Ottawa makes a push for eliminating economic barriers between provinces

James Moore’s plan to revive the Agreement on Internal Trade

by John Geddes

Pier Paolo Cito/CP Photo

At a time when the federal government is forging ahead toward a landmark free trade deal with Europe, Industry Minister James Moore is trying to borrow a bit of that momentum to try to dismantle economic barriers between Canadian provinces.

Moore spoke yesterday in a conference call, which lasted about an hour, with his provincial and territorial counterparts responsible for what’s called the Agreement on Internal Trade, and proposed a push to modernize the AIT, calling for the work to begin with a face-to-face meeting of the group within 90 days.

In fact, it would be more accurate to say he spoke on the phone with only some of the provincial and territorial ministers responsible for domestic trade. Six participated. The other seven didn’t bother—a telling indication of how the AIT, created in 1994 by the Liberal government of Jean Chrétien, has faded as a force for change.

“This is just so inadequate. Something needs to be done here,” Moore said in an interview today. “I said to the group… let’s talk about revitalizing and modernizing the AIT altogether.”

As reported recently in Maclean’s, Canada-European Union trade agreement, which Prime Minister Stephen Harper announced the broad outlines of back in October, casts an unflattering light on the AIT. Under the deal, European companies are guaranteed the right not only to bid on Canadian federal government contracts, but also for a fair chance to sell goods and services to provinces or municipalities. (Canadian companies gain the same access in Europe.)

If a European firm feels it hasn’t been allowed to compete fairly against local firms anywhere in Canada, it will have access to a swift, binding dispute-settlement system. The AIT doesn’t offer anything as nearly so powerful for a Canadian company based in one province that suspects it’s been shut out of another.

The coming of the Canada-Europe deal, Moore says, makes the time right for eliminating any remaining interprovincial procurement discrimination. “Whether we have our eyes open to it or not, there’s going to have to be progress by all of our jurisdictions on the very specific and big matter of procurement,” he said.

Moore said he plans to follow up on yesterday’s conference call with a letter to provincial and territorial governments next week. He’ll propose that meeting within 90 days. In a bid to build momentum, he’ll also suggest full ministerial AIT meetings every six months, instead of only once a year, with officials meeting quarterly.

As well, he said some of the basic ways the AIT functions should be reviewed. For instance, a consensus among all provinces and the federal government must now be reached before any AIT reforms are implemented; Moore suggests a mechanism that would allow clusters of provinces that want to “move more aggressively” to do so under the AIT, without first having to win over the entire country.

Impediments between provinces can be subtle. Health and safety rules, regulations for registering corporations or recognizing professional and trade credentials, preferences for firms with “local knowledge”—critics say all these and more are sometimes employed as economic barriers.

Moore says he’ll challenge the provinces to pinpoint specific areas ripe for fast reform. “I don’t think it’s unreasonable to ask provinces to come to the table with two proposals for full, pan-Canadian market liberalization, and see what others have to say about it,” he said. “We might be surprised by what provinces are willing to put on the table.”

The push from Moore comes as industry associations grow increasingly frustrated over the apparent gap between the Canada-Europe agreement’s ambition and the moribund AIT.

“It is an embarrassment that we are able to provide greater benefits to our trading partners than to each jurisdiction within Canada,” said the Committee on Internal Trade, a group counts among its influential members the Canadian Chamber of Commerce and the Canadian Council of Chief Executives, in an open letter to Moore a few days ago. “We can no longer excuse the fact that our domestic market remains divided by unnecessary barriers and urge you to work with the provinces and territories to rectify this fact.”




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Ottawa makes a push for eliminating economic barriers between provinces

  1. Mmm good luck with that!

    • There seems to be a regional uh, synergy, already from BC to Sask and maybe Manitoba to bring in economic agreements like this although I don’t know how far it goes right now. So it’s possible. Or it could end up with the American north west and Canada west of Ontario plus Europe as more of an economic zone than Canada.

      • Yeah, we keep talking about it….and occasionally someone makes a move, but we still seem to end up in regions.

        We could also have Ont and Quebec and the NE US as one zone.

        There was a book out years ago …the 9 nations of NA….that proposed something similar….and lately secessionist movements in the US have mapped out areas.

        I just hope the South leaves again, and nobody brings it back.

      • Or ditch Ottawa and formulate a Republic of Western Canada without the central and east lib-socialist-statism baggage to support. Imagine the tax savings…..huge benefit to us not to pack money off to Ottawa and have a smaller less taxing federal government

        Part of why the back room picks statism on our provincial ballots. Keeps the west down for colonial Ottawa.

        • You are aware the Alberta spends quite a bit more per capita than Ontario does, aren’t you?

          • The only thing Dave is ever aware of is that he wants everything for free.

