It will take national and provincial politicians to set aside partisan and regional differences to make freer internal trade happen. Pictured: Prime Minister Justin Trudeau. Photo Credit: Justin Trudeau/X.
It would be almost funny, if it wasn’t so serious. After years of Canadian economists and business leaders pleading for the removal of interprovincial trade barriers to boost our economy, all of a sudden, our politicians are falling all over themselves to pledge their support.
Anita Anand, the federal Minister of Transport and Internal Trade, said that meetings with provincial counterparts were going so well that barriers could be coming down in literally, days. On the Ontario election trail, all four political leaders, including Premier Doug Ford, have professed support in a rare show of unanimity. Other provincial premiers too have been voicing agreement and even Prime Minister Justin Trudeau has opined in favour.
What has brought about this rare Canadian consensus? President Donald Trump and his threat of 25 per cent tariffs on Canadian goods sold to the United States. Should he proceed, the economic damage to Canada’s economy could be catastrophic.
Canadian politicians are scrambling to find ways to head Trump off, and while they have achieved a 30-day reprieve, it is clear that the American president is determined to wreak economic havoc on Canada in his misguided attempt to “make America great again!”
What’s to be done?
The numbers appear to offer a possible solution, or at least a way to soften the anticipated damage. University of Calgary economist Trevor Tombe estimates that our own internal trade barriers add as much as 22 percent to Canadians’ cost of living, which is the approximate impact of the Trump tariffs. Put another way, Trump tariffs are estimated to cut 2.6 per cent off Canadian GDP. But our self-inflicted interprovincial trade barriers are estimated to cut 3.8 per cent off our GDP.
So it is easy to see why so many are calling for a magic wand to wave away internal trade barriers as a way to mute the harm Trump tariffs will inflict. The question is, how realistic is this?
If history is any guide, not very.
As if to prove the point, International Trade Minister Mary Ng, – who clearly missed the memo from her boss – chimed in to declare that Canada’s supply-managed dairy industry is off the table in any future trade talks. The dairy industry barriers have long been an irritant in Canada’s trade negotiations with Europe, the U.S., Australia and New Zealand.
Canada does have an internal free trade agreement – but it has 133 pages of so-called “carve-outs,” in other words, products or services that are still subject to trade barriers of one kind or another. (It is important to note that in Canada the barriers tend to be implemented by way of various rules, regulations and standards that differ widely from province to province rather than tariffs.)
Different rules exist for the licensing of professionals such as doctors and nurses, the trucking industry encounters different regulations from province to province, provincial marketing boards exclude agricultural products from other provinces, the securities industry must grapple with different standards in different provincial jurisdictions. The list goes on.
And each sector represents a significant group of regional advocates and lobbyists (see the dairy industry above), highly motivated to protect their economic piece of the pie.
Still, Trump’s unprecedented attack on Canada’s economy and our very sovereignty, with his desire to make us the 51st state, is having a profound impact on Canadians. Public opinion polls show that Canadian nationalism is back in favour, Canadians are cancelling trips to the U.S., reading product labels to avoid buying American goods and demanding political action.
Perhaps it is possible to harness enough public support to actually make significant progress in tearing down the many needless barriers that exist. But it will take national and provincial politicians to set aside partisan and regional differences to make this happen. It will require business and industry leaders willing to compromise their own self-interests. And most importantly, it will need a strong push from voters to demand that this be done.
The clock is ticking.
Janet Ecker is a former Ontario Finance Minister, Minister of Education, Minister of Community and Social Services and Government House Leader in the governments of Premier Mike Harris and Premier Ernie Eves. After her political career, she served as the founding CEO of the Toronto Financial Services Alliance, a public-private partnership dedicated to building Toronto region into an international financial centre. She currently sits on a number of corporate and non-profit boards, agencies and advisory committees.
Ms. Ecker received the Order of Canada for her public service contributions and was recognized as one of the “Most Influential People in the World’s Financial Centres” by Financial Centres International. She also received a “Canada’s Most Powerful Women: Top 100 Award” from the Women’s Executive Network and the Richard Ivey School of Business, among other awards. She is also one of the founders of Equal Voice, a national, multi-partisan organization working to elect more women.
