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The Conference Board of Canada has prepared a series of primers for Globe and Mail readers on the top economic and social issues our next federal government must address.

Our briefing last week discussed the international economic policies needed to adapt and succeed in a globalized economy. Now we extend the analysis to domestic economic policy reform, to better position Canada to compete more effectively and sustainably.

Domestic policies that complement openness to international trade and investment would position Canadian companies to reach their full potential, compete internationally, make profits, pay taxes and create jobs at home. Better alignment of goals, standards and practices within Canada is key to our success – and almost entirely under our control.

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The most difficult part may be where to start.

Many subtle internal barriers to trade are a legacy from previous eras. Some barriers limit the movement of goods (beer and wine, for example). Interprovincial barriers also exist to what are largely public services (health care and education). And there are market controls via quotas, price setting and tariff barriers, notably the outdated controls over the production of dairy, eggs and poultry.

There are also scores of non-tariff barriers on capital and people among the provinces. Without a common pan-Canadian securities regulation, the country suffers from second-best solutions in capital markets. A number of vested interests (professional associations, unions, government regulators) have worked hard to maintain barriers to the movement of people, which prevent skilled workers, including immigrants, from contributing fully to the economy. Misaligned regulations, in areas such as food safety, pharmaceuticals, transportation and environmental protection, between the federal and provincial governments, and with the United States, create more barriers to commerce and add costs to doing business.

The next federal government could show commitment to making Canada more competitive internationally by pressing for reduced barriers and better aligning our regulatory practices. The New West Partnership trade deal among British Columbia, Alberta and Saskatchewan is an important step forward. But further progress requires active federal leadership.

Domestic policies also influence foreign direct investment (FDI), both in terms of investment coming into Canada and by Canadian companies abroad. FDI is critical to embracing globalization because it builds worldwide value chains, and creates operating scale and efficiencies within Canada – which improves productivity. It also expands access to foreign markets for Canadian companies, not only for resources and manufacturing, but increasingly for services as well.

Canadians are often ambivalent about foreign investment. In trying to be open and selective at the same time, we mix up our economic and political interests. There are still material barriers to inward FDI, and we are reluctant to support Canadian firms as global investors, which impedes their ability to compete globally.

A third way domestic policy can boost our international competitiveness is to improve our reputation on the environment. The right mix of federal policies can help Canada compete in a low-carbon world. For example, putting a price on carbon, combined with stronger regulations, would nudge our economy toward cleaner technologies. A number of provinces are putting a price on carbon, which avoids the challenge of revenue recycling between regions. Better co-ordination of provincial initiatives could lead to a pan-Canadian carbon pricing system.

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The next federal government should take the lead on negotiating international greenhouse gas emission targets; on effective measures at the border to ensure a level playing field for Canadian firms; and on educating Canadians about the interconnections between environmental, energy and economic issues. There should be no tradeoff between the economy and the environment.

Given the reality of globalization, we need to ask a number of questions of those seeking to guide our country over the next five years:

What is your party's agenda to help us achieve stronger competitiveness?

How would your government ensure that we are focused on the global marketplace with its challenges and opportunities?

How will you ensure that governments at all levels are aligned, acting to make Canada fully competitive?

What will your first actions be to enhance Canada's competitiveness in the global marketplace?

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Daniel Muzyka is chief executive officer and Glen Hodgson is senior vice-president and chief economist of the Conference Board of Canada.

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