Western premiers tout new free-trade deal for provinces

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Saskatchewan Premier Brad Wall is leading a charge for a Canada Free Trade zone, calling for the dismantling of internal trade barriers between the provinces that are costing the economy as much as $50-billion a year. Several other premiers have expressed support for removing obstacles to the free flow of everything from jobs to beer.

Mr. Wall's western colleagues, Christy Clark from British Columbia and Alberta's Dave Hancock, are supporting him – the three premiers signed a letter Wednesday urging their counterparts to agree to commit to modernizing the 20-year-old Agreement on Internal Trade (AIT) when they meet in Charlottetown in August for the Council of the Federation.

"AIT is pretty anemic as a trade agreement," Mr. Wall said in an interview Wednesday.

For example, he argues that, given recent international trade agreements signed by the federal government, it will be "easier for a European country to get involved in some provincial procurement than it would be for companies from another province."

Trade barriers exist in many sectors, including energy, labour and procurement. In addition, there is no interprovincial free trade in wine or beer, so Nova Scotia wine, for example, is not widely available in other parts of the country.

"We start from the premise that everything is open," Mr. Wall said about his proposal. The current agreement is such that everything was protected and provinces would negotiate what would be covered by the agreement.

Under Mr. Wall's initiative, provinces would have to negotiate what should not be included in the agreement. He also wants stronger enforcement powers so that a business bidding for a contract that feels it was treated unfairly by a government has some recourse.

Nova Scotia's Stephen McNeil and PEI's Robert Ghiz, who will play host at the CoF meeting, support the idea of knocking down internal trade barriers.

"It's a time that has come, quite frankly," Mr. McNeil said.

Already the four Atlantic premiers have worked on breaking down what Mr. McNeil calls the "silliness" for apprentices, so that there are common practices and standards across the region.

Ontario, however, is not as enthusiastic – but happy to discuss it. "It's important to consider the views of all provinces and territories before deciding how best to move forward on this important initiative," Ontario's Economic Development Minister Brad Duguid wrote in an e-mail, adding that Ontario recognizes "removing trade barriers is a good thing for Ontario's and Canada's economy."

Some barriers, however, may prove non-negotiable. Infrastructure Ontario, the agency that handles billions of dollars in construction each year, requires companies bidding on contracts have "local knowledge" – a rule that favours Ontario-based firms over competitors from outside the province or country. The province has fought hard to maintain this protectionist provision, even gaining a special exemption in Canada's free trade deal with the European Union.

Mr. Wall is critical of this rule – calling it a "head start for companies bidding on infrastructure projects there."

"We don't have that same thing. So our companies are saying, 'hey, fair is fair.' You can see how these things can escalate," he says. "They will put pressure on their respective governments and by the way that will drive up the costs for procurement if we are all engaged in that sort of thing."

Mr. Wall said rules and regulations should be harmonized so that, for example, the trucker who is driving across the country doesn't have to worry about the length of the trailer when he goes from one province to another.

The push by the western premiers comes as federal Industry Minister James Moore is calling for trade barriers between provinces to be dismantled. Last month, he began his tour of six major Canadian cities during which he has been trying to engage his provincial colleagues, businesses and consumers in supporting a massive change to the AIT.

Mr. Moore noted his government has negotiated more than 40 international trade agreements since coming to office. As a result, he says some people who live outside Canada now have "more access to the Canadian economy than Canadians. It's just patently ludicrous for us to continue and to not make sure that we are taking full advantage of all of Canada's economic opportunities for Canadians."