  2. Perfect solution. Eliminate transfer payments and see who sinks(Quebec, some of martitimes) and see who swims(alberta, sask). The real obstacles that some provinces get huge sums of dollars for great social programs like daycare on the back of the have provinces. If you need money from someone else to run then it needs to be no frills

    • No, the real obstacles are the barriers that the article mentioned. Why does a tradesperson licenced in one province have to re-certify to work in another? Why do Ontario construction companies have trouble getting contracts in Quebec?
      Transfer payments have nothing to do with any of this.

      • Correct. Transfer payments are a separate issue. The real issue is petty parochialism, or you could call it provincialism.

    • Ahhh. Let’s parse your comment a bit. Considering that Ontario and Quebec make up three quarters of the Canadian population, who do you think pays more to the feds for transfer payments. Tell you what, lets do away with all transfer payments as well as federal subsidies and and let each province keep all they transfer to the feds and see how Alberta will do. I am not saying this is what I believe but I tire of Albertans continuously making this pathetic point. It’s just an indication of how few really understand transfer payments and from this misunderstanding, will make hey for political convenience.

      • K moron. Consider this:

        Alberta – doesn’t qualify for transfer payments

        Ontario -$3.169 billion

        Quebec – $7.833 billion

        I wonder how Alberta will do if the transfer payments get cut.

        • The answer is: No differently to worse.

          Why? Because as you point out, we don’t get transfer payments. If they cut them, we see no benefit.

          On the other hand, places like Quebec and Ontario will be losing a lot more of their own money (AB pays approx 36B in tax to the feds while Quebec pays 40B, and Ontario 85B — once you know this, it becomes easy to see that equalization is more of a rebate on the federal taxes a province pays, which it gets if its per-capita income is lower than the Canadian average.. an average that we here in Alberta push up.)

          Since they won’t have as much of their money returned to them, business in those areas will very likely slow down, and Alberta is not an island. We actually sell a hell of a lot of stuff to Quebec and Ontario.. including our oil.

          • Good point but what I suggested is that each province keeps its money. Not that I advocate this but I just wanted to show that on the whole, Alberta pays very little compared to Ontario and Quebec (about a ratio of 35 billion to 125 billion). And you are correct in that Alberta does not give to the other provinces. I just got tired of hearing this from Albertans.

        • OK. Simple math for simpletons. The total transfer by all provinces in terms of what the feds gets from the provinces is 215 billion. Of that amount, Ontario and Quebec pay in 125 billion and all other provinces put together pay in 90 billion which includes Alberta kicking in 35 billion. And as I indicated in my post and according to the IMF, Canada paid 26 billion in oil subsidies in 2011. Note, not just Alberta but all of Canada. Now do you get my drift.

          • Canada paid nothing in oil subsidies in any year.

            The oil and gas industry, in marked contrast, is a huge revenue source for governments at all levels, with income tax, EI, CPP, corporate income tax, employer EI and CPP, self-employment EI and CPP, GST-PST-HST, royalties, property tax, grants in lieu of tax, grants to ‘first nations’, business tax, capital tax, lease payments, and I’ve probably missed some.

      • After hearing the Que Premier’s comment on why they would develop their natural resources if they’d end up sending more money to Ottawa I really expect the system as it is does no overall good for anyone in any case though.

    • Irrelevant comment is spelled as just demonstrated. NOT, as you wrote, p-e-r-f-e-c-t s-o-l-u-t-i-o-n.

  3. Canada should just adopt the USA Interstate Commerce act verbatim plus amendments:

    http://en.wikipedia.org/wiki/Interstate_Commerce_Act_of_1887

    Reality is this is we are a tax greedy nation of bickering politicians and a real commerce act to facilitate internal trade and commerce never was drafted for out mutual benefit. Denied to us as Ottawa is myopic, incompetent and tax greedy and insatiable bickering took precedence. It impedes Canada’s growth and a major reason why USA grew much faster than we did, its crippled our economy long enough.

    But do I trust Ottawa to get it right? I would believe pigs could fly first. Need to fix our decades long (lack of) leadership issues first. Ottawa impedes Canada from being all that she could be.

  4. Ah yes, ‘eliminating economic barriers’ – the code for letting corporations race to the bottom, just like ‘Free Trade’, ‘State’s Rights’, and ‘Right to Work Laws in the US.

    You folks have some catching up to do. Thank goodness you’ve got a government that’s ready willing and quite able to wreck your country, just like the Birchers have done to America.

    Gut some more environmental laws while you’re at it.

    And enjoy your ride.

    • Here in Calgary there has been a noticeable increase in Ontario and Quebec licence plates on vacuum trucks and construction vehicles since the June floods.

      The result, of course, is that the mess is being cleaned up faster than otherwise, and everyone benefits.

      But Albertans are blocked by provincial regulations and restrictions from reciprocating in Quebec in particular, and to a lesser extent in Ontario, should there be a comparable disaster there.

      That’s not good for anybody

    • So more trade barriers between the provinces is better. And silly rules that prevent me from buying Nova Scotia or BC wine in Ontario, while I can buy wine from anywhere else in the world, are worthy of maintaining. Got it.

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