The now-delayed but still looming threat of U.S. President Donald Trump’s tariffs on Canadian goods has reignited the debate about removing barriers to trade within Canada.
Opposition Leader Pierre Poilievre seized on the issue Monday, releasing a seven-minute video claiming “it’s actually easier for our businesses to sell to other countries than to other Canadian provinces” and that eliminating interprovincial trade barriers could boost family incomes by $6,000 a year.
“Let’s knock down these barriers, let’s have a truly free trading, free market Canadian economy that’s capable of standing on its own two feet,” Poilevre told media Monday morning.
“Let’s do that not to adopt, to appeal, to any foreign leader but to put Canadians back in charge of their lives and their country.”
There are no tariffs on trade between Canadian provinces. But barriers do exist, and fit into three general categories: inconsistent regulations, rules around transportation and provincial protectionism.
The federal government’s own 2024 fall economic statement, citing International Monetary Fund data, acknowledges the impact, arguing the country could boost its GDP by as much as 4 per cent, or $2,900 per capita, by liberalizing internal trade.
“What is clear is that with the threat of tariffs, we need to get a lot more focused on strengthening our economy,” said Laura Jones, president and CEO of the British Columbia Business Council, arguing breaking down internal barriers was “urgent” and “long overdue.”
Jones said the the provinces have made some progress on the issue, replacing the “completely useless” 1995 Agreement on Internal Trade with the new Canada Free Trade Agreement in 2017.
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That deal fixed a lot of challenges around trading goods between provinces, she said, though didn’t address some key goods, like alcohol, that remain a major focus of provincial protectionism.
“It didn’t fix the regulatory differences between provinces, so that’s what we’ve got to get better at,” she added.
Every time a truck crosses a provincial boundary, for example, it faces a new set of regulations including new safety requirements and weight limits.
Jones gave the example of regulations in Ontario that require construction site toilet seats to have a lifting lid, something many other provinces don’t require — making selling the product nationally a challenge.
She pointed to similar discord between provinces on regulations about work boots or safety glasses.
“Why not just say hey, if the safety standard is good enough for Alberta it’s good enough For B.C.,” she said.
“If we did that across Canada it would do two things. First, it would give us a lift on GDP. Second, it would send an incredible signal to the rest of the world that we are open for business.”
But Marc Lee, senior economist with the Canadian Centre for Policy Alternatives, argued the idea streamlining interprovincial trade could offset U.S. tariffs was “really nonsense.”
Lee said the barriers to business between Canadian provinces pale in comparison to things like customs inspections, currency differences and radically different legal and institutional frameworks businesses must deal with when exporting internationally.
What’s more, he said Canada has already addressed much of the “low-hanging fruit,” leaving smaller issues like liquor protectionism and professional regulation.
“To think they are going to compensate for the impact of the United States, these are literally like a drop in the bucket,” he said.
“The idea that being able to buy more beer options from Nova Scotia or Newfoundland is going to somehow rectify problems in the federation is, I think, a bit of a stretch.”
Lee’s view, however, is at odds with many in the business community.
According to a 2019 study by the IMF non-geographical barriers amount to a cost equivalent to a 21 per cent tariff, while the Canadian Federation of Independent Business suggests that removing trade barriers would provide a boost to the economy of $200 billion dollars.
And with the looming threat of Trump’s tariffs — now delayed 30 days — it’s an issue premiers may have the political capital to address.
“We will take every minute we are given here to ensure that we are supporting business to diversify,” B.C. Premier David Eby said in response to the tariff pause.
“That we are kicking down the internal trade barriers in this country that make it easier to trade with Ontario, and to make sure we are stronger as Canadians in building our national economy, in trading with each other.”
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