For a better understanding of what stands in the way of interprovincial trade
While it is true that one does not have to pass through customs when driving from, say, Calgary to Vancouver, or Montreal to Toronto, and while it is also true that there are no formal tariffs imposed on goods crossing Canadian provinces, too many non-tariff trade barriers remain.
Probably the most well-known example are the restrictions imposed by government-owned provincial liquor monopolies that prevent or seriously limit the free flow of wine or liquor between most provinces. We should point out that these restrictions (of a discriminatory nature depending on the point of sale) differ from those imposed by certain communities in the Northwest Territories. In those cases, the restrictions are imposed uniformly, regardless of the origin of the alcohol. Put differently, it’s a public health measure, not an interprovincial trade barrier. We make this important distinction from the get-go, since it helps explain the nature of an interprovincial trade barrier, which is that a product, a service, or a labour offering is treated differently (presumably worse in virtually all cases) because it comes from outside a particular province.
Over 200 similar barriers are codified in the Canadian Free Trade Agreement, preventing or hindering the free the flow of a variety of goods, from alcohol to forestry products, across provincial boundaries.
While these are costly, they represent only a minority portion of the various impediments to commerce that firms and individuals wishing to operate across Canada face.
This is the central point of this opinion piece: Many of our interprovincial trade barriers actually affect labour mobility.
Think of a licensed nurse practitioner who went to school in Halifax but moves to Winnipeg to follow their partner. They would have to undergo additional training to be able to practise nursing in Manitoba’s health system. In several cases, these additional training and certification requirements are so onerous that they constitute de facto barriers to entry that may very well be more motivated by protectionist and corporatist instincts than by the alleged desire to “protect the public.”
Similar restrictions on labour mobility prevent professionals from practising their trade in a variety of fields, from water well drillers in Alberta to denturists in Quebec.
These represent a very tangible form of barrier to trade, as they restrict Canadians in their professional life by not automatically or quasi-automatically recognizing the value of the training, skills, and certifications acquired in another province. Presumably, a recognized and competent medical doctor in British Columbia would still have the same qualities and abilities after relocating to Ontario.
The other main category — and possibly the costliest of all — is what are referred to as regulatory barriers to interprovincial trade. In most cases, these are due to a lack of harmonization of provincial regulations, which hinders trade.
A good example of said regulatory barriers to trade was expressed by a former staffer in the Quebec government. Different regulations between Quebec and Canada’s main car-producing province of Ontario meant that car seats for the Quebec market had to be stuffed with different materials.
While that regulation has since been removed, it’s not hard to figure out that one of its unforeseen consequences was to increase the cost of producing and selling cars in the Quebec market, as they required non-standard seats.
Another particularly costly example of regulatory barriers to trade between our provinces has to do with trucking. Different provinces have adopted different standards that have to do with maximum loads, truck length, allowable sizes of tow-trucks, and driver qualifications.
Figuring out what is needed to send goods across provincial lines is a real headache for the logistics experts working in Canada’s transportation sector. As you can imagine, this is ultimately reflected in the cost of shipping goods across provincial boundaries. In this specific case, it is estimated that regulatory barriers to trade specifically affecting the trucking industry increases the cost of freight rates by an average of 8.3 per cent.
Overall, it’s estimated that removing all barriers to trade between our provinces would increase our shared prosperity by up to some $200 billion annually, or just under $5,000 per Canadian.
Removing every last one of these barriers between our provinces might require a lot of political will from our premiers, but if one thing is clear, it’s that it would be well worth it. And this is especially true given the recent Canada-US trade developments we all know about.
Michel Kelly-Gagnon is Founding President of the MEI and Gabriel Giguère is a Senior Policy Analyst at the MEI. The views reflected in this opinion piece are their own.