similar fields would be subject to more competitive pressures if it were easier for them to move between provinces some trade experts say. As it stands, individual provinces are responsible for jurisdictional accreditation, meaning a dentist in Ottawa must jump through several hurdles if they want to work across the river in Gatineau, Que., or just open an office there. Many local and provincial government agencies still give preference to local companies when a request for proposal is released for a project. The CETA trade deal with Europe as well as a new trade agreement with Korea appear poised to open up government procurement to foreign firms, but there’s nothing enshrined yet that says Canadian firms from other provinces deserve an equal seat at the table.

On July 16, 2015, the premiers signed the apprentice mobility protocol under which all provinces and territories will recognize apprenticeship and pre-apprenticeship training completed in the same trade in another jurisdiction. Erin McGrath-Gaudet says, “What the protocol means, is that if you have your certification, it’s good all across Canada.” It includes the recognition that work experience and technical training may occur in any jurisdiction; jurisdictions will facilitate mobile apprentices progressing through their apprenticeship programs; and the mutual recognition of apprenticeship training and pre-apprenticeship training between jurisdictions. CFIB’s McGrath-Gaudet says the target that has been heard from the provincial ministers is they’ll have an updated Agreement on Internal Trade put to bed by March 2016. “That’s the target we’re working with, I have no doubt they will meet that target, although we continue to monitor progress. “At the end of the day, what we want is for businesses to do business in Canada.”