This information is from a webinar put on by BDC called “Unlocking Growth: How New Federal Policies Could Reshape Interprovincial Trade.” You can watch more webinars such as this one here https://www.bdo.ca/insights/events-webinars.

In early June, BDO Canada hosted a webinar that featured speakers Mike Abbott, Partner, Technology & Regulatory Advisory; Jesus Ballesteros, Partner, Strategy, Value Creation and Analysis; Gitane De Silva, Former Alberta Deputy Minister of International and Intergovernmental Relations, Founder & Principal of GDStrategic; and Paul M. Lalonde, Partner of Dentons. These experts discussed how Prime Minister Mark Carney’s pledged trade barriers and regulations could affect businesses, workforces, and the broader economy.

Barriers

“International trade represents about 20 per cent of Canada’s GDP. That’s why we’re seeing so much attention finally placed on it now, given that we’re having a bit of an external crisis in our trading relationship with the United States,” says Gitane De Silva. “This is an opportunity for Canada to work better together and to grow our economy domestically.”

One study by Dr. Toohey from the University of Calgary estimates that if Canada can remove these barriers, the Canadian economy would grow about 7.8 per cent – adding about 200 billion to the Canadian GDP.

What are these barriers, and why are they so persistent? The first barrier is the differences in standards and regulations. Many of these are established at the provincial level; when it comes to trucking, what happens is different provinces establish different safety standards. These involve different rules around driver training, the length of loads, which pieces of equipment can be operated when, etcetera; the challenge is when each province act independently, it causes problems when these truckers move across borders.

You multiply these kinds of problems across the sectors and industries, and it amplifies. “Every time you need to make a change like that, every time there is a difference, it costs time and costs money,” says De Silva.

The second type of barrier is what De Silva would call domestic protectionism. The example most often used is alcohol. “Say you are the premier of Nova Scotia, and you want to grow your wine sector. You know that you’ll have a hard time competing with Ontario and British Columbia, so you’ll put measures in place to protect that growing sector,” says De Silva. “So, you might either give Nova Scotia wine preferential treatment when you’re buying it with provincial liquor stores, or you might give it preferential tax treatment. These are both examples of why this problem is so persistent.”

Because there are hundreds and thousands of these standards and regulations, it has been incredibly difficult to amass a list of everything that would need to be harmonized. “What you’re seeing right now is a push for mutual recognition, where it’s like you have a standard, I’ll accept yours if you accept mine,” says De Silva. “The other reality on the protectionism side is we know that there are winners and losers in trade agreements. It’s difficult politically for leaders to say okay, I will reduce these barriers knowing that perhaps my sector of this economy cannot compete, and people lose their jobs.”

It will take the support from Canadians, not only at the political level, to keep moving forward. What needs to be discussed further is how, exactly, to support people as they transition to new opportunities.

“When anyone hears the word thousands, one has to remember that it’s been since 1867 that we’ve had the chance to build these agreements,” says Mike Abbott. “There’s a lot to unwind and a lot in the detail.”

Legislative Components

“There is a strong political consensus that’s emerged around reducing these barriers, and easing the flow of trade in services and goods, easing labor mobility across Canada,” says Paul Lalonde.

Minister LeBlanc, on June 6, introduced new legislation that represents one of the steps that the Carney government is taking. This new legislation is the first big legislative step that the Carney government is taking to build a stronger, more competitive and resilient Canadian economy. That objective, of course, has yet to be attained; but they have stated this is the purpose.

The new bill put forward by Minister LeBlanc, titled the One Canadian Economy Act, is tabled as Bill C-5 in the House of Commons. It has two main parts – “in fact,” says Lalonde, “it’s two laws in one omnibus piece of legislation.”

The first part of the bill is called the Free Trade and Mobility in Canada Act. The stated purpose of this is to promote trade and mobility by removing the federal trade barriers to interprovincial movement of goods and the provision of services that might apply within Canada. On top of the provincial barriers discussed previously, there are also federal regulations that can impact the freer movement of goods and services across the country. The central idea of this part of the bill is that a good produced, used, or distributed in accordance with a provincial or territorial requirement will be automatically considered to meet any comparable federal requirement, once the bill is passed. If there are overlapping requirements from both federal and provincial, if you meet the provincial one, you’re automatically going to be deemed to meet the federal one without any additional requirements to be met.

The second part of the bill is what’s being called the Building Canada Act. The stated purpose here is to enhance Canada’s ability to approve and move forward with major projects. This act will allow for the designation of certain major projects to be in the national interest, and if a project is designated to be so, its development can be accelerated. It will be conditionally approved upfront and the process will go through some of the existing review processes, but with a focus on how we get it done as to whether or not we get it done.

There are still a lot of details that need to be sorted out and concerns being voiced about this proposed bill, but “I think this is overall good news for the Canaidan economy,” says Jesus Ballesteros.

The Opportunities coming in the Canadian Marketplace

“By removing barriers,” says Ballesteros, “one of the things that companies can expect to see is cost savings. One of the biggest opportunities here is as you bring down those barriers at least between the federal level and provinces, you are removing essentially red tape, requirements, delays, and all that is money.”

One of the other opportunities is opening up new markets and growing the top line. For companies in many sectors, it has been an impossibility or been at least burdensome to do business in a different province because of the regulatory requirements and barriers. As the barriers start to come down, it will make inter-provincial commerce more possible.

“As barriers are being erected down south, it gives another outlet for Canadian companies that are looking for different markets,” says Ballesteros, “and especially as Canadians have woken up to the fact of buying Canadian strongly; it is an opportunity that many businesses will be able to take up.”

The investment in infrastructure is also an important part of this because to whatever extent that Canada invests in its infrastructure to make the flow of goods easier across the country, it will also reduce costs and make it much easier for companies to sell in other provinces and markets. If it is possible to bring down the approval of large, national interest projects from five years to two years, then this is essentially pulling forward a lot of investment.

“We’re not going to disentangle ourselves from the United States overnight, but if we can build these other pieces of infrastructure: roads, ports, rail, all of the things that we need to move things across the country, there is a real opportunity for everything from agricultural products to manufacturing to really be working together, better,” says De Silva.

To listen to the whole conversation, please watch the full webinar here: https://www.bdo.ca/insights/events-webinars/unlocking-growth-how-new-federal-policies-could-reshape-interprovincial-trade.