Remove Canada’s “dumb” trade barriers
Business groups are predictably in favour of breaching the trade walls sooner rather than later.
Manufacturers have to deal with many challenges, but doing business in other provinces shouldn’t be one of them. It’s one thing to squawk about being shut out of infrastructure projects in the US because of a blatantly protectionist Buy American law; quite another to bang into a provincial barrier that gives greater weight to a home team.
That was an issue Saskatchewan premier Brad Wall brought to the table during the Confederation conference in August when he threatened have-not Ontario with retaliation if it didn’t eliminate preferential conditions on provincial infrastructure procurement. Indeed, a manufacturer from the EU under CETA would have clearer access to projects than an out-of-province company.
And there are plenty of other impediments across the country. Wall was surprised that a manufacturer of first aid kits would have to jump through regulatory hoops set up in 10 jurisdictions.
You like chicken? There are marketing boards that determine the origin and price of your Sunday dinner clucker. If you want wine with that, in Ontario (for example), it’s easier to uncork a pretentious French plonk than a crisp vintage from BC’s fine orchards. The Conference Board of Canada asks, why should each province have its own standards for blending ethanol with gasoline at the refinery? Each province accredits its own professionals, which makes changing employment jurisdictions a pain. And try to move merchandise across country without getting entangled in each province’s red tape.
Provincial trade barriers are inefficient, they’re a drag on the economy, and as Wall has declared, they’re dumb. BC, Alberta and Saskatchewan have been going it alone with their New West Partnership, which endeavours to clear some of the regulatory flotsam out of the way. They call it leading by example, but getting all of Canada’s provincial and territorial governments in line will require more aggressive federal leadership.
Business groups are predictably in favour of breaching the trade walls sooner rather than later and they recommend a tune-up for the 1995 Agreement on Internal Trade (AIT). The Canadian Chamber of Commerce, Canadian Manufacturers & Exporters, the Canadian Federation of Independent Business, the Dairy Processors Association of Canada and Restaurants Canada have laid out five principles for a new Canada free-trade zone deal:
• It should be as ambitious and comprehensive as any free trade deal with a foreign country, covering all sectors of the economy with only specific, argued for and agreed to exceptions.
• Base the agreement on mutual recognition: if a product is made and sold in one province or territory it should be sold in any other jurisdiction, even if standards and regulations differ. Very clear evidence must be provided for any exceptions.
• Provinces and territories would work together to develop common standards and practices.
• An effective and efficient dispute resolution mechanism is needed with fair adjudication and enforcement.
• A new AIT would have an effective, transparent and inclusive governance structure.
Canada is part of a global economy. It has trade pacts with 40 countries. The five business groups point out provincial barriers put companies at a disadvantage on their own turf competing against foreign competitors, add costs and hurt productivity.
The premiers, fresh from their Charlottetown sojourn, need to turn good intentions into action with a reinvigorated AIT. To paraphrase Ronald Reagan speaking on another matter involving a barrier, the time has come to tear down these walls.
This editorial appears in the September 2014 issue of PLANT.
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