When British Columbia Premier Christy Clark travels to Niagara-on-the-Lake this week for the annual Council of the Federation meeting between Canada’s provincial and territorial leaders, she will be carrying a case of British Columbia wine, including some made in her Kelowna riding.
Canadian wine is now exported internationally, but still the biggest obstacle to expanding markets is interprovincial trade barriers. Even with the passage, strongly supported by the public, over a year ago of MP Don Albas’ private member’s bill lifting federal restrictions on carrying wine across provincial borders, only B.C., Manitoba and Nova Scotia have acted to ‘Free our Grapes’.
The blocking of wine between provinces is another example of internal obstructions to trade that cost the Canadian economy close to $14-billion annually. The OECD and the 2008 Competition Policy Review panel both single out interprovincial trade barriers as a major factor explaining Canada’s poor productivity performance.
So what are we doing about it? A cursory look is not encouraging.
Liquor monopolies, provincial securities regulators, shipping rules, licensing and accreditation rules and food-supply management boards all serve to “balkanize” the Canadian economy and hinder our ability to both attract investment from around the world and sell our wares globally.
There is a bill in the Ontario legislature to effectively rescind the agreement with Quebec to allow construction workers into each other’s provinces. It’s a bitter setback of relations after the Charest-McGuinty entente of a couple of years ago.
Moving west, will there be continuing progress in New West Partnership created in 2010 by British Columbia, Alberta and Saskatchewan? With the departure of Premiers Campbell, Klein and Stelmach, momentum has stalled, notably over the differing perspectives of Ms. Clark and Alberta Premier Alison Redford over the pipeline to the Pacific.
The 1994 Agreement on Internal Trade involving federal, provincial and territorial governments has achieved some success, notably in improved dispute settlement, but it lacks the level of ambition of the new West Partnership.
When then Industry Minister Christian Paradis took up the chair of the Committee on Internal Trade for 2013, he promised to take on the “invisible monster” of internal trade barriers. Will his successor, James Moore, turn words into actions?
Too often federal-provincial discussion devolves into a debate about the appropriate division of powers between governments rather than reducing trade barriers.
Provinces are reluctant to surrender powers or accept disciplines. Federal governments have been complicit over many years in erecting or maintaining certain internal barriers through federal regulation of agricultural and labour markets.
In the inevitable tradeoff between diversity and harmonization in policies, it should be the greater good for the greater number of citizens that prevails.
Success in achieving internal-market reform is more likely to happen with strong institutional champions and a broad agenda with attractive potential.
We need creative approaches to decision making – notably in avoiding the need for full consensus.
We should enshrine reforms in law with enforcement disciplines, so that they have real effect. One conclusion of the AIT experience is that “shaming by naming” is less effective than having real teeth with disciplinary measures for bad behaviour.
We are in the midst of negotiating a series of international freer trade arrangements – the Canada-Europe Trade Agreement and then Trans Pacific Partnership and bilateral deals with India, China and Japan. We need to match our international ambitions with free trade across Canada.
Internal trade doesn’t get anywhere near the same attention as international trade. Canadians would be surprised at our thicket of internal trade obstructions – a forest that continues to expand.
We know the scope of the problem. The Forum of the Federations, the Macdonald Laurier Foundation and a recent Public Policy Forum conference have produced a prescriptive inventory of the barriers that need to be overcome. Start with labour mobility, corporate registration, business licensing discrepancies and the technical barriers to trade.
Christy Clark is right when she describes the New West Partnership as the “gold standard.” With the NWP the starting point is “everything is on the table.” Any exceptions have to be brought to the table and negotiated into the agreement.
Like-minded provinces should join. This will put increasing pressure on the stragglers.
Internal Free Trade is a national project requiring national leadership but the drive will have to come from the provinces because they hold the regulatory and legislative levers needed to open up markets.
Business wants this to happen. And once the ball starts to roll, experience suggests confidence builds as integration creates a win-win situation.
This week Ontario Premier Kathleen Wynne chairs the Council of the Federation in Niagara-on-the-Lake. She should uncork Christy Clark’s offering along with some local vintage and invite Premiers Clark, Redford, Marois and Dunderdale to share a glass over an informal discussion on internal trade.
A former diplomat, Colin Robertson is vice president of the Canadian Defence and Foreign Affairs Institute and a senior advisor to McKenna, Long and Aldridge, LLP.