Trade barriers have real-world impacts that are weakening Canada’s economy. Photo Credit: Pexels.
With American tariffs being held over Canada’s head like the sword of Damocles, it’s time to end restrictions on trade within Canada once and for all.
The United States is Canada’s largest export market, with 77 per cent of Canada’s exports heading south of the border.
President Donald Trump’s threat to place a 25 per cent tariff on all Canadian goods other than energy (and a 10 per cent tariff on energy) coming into the United States may have been paused, but the threat itself remains very real. There’s every chance Trump changes his mind and simply imposes the tariffs once this initial 30-day pause comes to a close.
How should Canadian respond?
This trade threat also opens up an opportunity for Canada to complete a long-lost project of Confederation. Right now, it’s easier for provinces to trade with many other countries than with each other. That has to change.
Canada’s leaders shouldn’t waste another second before getting to the negotiating table and tearing those domestic trade barriers down. Research shows that the benefits of ending interprovincial trade barriers could outweigh the impact of Trump’s threatened 25 per cent tariffs.
Interprovincial trade barriers are a series of rules, quotas, and regulations that limit the mobility of goods and services from one province to another. There are currently more than 400 carve-outs in Canada’s internal trade agreement. And those carve-outs have meaningful consequences.
Consider the case of a nurse who wants to move from one end of the country to the other. Let’s call her Joan. Nurses are required to register with a provincial college. If Joan wants to move from Alberta to Ontario, she needs to get re-licensed to practice in another province. This is a process that can take months and might discourage Joan from moving at all. Or she might move and then spend months trying to get certified. That’s an interprovincial trade barrier that hurts both the economy and the health-care system.
Another example is trucking. Consider the case of Chuck, a trucker bringing goods from Manitoba to Nova Scotia. Nova Scotia has different rules for load weights and that means Chuck might have to offload some of his goods before he gets to Nova Scotia or travel with fewer goods than his truck can fit to meet Nova Scotia’s stricter guidelines. Chuck’s company might just decide to sell fewer goods to Nova Scotians, or give up on the Nova Scotia market altogether.
A final example is Darlene, a craft beer lover. Darlene used to live in British Columbia, but has since moved to Quebec. She has a favourite craft beer from Vancouver. In Quebec, as is the case in every province other than Manitoba, Darlene can’t order alcohol from another province and simply have it sent to her. That’s a bummer for Darlene, who can’t have her favourite beer, but it’s also a major roadblock to Darlene’s favourite craft brewery, which can’t sell directly to customers beyond British Columbia’s borders.
These cumbersome interprovincial trade rules are holding Canada back and cost the Canadian economy $200 billion a year, according to the Canadian Federation of Independent Business.
If Trump follows through with his tariff threat, there could be a recession. Canada can’t afford to leave $200 billion a year on the table a moment longer.
The time has come for Canada to finally deal with the internal trade issues that have held our country back from being truly united for far too long.
Jay Goldberg is the Ontario Director at the Canadian Taxpayers Federation. He previously served as a policy fellow at the Munk School of Public Policy and Global Affairs. Jay holds a Ph.D. in Political Science from the University of Toronto.
