Provincial trade barriers costing economy billions: report

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The Canadian economy is losing billions a year because of interprovincial trade barriers, a new Senate report warns after a promised March deadline for a national deal has quietly passed without any explanation from Ottawa or the provinces.

Titled "Tear down these walls," the report by the Senate committee on banking, trade and commerce states that the failure of negotiations to date is "baffling" and "unacceptable."

At issue is the fact that businesses and workers face different rules in different provinces when it comes to where products can be shipped and sold. There are also long-standing problems related to services and the professional qualifications an employee needs to obtain when switching provinces.

The Senate released a cheeky top 10 list illustrating the biggest problems caused by internal trade barriers, including different beer bottle size standards, a range of reporting standards for maple syrup and "un-brie-lievable" rules that ban the sale of Quebec's unpasteurized cheeses in other provinces.

The senators recommend that if a deal does not materialize soon, the federal government should ask the Supreme Court of Canada whether it has the power to unilaterally resolve some of the issues that are preventing free trade between provinces.

The Conservatives, the Official Opposition, are putting the suggestion to a vote in the House of Commons, introducing a motion on opposition day for debate on Tuesday that calls for a Supreme Court reference on internal trade.

With signs of increased protectionism on the horizon internationally, the senators argue that there is urgency to resolve issues within Canada.

"Reducing internal barriers to trade is particularly important now," the committee says in a statement. "The United States – Canada's biggest trading partner – is soon to elect a new president who might be less receptive to trade with Canada. Moreover, the ramifications of the United Kingdom's possible exit from the European Union are unclear. Making trade within Canada easier will provide a measure of insurance against potential hits to international trade."

The federal and provincial governments agreed to reduce internal trade barriers via the Agreement on Internal Trade, which was signed in 1994. The agreement is widely viewed as having fallen short of its potential, and Ottawa and the provinces had promised to renew the deal by March, 2016.

"Sadly, it is now June, and no announcement has been made," the report notes. "Nor have Canadians received any information about a new deadline for the completion of negotiations. The committee believes that continued delay must not be an option."

Navdeep Bains, the federal Minister of Innovation, Science and Economic Development, told the House of Commons on Tuesday that he had a positive meeting with his provincial colleagues this week.

Mr. Bains said politicians and officials are actively engaged in reaching a new deal on internal trade. "We have been in extensive negotiations and discussions at the officials level," he said. "There is a sense of urgency to act on this."

Mr. Bains later told reporters that he's optimistic a deal will be reached "sooner rather than later."

On the issue of a Supreme Court reference, the committee notes that Section 121 of the Constitution Act states that "all articles of the growth, produce, or manufacture of any one of the provinces shall, from and after the union, be admitted free into each of the other provinces."

The committee recommends that the federal government ask the court whether Ottawa has the power to impose free internal trade and whether that power applies to the trade in services.

Mr. Bains said the government does not support the Conservative motion's call for an immediate Supreme Court reference, warning that it could hurt the ongoing negotiations.