In Canada, there is nothing so hypocritical as the so-called economic union. So many regulations, prohibitions and restrictions clog the flow of goods and workers between provinces that a business in British Columbia can sell its product more easily to Washington than Alberta, or in Ontario to Europe than Quebec.
While everyone talks about dismantling these barriers, few are willing to do anything about them.
But recent events have opened a window. The best hope for progress may lie with Ontario Premier Doug Ford.
Global supply chains that have been disrupted by the pandemic, and increasing hostility from and toward China, have people talking about the need for self-sufficiency, making an open internal market more important.
A 2019 report from the International Monetary Fund states that full trade liberalization within Canada could increase GDP per capita by 4 per cent, which could be a real boost in the current recessionary times.
The West has been leading reform for years. Alberta Premier Jason Kenney and Manitoba Premier Brian Pallister have both moved to dismantle internal barriers.
And all four Western provinces are now members of the New West Partnership Trade Agreement, which seeks to meaningfully improve the flow of goods and workers among the provinces while reducing red tape.
How is New West doing? “There have been some successes,” said Gary Mar, president of the Canada West Foundation, a Calgary-based think tank, and a former Alberta cabinet minister. But reality still doesn’t meet aspiration.
The premiers “say the right things, but it gets mired down," he said in an interview. Parochial pressures and bureaucratic obstruction too often win the day.
Mr. Ford says he supports a stronger economic union. Talks are under way between Ontario and other provinces. There is even the possibility of Ontario joining the New West trade agreement. That would be a genuine breakthrough.
Any new agreement should contain fewer carveouts and include an effective dispute resolution mechanism.
Provinces bring herds of sacred cattle that they demand be protected in any accord. And when a business complains about rule-breaking, either there is no method to seek redress or the cost of pursuing the complaint is beyond what most businesses can bear.
The absence of an effective dispute resolution mechanism is hardly surprising, says Ryan Manucha, who studies interprovincial trade issues and who wrote a paper on the subject for the C.D. Howe Institute, a Toronto-based think tank.
“You’re asking a bunch of governments to set up a court that can only be used against them,” he told me.
Nonetheless, without such a body any trade agreement is toothless, which is why this country insists on including them in trade agreements with other countries. Canada needs one for itself that all sides can rely on.
Of course, a truly national economic accord would be a better solution. But the Canada Free Trade Agreement of 2017 appears to be moribund, hobbled by provincial protectionism and a distracted federal government. This is a shame, for the CFTA has a dispute resolution mechanism, albeit one that smaller players cannot afford to access.
Chrystia Freeland, when she was Intergovernmental affairs minister, was supposed to give the CFTA some teeth. But the Finance Minister has bigger priorities now.
Conservatives tend to be more open to free trade. Conservative governments of one stripe or another govern every province except British Columbia, Nova Scotia and Newfoundland and Labrador. Blair Higgs’s majority-government re-election in New Brunswick this week reinforces conservative provincial dominance.
Would Quebec Premier François Legault, something of a populist conservative, be open to a greater degree of interprovincial trade? Is New Brunswick prepared to look west instead of east? There may be possibilities among this consortium of conservatives.
Federal Conservative Leader Erin O’Toole insists his government would make real progress in perfecting the economic union. If he’s serious, he should tell us how.
But there’s no need to wait for Ottawa or the more recalcitrant provinces to come around. Ontario and the Western provinces should sign on to a new internal free trade agreement with few carveouts and an effective dispute resolution mechanism.
And if Canada once again divides economically between West of the Ottawa River and East of the Ottawa River, that would be nothing new in the life of this country.
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