What Jason Kenney can teach Doug Ford about provincial trade 

OPINION: Every government talks a big game about reducing interprovincial trade barriers. The Alberta premier is reminding everyone that it’s possible to walk the walk
By John Michael McGrath - Published on Jul 12, 2019
Alberta premier Jason Kenney announced this week that his government will be abandoning the carve-outs it had under the Canada Free Trade Agreement and reviewing other interprovincial trade barriers. (Jeff McIntosh/CP)

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Everyone (in provincial government, anyway) likes to say they’re opposed to interprovincial trade barriers. Canada was founded to create a single market out of the disparate British colonies too good to be Americans, after all. And do you think you’re better or smarter than the founders? Huh? Do you?

Economists produce wildly varying estimates of the costs of trade barriers between the provinces: a Senate committee in 2016 reported that estimates ranged from $1 billion in deadweight losses to the economy to $130 billion. Obviously, a $130 billion problem is worth taking seriously; a $1 billion problem (in the context of a $1.6 trillion national economy) might get pushed to the back burner.

But governments do say they take the issue seriously, so it’s worth taking governments seriously when they say it  — as Premier Doug Ford did at the latest meeting of provincial leaders in Saskatoon this week, when he pledged to work with other premiers to lower those pesky interprovincial barriers to trade.

It’s exactly the kind of vow that Kathleen Wynne issued before Ford (no, really). At the current glacial pace of trade liberalization, it seems likely that Ford’s successor will be in a position to say much the same. The problem is simple: provinces have any number of regulations that (deliberately or not) have the effect of preferring businesses that operate and employ people in that province. It would be better for Canada overall if those barriers were reduced or eliminated, but “Canadians” don’t elect MPPs at Queen’s Park — Ontarians do. And Ontarians aren’t as fussed about Quebec or Manitoba companies losing out on business here.

Repeat that dynamic across 10 provinces, and it’s not surprising that negotiations among the provinces to make serious multilateral agreements to reduce trade barriers is slow-going. In 2017, the provinces signed a much-ballyhooed Canada Free Trade Agreement for Canada’s 150th anniversary, and it has not exactly been earth-shaking.

The thing is, though, the provinces don’t actually need to move together. If governments believe that these barriers to commerce are a serious problem (and they say they do), they can just … get rid of them. On their own. Without asking anyone else’s permission. That’s the approach Alberta premier Jason Kenney announced this week: his government will be abandoning the carve-outs it had under the Canada Free Trade Agreement and reviewing other barriers that don’t have a pressing justification.

There’s nothing preventing Ontario’s government from following Kenney’s lead — if it wants to. What we call “interprovincial trade barriers” are simply differences in regulation: one province requires different types of tires for long-haul trucking than the others, say, or doesn’t recognize a professional or trade credential from beyond its borders. There’s neither mystery nor novelty here: we’ve been jabbering about it for decades. We know how to fix it.

The other thing Ford could do is accept Kenney’s invitation to join the New West Partnership Trade Agreement, a more robust agreement between the Western provinces (originally between British Columbia, Alberta and Saskatchewan, it now includes Manitoba) that includes such things as mutual recognition of trade and professional credentials. Ontario may not be anyone’s idea of a Western province but, under Tim Hudak, the PC party argued in favour of joining the NWPTA, so it’s something the Tories have definitely considered.

Of course, there are reasons provinces don’t generally do what Kenney has done: the current trade barriers serve as bargaining chips for negotiations with the other provinces.

That’s totally normal in the world of politics, but if you take the argument about interprovincial trade seriously, it’s nuts: the people paying the cost of high trade barriers are Ontario consumers, who have to pay more for goods and services than they would have to otherwise, and Ontario taxpayers, who have to pay more for government procurement. We can be angry about the fact that Ottawa contractors can’t drive across the river to a job site in Hull without imposing substantial costs on the entire provincial economy.

It may all just be negotiation, but remember — the hostages here are you and me.

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