Diya Jiang is a lecturer at McGill University and a researcher who specializes in the politics of international trade and protectionism. Daniel Béland is the director of the McGill Institute for the Study of Canada.
The recent federal election has brought much momentum toward liberalizing Canada’s internal trade. During the campaign, Prime Minister Mark Carney pledged to remove interprovincial trade barriers by July 1. This reflects the urgency of the issue amid Canada’s ongoing trade war with the United States. It also points to new political momentum surrounding an issue that has been on the radar screen of economists and policymakers for decades, but on which little real progress has been made before this year.
Yet, significant risks remain on the path toward free internal trade in Canada. Politicians must resist the temptation of announcing high-profile policy changes while neglecting the actual implementation of trade liberalization, which is complex and technical in nature.
While public announcements allow both federal and provincial leaders to score easy political points, performative statements are not the same as fully implemented policies. Even if approaching the issue with a genuine intention of removing interprovincial trade barriers, politicians must carefully follow through on any announcements to ensure true policy progress on the ground, where it really matters for the future of our economy.
Several recent cases illustrate this. Back in February, Nova Scotia introduced legislation to reduce existing interprovincial trade barriers. The bill, which passed in March, was covered heavily in the media and widely applauded as one of the first significant provincial efforts to overcome Canada’s internal trade problems. Among other measures, it enabled professionals licensed in other provinces to work in Nova Scotia without seeking new credentials.
However, what received much less attention was the almost immediate rollback of many of these measures. In fact, the province made several amendments to the original bill, which significantly reduced the intended effect of removing interprovincial barriers. Specifically, the change to waive re-licensing requirements was almost completely scrapped amid predictable pushback from local licensing bodies.
The change occurred much more quietly than the initial announcement and might have gone unnoticed if it had not been picked up by national media. This is problematic because it can create the impression that Nova Scotia’s interprovincial trade barriers have already been removed, despite only partial and limited progress on the ground.
The same concern exists surrounding Ontario’s announcement to remove its registered exemptions to the Canada Free Trade Agreement (CFTA). While this may sound like a big step forward, it does little to address the underlying regulatory practices that represent the biggest barriers to free interprovincial trade. Without additional action, it may create the illusion of free internal trade and reduce the sense of urgency for further policy change.
In fact, most formal internal trade barriers have already been minimized across Canada. The biggest challenges to internal free trade today come from misaligned regulatory standards, overlapping licensing mandates, and inadequate transportation infrastructure. Removing these requires policymakers to engage in highly technical work that is poorly understood by the public and will hence yield little immediate political benefit.
As they coordinate actions to liberalize Canada’s internal trade, federal and provincial leaders must resist the temptation of flashy yet poorly implemented policy announcements. This is especially important as Mr. Carney’s promise of achieving free trade by July 1 becomes more pressing.
Real policy progress on the issue of internal trade is unlikely to be delivered through superficial and politically expedient ways. Instead, it will require delving into technical and politically unrewarding work while confronting entrenched provincial interests. The current moment represents an unprecedented opportunity to finally liberalize Canada’s internal trade environment. It should not be wasted.