An interesting article in Maclean’s Magazine
that illustrates the culture of provincial trade barriers in Canada and how the
Agreement on Internal Trade can be ineffective. The issues raised in this article also apply to P.Geo.’s who want to
work seamlessly across Canada. APGO
advocates for the national mobility for P.Geo.’s in a national environment
where cooperation between provinces is challenging.
APGO thanks member Alan Aubut, P.Geo. for suggesting this story.
Home is where the trade barriers are
We’ve got free trade with Europe. Fantastic. Now how about trade restrictions between provinces?
by John
Geddes and Nick Taylor-Vaisey on Tuesday, October 29,
2013 - Maclean’s
Prime Minister Stephen Harper is wasting no chance these days to talk up the
job-creating advantages of free trade. Harper’s surprise announcement last week
of the broad outlines of a long-delayed trade deal with the European Union
gives him his best chance to pitch a story
of landmark progress on economic policy, to offset the Senate
scandal saga that’s otherwise dominating political news. But to
Jennifer Warren-Part, co-owner of Les Fougères, a restaurant and maker of gourmet
packaged foods—nestled in Quebec’s woodsy Gatineau Hills, only a half-hour
drive from Parliament Hill—all the talk of unimpeded transatlantic trade rings
hollow. She would just like to sell across the Ottawa River into Ontario.
But Warren-Part says the refusal of Quebec and Ontario to recognize
each other’s food-safety laws means her duck tourtière or lamb burgers with lime chutney can’t be sold in Ottawa stores. “It’s
enormously frustrating for us that, for no apparent food-safety issue, we’re
not allowed to go to the closest metropolitan centre,” she says. Rules in
Quebec and Ontario for small-scale commercial food preparation are, Warren-Part adds, “almost identical.” The provinces aren’t
obliged, though, to accept each other’s standards. Big food companies can get
federal licences to ship in bulk across provincial borders, but those federal
regulations aren’t designed for small, artisanal firms. So Warren-Part is left
frustrated—and wondering if the Canada-EU deal might soon allow European food
companies to enter the Ontario market more easily than she can.
The red tape that businesses such as Les Fougères must hack through to expand across a provincial border rarely draws as much
attention as the aspirations of export-oriented industries striving to break
into big foreign markets. Still, even in the shadow of the Canada-EU deal,
interprovincial trade barriers are getting a hint of fresh attention. In last
week’s Throne Speech, which sets out the federal government’s new agenda, the
Conservatives committed vaguely to “continue to work to remove barriers to
trade between provinces and territories that cost jobs, inconvenience
Canadians, and defy common sense.” Their most ambitious initiative is Finance
Minister Jim Flaherty’s bid, with only Ontario and B.C. in agreement so far, to
create a streamlined single regulator for securities and capital markets,
replacing a hodge-podge of provincial stock market
commissions.
Beyond Flaherty’s ambitious push, however, signs of real progress
in breaking down interprovincial economic barriers are hard to find, despite
decades of on-again, off-again effort. Back in 1994, the federal, provincial
and territorial governments signed what’s called the Agreement on Internal
Trade, a sort of free trade pact for Canada’s domestic economy. But the AIT
hasn’t eliminated a wide range of obstacles. Corporations face separate, unharmonized registration requirements in different
provinces. Professionals confront different standards from province to province
when it comes to recognizing their qualifications. Consumers in most provinces
still can’t order wine from another’s vineyards. Refiners have to mix special
batches of ethanol-enhanced gasoline to meet varying provincial rules. And the
list goes on.
Why do governments persist in imposing costly, irritating burdens
on individuals and companies just trying to function inside their own country? Trade consultant Kathleen Macmillan, who has recently studied the
issue for the Public Policy Forum, detects little political motivation to fix
the problems. “Generally, provincial and federal governments, with
exceptions, don’t view this as especially important,” Macmillan says. “There’s
probably a lack of leadership and a lack of commitment.” Industry groups and
think tanks that take the matter seriously are watching closely for signs of
how much emphasis Industry Minister James Moore, who took over the file in last
July’s cabinet shuffle, places on this part of his sprawling new portfolio.
