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Economy New interprovincial trade deal expected to add billions to economy

Brad Duguid, Ontario Minister of Economic Development, says the Canada Free Trade Agreement is expected to add $25-billion a year to the economy.

Matthew Sherwood/The Globe and Mail

A new internal-trade deal that will remove domestic trade barriers is expected to add billions of dollars to the economy, but an agreement on booze will have to wait.

The Canada Free Trade Agreement, unveiled Friday in Toronto, takes a "negative list" approach, meaning it automatically covers all sectors except when exemptions are listed. Exempt sectors include taxation, water and tobacco control. The deal replaces the Agreement on Internal Trade from 1995, which essentially took the opposite approach.

Officials have struggled to pin a number on the potential economic benefits of the agreement, but Ontario Economic Development Minister Brad Duguid, who was also chair of the negotiations, said the deal is expected to add $25-billion a year to the economy.

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"Why did we need a new agreement, some may ask," Duguid said. "First off, the economy and the world has changed. Canada needs to be at its best to compete in a fiercely competitive economy ... (It) reduces the costs of doing business in Canada and makes us economically strong and creates jobs across this country from coast to coast to coast."

What's not in the deal is an agreement to streamline standards for alcohol across Canada. Instead a working group will report back by July 1, 2018.

The deal does, however, lay the groundwork for talks to eventually establish a process to help provinces and territories regulate the trade of recreational pot.

"We've seen 100 to 150 years of acrimony and debate about the availability of alcohol across the country," said Duguid. "We do have an opportunity, I believe, to get (marijuana regulation) right from the start."

The deal, which takes effect July 1, establishes a process to reconcile regulations in different provinces that make trade or labour mobility difficult.

For example, Duguid said, different jurisdictions have varying requirements for the percentage of ethanol and gasoline in a fuel blend, meaning producers have to create many different versions.

As well, there are different standards across the country for dairy creamer cups, which Duguid said "drives our dairy producers and our food processors absolutely crazy."

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The Canadian Federation of Independent Business applauded the deal as a "major step."

"There is more to do to eliminate some silly, irritating rules but the deal creates an innovative framework that we haven't had before to get outstanding red tape issues resolved," said executive vice-president Laura Jones.

Federal Economic Development Minister Navdeep Bains said as protectionism is on the rise in the world, the deal demonstrates that Canada is open.

"We're an open society and we recognize that this is a source of strength for us," he said.

"(Companies) have the ability now to do business across the country with less barriers, with less impediments, with regulations being aligned now."

The deal will put Canadian businesses on equal footing with foreign companies when competing for government procurement contracts across the country, officials said.

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With the upcoming Comprehensive Economic and Trade Agreement with the EU, foreign companies could have had better access to provincial markets than Canadian companies, Duguid said.

The Canadian Trucking Alliance gave a "cautionary thumbs up" to the deal. Different trucking regulations across Canada make it difficult for drivers going between provinces.

"While we are encouraged, time will tell whether the new processes established to identify, prioritize and negotiate standardized rules will be more effective than previous attempts to increase the level of harmonization of trucking regulations," said CEO David Bradley.

The CFTA enables suppliers to most publicly owned energy utilities to bid for government contracts in various parts of the country, which officials estimate will provide $4.7-billion a year of new business opportunities.

The old deal included a maximum $5-million fine for governments who violate it, and that is now increased to $10-million.

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