Doug Firby's View from Alberta: Interprovincial trade constraints cost the Canadian economy as much $130 billion a year and may harm international trade.
Despite a struggling economy, Calgary’s restaurant scene is more robust than ever, with new and exciting venues opening regularly.
Last week, I attended the media preview of another great restaurant in the downtown area – NUPO, in the Hotel Arts, smack dab in Calgary’s up-and-coming East Village district. NUPO features a predominantly vegetarian menu with unique sushi and fish dishes, created by local celebrity chef Darren MacLean.
It was great event, except for one sobering realization – the chef’s desire to serve the exact Canadian ingredients he wanted was limited by a lingering regulatory anachronism: interprovincial trade barriers.
“I’d love to serve you cheese from Oka,” said the chef. “Unfortunately, I am not able to.”
Restrictions on trade between provinces has been a vexing problem for decades. Even today, and in spite of some small progress, it’s still easier to buy wines from France, Australia and South Africa at the liquor store in Prince Edward Island than it is wine from Nova Scotia.
“I’d love to serve you cheese from Oka. Unfortunately, I am not able to.”
Studies estimate that interprovincial trade constraints cost the Canadian economy as much $130 billion a year and may harm international trade relations. Sen. Rob Black and Sen. Diane Griffin wrote in the Hill Times: “Interprovincial trade is a national embarrassment.”
How can this be?
The answer is complex but a lot of it has to do with inconsistent regulations at the provincial level.
Perrin Beatty, president and CEO of the Canadian Chamber of Commerce, has said most of the trade barriers are regulatory differences, “divergent sets of rules and processes between provinces that have created a tyranny of small differences for businesses.”
There have been several efforts in the past 25 years to wrestle this problem into submission but progress can best be described as agonizingly slow.
“Divergent sets of rules and processes between provinces that have created a tyranny of small differences for businesses.”
Canada’s provinces and territories signed on to the Agreement on Internal Trade (AIT) in 1995 with the hope of eliminating barriers to free movement of persons, goods, services and investment within Canada.
Now, AIT is widely considered a failure at removing most interprovincial barriers.
In 2006, Alberta and British Columbia struck out on their own with the Trade, Investment, and Labour Mobility Agreement (TILMA). It aimed to create a barrier-free economic region between the two provinces. That agreement led to the creation of a labour mobility provision and enforcement mechanism among all provinces.
And in April 2017, the federal, provincial and territorial governments signed the Canadian Free Trade Agreement (CFTA) – again with the noble goal of easing interprovincial barriers. Yet Sen. Diane Bellemare and Sen. Diane Cordy note that almost half of the agreement’s 345 pages contain exceptions to the agreement and opt-out measures.
In April 2019, the Liberal government introduced legislation to remove the federal requirement that alcohol moving from one province to another go through a provincial liquor authority. This was not directly in response to the case of Gerard Comeau, a New Brunswick retiree who was busted at the Quebec-N.B. border with 14 cases of beer and three bottles of liquor. His case went all the way to the Supreme Court of Canada and he lost.
Some provinces have made the move to loosen restrictions on alcohol. In July 2019, the B.C. government announced that the province’s residents will no longer face restrictions on the amount booze they bring from other provinces. Nova Scotia and Saskatchewan already scrapped such archaic rules.
In a recent opinion piece, the Fraser Institute suggested a solution similar to what Australia did in 1993: mutual recognition of regulation to encourage the removal of barriers to the free flow of goods and labour between Australian states and territories. Each jurisdiction recognizes regulations created and administered by another jurisdiction, even when they vary from their own. This allows goods to be sold in one jurisdiction to be sold throughout the nation.
Canada could do the same. Finally, any province or territory would have unrestricted beef from Alberta, canola from Saskatchewan, P.E.I. potatoes, B.C. wines – even wonderful unpasteurized Oka cheese from Quebec.
An added bonus, as the Fraser Institute notes, would be easing of negotiations for trade agreements with other countries, which – not surprisingly – don’t want to have to deal with individual jurisdictions within Canada.
Let’s hope our legislators remain committed to finally blasting away the bizarre spider’s web of barriers to trade between our jurisdictions. In the meantime, Calgary chef MacLean can only serve Oka cheese “by request” and at no charge – i.e., as a gift to guests who are savvy enough to ask for it.
It’s time for such nonsense to end.
- Doug Firby previously wrote that all this talk about Wexit is harming Alberta’s badly-needed economic recovery.
- Last January, Shinder Purewal wrote that Canada needs a balanced approach to trade and human rights.
- In July 2019, Maclean Kay looked into signs that British Columbia’s economy was slowing down.