Canada’s next free-trade agreement? How about a deal between provinces
TheGlobeandMail.com – Globe Dabate
Jan. 02 2014. Perrin Beatty
Last month, the Committee on Internal Trade met via teleconference to discuss ways to reduce internal barriers to trade. These barriers cost the Canadian economy $50-billion a year. The business community had hoped to see some progress this year under the guidance of the federal government. Unfortunately, these promises fell short. The fact that the CIT meeting wasn’t even conducted face to face is a troubling sign.
The Canadian economy remains divided by artificial barriers. Take for example the fact that Canadians still have a difficult time ordering wine from one province to the other.
But the issues go far beyond our ability to enjoy a fine B.C. red. Barriers are entrenched in areas such as procurement, energy, agriculture and transportation. The free movement of professionals is far from being perfect. Discriminatory hiring practices which favour local labour, minor differences in licensing requirements and standardization are limiting our ability to grow. A recent study by the Bank of Canada found that barriers to labour mobility continue to be a major factor for professionals looking to relocate to another region in Canada. Removing these barriers could increase overall migration by more than 60 per cent. This is at the same time that businesses from coast to coast are crying out for skilled labour.
We can no longer afford this level of self-indulgence.
Early last year, former Bank of Canada governor Mark Carney highlighted the importance of trade to our economy: “Trade brings innovation, growth and jobs…” Free trade allows businesses to expand into new markets, increases productivity and enables economic growth.
Canada just concluded the most comprehensive trade agreement in our history. It’s ironic that the provinces were able to find common ground with our agreement with Europe and yet they have a difficult time sitting in the same room to discuss trade amongst themselves. At the same time that we’re undertaking the most ambitious international trade agenda in Canadian history, we remain divided internally. It’s sobering to think of a future where its’ easier for Ontario to trade with Europe or India than for Alberta to trade with Quebec.
Over the years we’ve developed band-aid solutions to help us get by. For the past 18 years, commerce between the provinces has been governed by the Agreement on Internal Trade – or the AIT as it is more commonly known. The AIT has evolved considerably since its inception and we’ve made good progress in a number of areas. Thanks to amendments in 2009 it’s now easier for workers to move between the provinces; we’ve made some progress on agriculture; reduced the administrative burden on corporate reporting and have recently added some teeth to ensure that the Provinces follow through on their commitments. Despite this progress, our fundamental approach to internal trade in Canada remains flawed. Instead of slowly whittling away at barriers, we need to think of Canada as a single domestic market.
Unfortunately instead of looking for creative ways to move beyond the AIT, Canadians have come to accept the imperfect system as the “best available option.”
To offset the inadequacies of the AIT, provincial governments are giving birth to regional arrangements. For example, B.C., Alberta and Saskatchewan have created the New West Partnership. With a combined GDP of $500-billion, this agreement creates the largest trading block in Canada. While ongoing attempts to tear down interprovincial barriers should be lauded, continuing down the path of regionalism will get us nowhere.
The AIT has been a useful tool but it’s time to take off the training wheels. Canada needs a new, more ambitious, agreement on internal trade. Our agreement with the EU proves that we are open to trade – that we see the benefits it brings to our people and to our economy. There is simply no excuse for us not to capitalize on the momentum provided by the CETA agreement.
It won’t be easy, but with the right political leadership it’s possible for us to hammer out a new, pan-Canadian agreement on internal trade.
Perrin Beatty is president and CEO of The Canadian Chamber of Commerce
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