Canada's premiers hold a press conference closing the Council of the Federation meetings in Charlottetown on Wednesday.Darren Calabrese/The Canadian Press
Fred Gallagher is chief executive of Canadian Vitality Pathway Inc.
Once again as Canada’s premiers meet, Canada is on the menu.
Canada is under attack by our largest trading partner with a new round of threatened tariffs on Canadian goods. Calls for a tit-for-tat and “dollar-for-dollar” retaliation seem to be the only demonstrable approach on the table at this year’s annual summer meeting of Canada premiers, taking place this week in Charlottetown.
Yet, the premiers appear to have conveniently forgotten that they and their governments are responsible for some of the largest unnecessary costs to Canadian GDP through interprovincial trade barriers.
In 2025, the federal government estimated that “eliminating internal trade barriers could boost GDP by as much as $200 billion, which is equivalent to $5,100 per person,” or approximately 6 per cent of Canada’s GDP. Similar numbers were reported by the International Monetary Fund regarding the impact of Canada’s internal trade barriers.
Premiers agree to lift interprovincial barriers on alcohol sales
For comparison, prior to the White House’s latest tariff proclamations, the Bank of Canada estimated Trump-era trade restrictions would result in a 1.5 per cent hit to Canada’s GDP by the end of 2026, or approximately $50-billion. (U.S. President Donald Trump’s planned new tariffs, meanwhile, will apply to roughly $28-billion worth of Canadian products, but the affect on GDP is unlikely to be that high.)
This means the beneficial GDP value of removing internal barriers to domestic free trade is on the order of three to four times that of all of Mr. Trump’s imposed tariffs.
On June 26, 2025, the federal government passed the Free Trade and Labour Mobility in Canada Act, which came into force at the beginning of this year. Additionally, Ottawa removed all federal exceptions to the Canadian Free Trade Agreement (CFTA) on June 30, 2025.
Sounds impressive. Problem solved! Simple, right?
Unfortunately, federal legislation was not the main impediment to opening domestic trade. Ottawa has very limited powers or actions it can take that affect interprovincial trade. The vast majority of legislative and regulatory responsibility for interprovincial barriers resides with the provinces themselves.
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While last year’s summer meeting of the premiers focused on “building a stronger Canada by reducing barriers to internal trade and labour mobility,” little tangible action has been accomplished since then.
Agreements have been signed, but implementation is slow, especially in the areas of financial services, trucking, professional licensing, regulatory frameworks and the integration of provincial infrastructure. It is the responsibility of the premiers to accelerate toward their mutually agreed upon goal.
To the premiers’ credit, some progress has occurred through the signing of the Mutual Recognition Agreement on the Sale of Goods, a patchwork of labour-mobility changes and the removal of approximately 22 per cent of the exceptions under the CFTA.
On Tuesday, nine premiers built on this progress and formally agreed to remove barriers to the interprovincial alcohol trade by allowing consumers to buy directly from wineries and breweries outside their own province.
In a report card on internal trade, the Canadian Federation of Independent Business gave the provinces high marks for having signed MOUs and declared policy intentions regarding interprovincial co-operation on trade. However, the CFIB proffered substantially lower scores to provinces clinging to CFTA exceptions and for the actual removal of internal trade barriers, with most provinces receiving a sub-C grade.
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In the 1990s, Australia faced many of the same inter-state trade and competition barriers. Through a national competition policy review, that country’s premiers were able to agree on removing internal trade and regulatory barriers that were critical obstacles to Australia’s international competitiveness. Since adopting the principle of the competition review, Australia went from lagging Canada’s GDP per capita by $2,709 in 1990 to exceeding Canada’s GDP per capita by $6,519 in 2022, a change of almost $10,000 per person.
In an open letter to all premiers in advance of last summer’s Council of the Federation summer meeting, I implored them to follow Australia’s lead and remove interprovincial barriers. I was encouraged by the premiers’ final communique of July 23, 2025. It was a solid start to dropping Canada’s internal barriers to trade and commerce.
But significant barriers remain in place that economically dwarf the Trump tariff issue. Without premiers exacting strong pressure on their governments, little will tangibly get accomplished and Canada will not realize the clear economic value.
At this year’s Council of the Federation summer meeting, perhaps the premiers should focus less on exogenous concerns – for which they can do little – and instead commit to accelerate the completion of goals they set for themselves last July.