TORONTO, ON – Canada has unveiled a new free trade agreement that applies to products moved between provinces and territories — and it comes with a new regulatory body devoted to eliminating barriers such as differences in trucking rules.
The Canadian Free Trade Agreement, which takes effect on July 1, was unveiled in Toronto on Friday by Navdeep Bains, minister of innovation, science and economic development.
Inter-Canadian trade is worth $385 billion per year, representing about 1/5 of Canada’s Gross Domestic Product, and accounts for 40% of provincial and territorial exports.
The new agreement replaces the Agreement on Internal Trade that has been in place since 1995, and commits all governments to reduce the “patchwork of rules and regulations that can stifle growth”, the federal government announced.
“Companies will find it easier and less costly to sell their goods and services across the country, which means Canadians can expect more choice and pay less for what they buy. More open markets and less red tape mean Canadian businesses can grow and compete globally,” Bains said.
The Canadian Trucking Alliance was quick to welcome the agreement, albeit cautiously.
“Time will tell whether the new processes established to identify, prioritize and negotiate standardized rules will be more effective than previous attempts to increase the level of harmonization of trucking regulations,” said David Bradley, the alliance’s Chief Executive Officer.
Brad Duguid, Ontario’s minister of economic development and growth, specifically referenced the lack of harmony in provincial Hours of Service rules.
The new deal also includes a Regulatory Reconciliation and Cooperation Table that will oversee a new regulatory reconciliation process.
“We have maintained for many years that the processes and institutions Canada has been relying on to address provincial trade impediments and regulatory differences are in need of re-energization, modernization or replacement,” Bradley said. “The new table might provide that focus.”
Bradley added that Canada needs to address the challenges that come with differences in the rules that govern everything from weights and dimensions to truck safety and environmental standard.
“We need more harmonization not only between the provinces but between the provinces and the federal government as well,” he added, referring as well to upcoming negotiations around the North American Free Trade Agreement.
“Given the current lack of domestic regulatory harmonization and cohesiveness, Canada – at least when it comes to trucking issues – often does not speak with one voice, which makes it difficult, if not impossible, to achieve true North American or bilateral standards,” Bradley said. “The Americans don’t want to deal with 10 provinces, three territories and the federal government. They would like us to discuss these issues with a single voice.”
Still, Mathieu Bedard, an economist with the Montreal Economic Institute, says the new agreement does not go far enough.
“A real common market entails the complete liberalization of interprovincial trade. It’s pretty counterintuitive, but in certain regards, it’s more difficult for a Montrealer to do business with a supplier in Toronto than with a supplier in San Francisco,” he said.
The institute says artificial obstacles between the provinces cost the Canadian economy between $50 and $130 billion per year. A recent study in the Canadian Journal of Economics estimates that potential productivity gains could be worth $100 billion, or about $2,700 per Canadian.
Canada has signed 10 free trade agreements with other countries since inking the previous deal on trade between the provinces.