Why free trade is the unfinished business of Confederation
The Globe and Mail Friday, Aug. 22 2014
When our 13 provincial and territorial leaders meet next week in Charlottetown for their 55th annual conclave, they will discuss, yet again, how to create free trade within Canada.
It is the unfinished business of our Confederation.
The intention in the Constitution is clear: “All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.”
But it didn’t work out that way. During our first half century a combination of interests – local and provincial, supported by the courts – resulted in a narrow definition of the federal commerce power. This yin yang over constitutional powers continues, as demonstrated in the Supreme Court’s 2011 decision to curb a national securities exchange.
Nearly 40 per cent of Canadian trade occurs within our borders. Economists estimate provincial protectionism costs us billions annually.
With Canada’s growth increasingly trade-driven, the premiers have become major advocates in the making of new deals and marketing our goods and services.
Then-premier of Quebec Jean Charest drove the campaign in 2007 to launch free-trade negotiations with the European Union. Saskatchewan Premier Brad Wall led the premiers to a Washington parley with U.S. governors in 2010 that sealed the procurement reciprocity agreement. Premiers sustained trade relations with China when the “new” Harper government had no time for the Middle Kingdom.
An Agreement on Internal Trade (AIT) was cobbled together 20 years ago by the federal and provincial governments but it lacks scope and teeth. As Industry Minister James Moore tells audiences: “The sad reality is that currently foreigners have greater trade benefits in Canada than our fellow Canadians do.”
Mr. Moore is not the first to observe that it is easier to find for sale across Canada a much wider variety of foreign products, notably beer, wine and cheese, than products made-in-Canada.
They are not the only examples of discriminatory differences. Truckers face different rules for weights, dimensions, tires, height and clearance. There are 39 different bodies regulating accounting standards. And good luck if you are an apprentice seeking to work in another province.
The business community, Western premiers and now the federal government are offering plans to achieve freer internal trade.
The Western premiers want to expand the vision of their New West Partnership (NWP) to the rest of Canada. Created in 2010, the New West Partnership opens the doors to trade, investment and labour mobility between British Columbia, Alberta and Saskatchewan. It also opens up procurement and creates a single business registry.
In a recent letter to their fellow premiers, advancing their principles for internal trade, NWP premiers’ Brad Wall, Christy Clark and Dave Hancock warned that the alternative is “anti-free trade behaviour which puts us on a slippery slope to protectionism.”
Business leadership has long argued for reform. This month they released a strategy document called A New Vision for Interprovincial Trade in Canada. It calls for a deal “as ambitious and comprehensive” as any with our foreign partners.
This week, Mr. Moore announced a policy paper, “One Canada, One National Economy,” designed to modernize internal trade in Canada, effectively scrapping the AIT, with regulators required to “align or explain.”
Out of these various proposals emerge common themes. The premiers should act on them.
First, all goods and services should be included except that which is negotiated specifically out of the deal. This is the approach used in the Canada-EU agreement and other international trade agreements.
Second, labour mobility. Mutual accreditation of trades – plumbers and electricians, nurses and teachers, including apprentices – is critical to success.
Third, open procurement that would remove the barriers to inter-provincial purchasing.
Fourth, mutual recognition, preferably harmonization, of regulation whereby any good or service made or delivered to one jurisdiction would be admitted into every other province or territory.
Fifth, strong governance, including an enforcement mechanism “with the teeth to make sure that we all play by the rules.”
We should emulate the Obama administration’s approach to regulatory reform and oblige Canada’s regulators to agree on common standards with an ambitious “lookback” to eliminate existing differences.
A hundred and fifty years ago an earlier generation of provincial leaders met in Charlottetown to see if “the sisterhood of the Provinces will form themselves into a great nation.”
Our current premiers need to finish the job and achieve free trade within Canada. They should set the deadline for July 1, 2017, the 150th anniversary of Confederation.
We’ve created freer trade within and between continents. Surely we can open trade within Canada.