Moore is widely ranked among the most powerful ministers in the Harper
government, and he is expected to meet with provincial ministers responsible
for trade in early December.
Even if Moore takes up the cause, it’s notoriously hard for any
federal politician to prod provinces into action. His predecessor, Christian Paradis, now international development minister, bemoaned
internal trade barriers as the Canadian economy’s “invisible monster.” But that
national view of the damage they do often clashes with provincial concerns
about boosting local companies. That’s one reason the Agreement on Internal Trade
has never been backed up by a powerful dispute-resolution system, or even
monitoring and reporting that might expose provinces that fail to live up to
the agreement’s spirit. Macmillian says the AIT’s
Winnipeg-based secretariat “hasn’t got teeth.”
But the proposed system for settling disputes under the Canada-EU
deal will bite. Brenda Swick, a lawyer who
specializes in trade and government procurement at the firm McCarthy Tétrault in Toronto, says that might emerge as a strategic
advantage for European firms competing for Canadian public sector
contracts. “If I’m a European company and I get shut out of bidding by one of
the provinces or municipalities, or even the federal government, there will be
rapid dispute settlement,” Swick explains. “You don’t
have that under the AIT.” In other words, she sees European companies chasing
Canadian government work, at any level, gaining an institutionalized edge over
Canadian businesses trying to win similar contracts outside their home
provinces.
Experts complain about all kinds of long-standing sources of
friction in the functioning of Canada’s domestic economy. Glen Hodgson, chief
economist at the Conference Board of Canada, flags those provincial rules for
blending ethanol into gas, which force refiners to follow local recipes. “They
have to do ethanol blends province by province, which leads to slightly higher
gas prices in certain provinces, particularly the smaller provinces, where the
providers wouldn’t be able to do large batches,” he says.
It’s possible the Canada-EU trade deal, which isn’t expected to be
finalized for up to two years, might spur progress in eliminating Canada’s
interprovincial trade restrictions. Europe sets a powerful example: The EU’s
rules governing free trade among its 28 nations are stricter than Canada’s for
its 10 provinces. Leah Littlepage, a Canadian Chamber
of Commerce director, points out that the EU outlaws any restriction in trade
or labour mobility among members that’s not spelled out as an allowed exception
under its rules. It’s the opposite with Canada’s weaker AIT—provinces are
permitted to impose barriers unless they are explicitly forbidden. That means,
for example, that all provinces would have to agree to add an AIT chapter on
energy before energy is covered—a gaping omission, considering the current
dispute between Alberta and B.C. over a proposed pipeline from the oil sands to
a new Pacific port. “But we’re never going to see an energy chapter, even
though we want to see it,” Littlepage predicts. “I
think, politically, it’s too sensitive for the provinces to look at that in the
AIT.”
What’s not too sensitive? In the Throne Speech, the federal
government vowed to amend the Importation of Intoxicating Liquors Act to let
individuals take beer and spirits across provincial boundaries “for their own
use.” But, then, the Tories did the same thing last year for wine, which
prompted the provinces, not to throw the marketplace wide open, but to enact
various regulations. Some allow consumers to order wine to be delivered by courier, others permit only limited amounts to be carried by
travellers returning home from trips. Even a straightforward attempt to
eliminate a barrier, it seems, runs the risk of creating fresh complications.
How red tape between the provinces is imposing costly, irritating
burdens on individuals and companies:
·
Ottawa lifted its ban on
interprovincial wine exports, prompting provinces to enact new restrictive
rules
·
A lack of harmonized rules for ethanol
gas means fuel companies produce separate, more costly batches for each
province
·
Labour-mobility barriers discourage
Canadian professionals and some trade workers from moving to other provinces
for work
·
Dairy marketing boards inhibit farmers
from exporting across provincial boundaries
|