With Alberta and British Columbia locked in a pitched battle over the fate of Kinder Morgan’s expansion of the Trans Mountain pipeline, Canada finds itself in another costly interprovincial conflict. But this dispute is about more than just pipelines – it’s really about Canada’s economic union, or lack thereof. Kinder Morgan’s announcement suspending all non-essential spending on its pipeline project is just the latest example of Canada’s internal trade barriers affecting jobs and prosperity. The time has come for a new economic vision that allows Canadians to trade and work freely within their own country.
Although the federal government clearly has jurisdiction in the matter, approvals by the National Energy Board and cabinet have not stopped B.C.’s government from dragging out its opposition to the Trans Mountain expansion. This creates significant uncertainty that calls into question Canada’s reputation as a secure place to invest and do business. Beyond the immediate harm done to the many companies responsible for constructing the pipeline and the workers counting on the jobs it will create, B.C.’s intransigence has long-term consequences for Canadian business across all sectors.
While a negotiated settlement between B.C., Alberta and the federal government would be preferable, the stakes are too high and the costs of further delays are significant. The federal government must use all powers at its disposal to ensure the Trans Mountain pipeline proceeds without further delay.
This isn’t just about pipelines. The absence of free trade between Canada’s provinces affects consumers, businesses and governments. On Thursday, the Supreme Court released its decision in Gerard Comeau’s “alcohol smuggling” case. He was fined for exceeding New Brunswick’s limits on alcohol imports from other provinces. Mr. Comeau’s lawyers argued that these limits were unlawful as Section 121 of the Constitution allows that all goods should “be admitted free into each of the other Provinces.” An Ipsos poll showed 89 per cent of Canadians agreed they should be allowed to bring any legal product across provincial borders anywhere in the country. Disappointingly, the court chose to preserve an outdated vision of Canada as 13 separate markets, not one economic union.
Many trade barriers arise from the many bizarre differences in provincial commercial regulations. For example, provincial rules differ on the size of containers for the sale of goods such as beer and dairy products. This forces producers to either run multiple bottling lines or forgo selling their products in some areas of Canada, reducing choice and competition. A transport truck carrying these products from Vancouver to St. John’s could find itself breaking provincial rules half a dozen times as a result of arbitrary differences in weight limits, axle size, tire measurements and, inexplicably, the definition of what constitutes a truck.
The bottom line is the multitude of barriers, regulations and fees restrict the free movement of people and goods in Canada and impose an incredible cost. A 2016 Senate Committee report noted interprovincial barriers are estimated to reduce Canada’s GDP by between $50-billion to $130-billion. To put that in perspective, that means each Canadian is between $1,350 to $3,500 poorer because of the lack of free trade within Canada.
Some progress toward freer interprovincial trade has been made, notably 2017’s Canadian Free Trade Agreement (CFTA). Although this improved on the status quo by requiring provinces to exempt specific goods, services and professions from interprovincial trade and competition, half of the CFTA’s 350 pages were filled with exemptions. Without further action, new trade agreements like the ones with Europe and Asia would provide foreign firms with better access than Canadian companies would have to their own market.
The Comeau case and Trans Mountain pipeline are drawing attention to the significant barriers that exist between our provinces. Now is the time to act quickly to bring true free trade to Canada.
The federal government should bring together the provinces to reach a national agreement that provides for mutual recognition of provincial regulations for goods and occupations. This would mean a product or worker that is legally regulated in one province could be sold or work in any other, without the need for more red tape. Australia did this 25 years ago in a 17-page agreement.
After decades of determined inaction by all parties, this government has an opportunity to have a meaningful impact on Canadian free trade that lowers prices for consumers and governments, provides greater choice and allows Canadians to freely pursue their careers from coast to coast. Few other measures could provide such a significant boost to our economy, increasing our prosperity.
Let’s make this the beginning of the end of Canada’s outdated and costly trade barriers.
Jan De Silva is CEO, Toronto Region Board of Trade, Patrick Sullivan is CEO, Halifax Chamber of Commerce.