A New Canadian Partnership: The Promising Opportunity for Interprovincial Free Trade
A New Canadian Partnership for domestic free trade could produce economic benefits for Canadians that rival those of international free trade agreements. That’s the conclusion of Professor Ian Brodie, political scientist at the University of Calgary, in a new public policy study for the Montreal Economic Institute, the Atlantic Institute for Market Studies (AIMS) and the Canadian Constitution Foundation.
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This paper was prepared by Ian Brodie, associate professor of political science at the University of Calgary and fellow of the Atlantic Institute for Market Studies. It was produced in collaboration with the Montreal Economic Institute and the Canadian Constitution Foundation for an initiative called “One Country, One Market.” Its ambition is to advance the goal of greater internal trade for Canada.
Introduction
We Canadians earn our keep through trade. Millions of Canadians contribute to our international trade and their jobs, in turn, rely on Canadian businesses having secure access to many foreign markets.
That secure access depends on dozens of international trade agreements. Canada was an original party to the General Agreement on Tariffs and Trade (GATT) and a charter member of the World Trade Organization (WTO). We also have trade agreements with the United States, Mexico, several Latin American countries, most European nations, Israel, Jordan, Korea, and the major countries of the Pacific Rim. More agreements are under negotiation or at the exploratory stage. Given our reliance on foreign trade, the international rules-based system has been very good to Canada.
Canadians have an even longer history of getting secure access to domestic markets. The case for Confederation got a boost when the British North American colonies lost secure access to U.S. markets after the 1866 abrogation of the Reciprocity Treaty of 1854. Confederation’s economic ambition is clear from the legal agreement that underpinned it – the Constitution Act, 1867. Delegates to the Confederation conferences agreed to allocate strong economic powers to the Dominion Parliament and drafted the document with the expectation that the union would soon expand beyond the four original provinces. Sir John A. Macdonald’s National Policy, while not a blow for free trade per se, nonetheless depended on the free movement of goods between the provinces – between the industrial heartland and the hinterland.
As Canadians know, a strong and principled commitment to free trade can co-exist alongside strong commitments to family, neighbourhoods, and community. This means political leaders must make constant efforts to expand secure access to markets. Without a political commitment to strong rules and institutions, the normal preference for the local tends to win out. The cause of international free trade needs to be reinvigorated with regular doses of political momentum, as does the cause of domestic free trade.
As Canada has secured access to more and more international markets, many observers have wondered if it is easier for Canadian firms to do business across international boundaries than across provincial ones. In turn, the nagging doubt that globalization has proceeded faster than national economic integration makes the cause of domestic free trade an ongoing political issue. That nagging doubt helped propel the negotiations for the original Agreement on Internal Trade (1995), the Canadian Free Trade Agreement (2017), and the agenda of the recent meeting of first ministers.
In this paper, I investigate how Canadian political leaders can continue to bring momentum to this cause in the coming years, and show how can we progress toward a true common market for all Canadians.