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Ontario Economic Minister Brad Duguid says recommendations for the interprovincial agreement will be presented to premiers and territorial leaders at their annual summer meeting this month in Whitehorse.

Matthew Sherwood/The Globe and Mail

Ontario Economic Minister Brad Duguid says he and his provincial and territorial counterparts will present recommendations to the premiers for an internal free-trade deal that is more ambitious and much broader in scope than "this country has ever embraced."

The recommendations are part of a deal, two years in the making, that will replace the 20-year-old Agreement on Internal Trade, which contains protectionist barriers, inhibiting competition.

"Canada and all of our respective jurisdictions within Canada are fighting for a piece of the global economy in the most fiercely competitive global economy we've ever experienced," Mr. Duguid said. "It's important that we are at our best when we compete for those jobs. If there are barriers across this country to doing commerce, then our businesses and economy can't be at [their] best."

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Mr. Duguid has been the lead minister to modernize the AIT and will chair the meeting in Toronto on Friday to negotiate final details. It will then be presented to the premiers and territorial leaders at their annual summer meeting this month in Whitehorse.

It is up to the premiers to decide how to proceed in terms of timing and support.

The deal will contain a strengthened dispute settlement mechanism with increased monetary penalties, according to a senior Ontario government official. In addition, a tribunal or working group will be established to address regulations that create barriers to competitiveness in trade and national commerce.

Businesses have been asking for this, the official said. The tribunal will bring the provinces together to negotiate agreements on regulations that may differ between jurisdictions.

Interprovincial trade barriers put restrictions on Canadians and companies trying to conduct their business outside of their home province. As an example, the official pointed to the trucking industry where rules around equipment on trucks vary from province to province. This is considered a barrier to competition.

Researchers from the Canadian Federation of Independent Business have said regulations vary from province to province on everything from what is required in a first aid kit to the blends of ethanol in gasoline.

The provinces are leading the process, but the federal government is also involved. Navdeep Bains, the Minister of Innovation, Science and Economic Development, will be at Friday's meeting.

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This new agreement is structured differently from the current AIT in that it takes a "negative list approach," Mr. Duguid said. This means that every sector of trade is included, unless a province or territory declares it exempt.

"… At the end of the day, the beauty of the negative list is that as the economy changes and disrupts and as new sectors emerge … with the negative list it means everything is in unless it's explicitly out."

The current AIT uses a positive list approach. This means no sector is included at the start, until everyone agrees on what should be included. As a result, barriers exist in many sectors, including energy, labour and procurement.

Mr. Duguid said there will be exemptions in the new deal, but "we've got it to a very high bar now compared to where we were at."

If a province or territory did not exempt a sector from the agreement prior to negotiations starting, it's considered to be part of the deal, according to a government official. So if the province or territory then decides to introduce a protectionist policy on that sector, it can be challenged through the dispute settlement process, and a monetary penalty may be awarded, the official said.

Mr. Duguid said there is no plan to dismantle provincial supply management systems; nor will there be much change on interprovincial trade in alcohol. "It is really important that Canadians understand that, while it is an issue that we have had some discussions on and some progress will be made on it … it's a 150-year-old issue and it will require a great deal more of complex discussions between the provinces and federal government to go further."

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