On interprovincial trade, it would be nice to see what Canada is agreeing to

ANALYSIS: Canada’s provinces are hashing out a far-reaching deal on interprovincial trade, but they've released no details to the public
By John Michael McGrath - Published on Feb 02, 2017
The provinces are working out what's been billed as the broadest agreement on interprovincial trade in the country’s history. (Jonathan Hayward/CP)



Interprovincial trade in Canada is kind of like power from nuclear fusion: it's been 10 years away for the past 50 years. Except in our case it’s actually been 150 years, since one of the primary motives for the confederation we’re currently celebrating was to create a single market among the provinces of Ontario, Quebec, New Brunswick, Nova Scotia, and the provinces that have joined (or been created) since. We may not need to wait for another 150, though. The provinces are, this very minute, working on what is billed as the broadest agreement on interprovincial trade in the country’s history.

There’s one problem: they haven’t yet said anything about what’s in it.

Now, keeping quiet about negotiations in progress isn't unusual (the recent trade agreement with the European Union was similarly opaque), but just because secrecy is the habit of governments everywhere doesn’t mean we should accept it. And if the agreement is far enough along that governments are confident of it being in place by Canada Day, it’s time the public got a look at what’s being done in their name.

Ontario’s minister of economic development and growth, Brad Duguid, is Ontario’s primary representative in these negotiations. A spokesperson for his office disagreed sternly with TVO.org’s description of these negotiations as “secret talks,” while acknowledging that neither we nor any other journalists were allowed to see the draft text of the agreement. His office also would not confirm whether Ontario is one of the provinces that, according to the Globe and Mail, have already approved the draft text.

Interprovincial trade barriers are a real issue in the Canadian economy, and courts have, until recently, broadly deferred to these kinds of barriers. Provincial governments love putting obstacles between, say, contractors being able to work in both Quebec and Ontario (which keeps the competition for work in the Ottawa-Gatineau region down — and no, this is not a hypothetical example). And it’s not just labour: regulatory differences make it harder to move meat and cheese across provincial borders, before even wading into the issue of supply management. Thanks to the new Comprehensive Economic and Trade Agreement with the European Union, Canadian businesses are now worried they may actually have a harder time selling their wares in other provinces than European companies will.

Estimates over how much of our productivity is lost because it’s difficult to move some goods and services between provinces vary widely, and in any event need to be taken with a grain of salt. A June 2016 report from the Senate Committee on Banking, Trade and Commerce noted that estimates range from $50 billion to $130 billion. That’s a huge variance, and the public would be right to be skeptical of the ones on the high end, given the political stakes involved: even NAFTA’s defenders, such as the Peterson Institute of International Economics, concede it has failed to deliver “the inflated promises of politicians when the pact entered into force.”


In any event, we know that whatever the provinces sign won’t bring down barriers in all sectors, because it is designed not to: its “negative-list” approach will carve out specific sections of provincial regulation that will not be subject to free trade. Prior news reports indicate that energy, financial services, and alcohol will all be at least partially exempt, even though byzantine rules regulating beer and wine sales are also the most common way ordinary Canadians actually encounter limits on interprovincial trade. Provinces might be interested in making life easier for businesses, but they refuse to give up their cherished alcohol monopolies (or whatever we want to call Ontario’s duopoly-plus-grocery stores.)

It’s true that the negative-list approach, where anything that’s not explicitly preserved is opened to interprovincial trade, is likely to resolve trade disputes more effectively than the status quo. The previous deal — the Agreement on Internal Trade, signed in 1995 — has barely moved the needle on interprovincial trade, in part because it was timid in conception and has been costly and difficult to enforce. A negative-list agreement with a clear mechanism for harmonizing regulations addresses that problem.

But because it’s likely to be so much more far-reaching, it would obviously be in the public’s interest to see what’s being agreed to before the premiers ratify the text.

Duguid’s office says Ontarians won’t be in the dark much longer. “We’re very close to being in the position to release the details of the agreement,” they told TVO.org in an emailed statement, “and Canadians can expect it to be in effect by July 1.”

There will almost certainly be some kind of formal way for Ontarians to contact their MPPs about the changes any free trade deal brings, even after it is signed and implemented (the government will sign the agreement and then present an implementation bill to the legislature, but there won't be legislative hearings). And as the government subsequently issues new regulations and laws to allow for the agreement's implementation, those will be publicly posted, and laws will need to work their way through the usual procedural steps, including committee hearings.

The problem is that once the agreement is in place it will become the reason that changes to other laws have to be pushed through, over any objections from opposition parties, labour unions, or other advocates — whatever those objections may be, once the interprovincial agreement is in place Ontario will be obligated to take the measures necessary to implement it.

Fittingly, the reflex to negotiate these things in secret is kind of a Canadian tradition. Reporters weren’t welcome when the fathers of Confederation were hammering out the details of what, exactly, British North America would look like at the Quebec Conference of 1864, either. But the Quebec Resolutions were debated thoroughly in the colonial legislatures before they were sent to London. The pre-Confederation Parliament of Canada (what is now Ontario and Quebec) produced 1,000 pages of transcribed debate in 1865, which were published for the public to pore over, for an agreement that didn’t get approved by the British parliament until more than a year later. Voters didn’t get to make substantive changes then, either, but the long lead time meant they got to express their opinions in elections, voting for anti-Confederation governments in both New Brunswick (1865) and Nova Scotia (1867) who tried and failed to derail the process. In 2017, Ontarians and Canadians are going to be presented with a deal our governments have already agreed to that goes into effect only months after the public gets any chance to scrutinize it.

It’s easy to wax alarmist about these kinds of deals, but there's good reason not to. Interprovincial free trade isn’t going to destroy the economy any more than it’s going to make every single Canadian a millionaire. In the best-case scenario it’s likely to iron out some of, but not all, the irritations that make it harder than it ought to be doing business between the provinces. And that’s worthwhile. But it’s also worth letting the public see what’s going on.

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