By Laura Balanko-Dickson
Staff writer
lbalankodickson@fortfrances.com
Is all the discussion about interprovincial trade a significant source of cash flow or political theatre? How much money is there to be saved on domestic trade in Canada, and will it make a meaningful impact on the economy?
For Marc Lee, Senior Economist at Vancouver’s Canadian Centre for Policy Alternatives, there is a distinct lack of meaningful economic gains to be made by addressing interprovincial trade barriers, except in the case of alcohol sales and regulation. He suggests everyone lowers their expectations about immediate economic benefits, and that domestic trade transportation costs are more significant than regulatory barriers. More than that, macroeconomic issues like Canada-U.S. trade relations and federal budget deficits will have a greater impact on the pinch people are feeling in their pocketbooks across Canada.
“Alcohol is one area where there are barriers between the provinces,” said Lee.
“Somewhere else, it’s not there. It’s not clear to me exactly what problem [federal and provincial governments] are trying to solve. Like, can you think of a company that is experiencing difficulties trading across provinces or other consumers that have any products that you can get here in B.C., that you can’t get in Ontario? Like, where’s the specific problem? That, I think, is the genesis. “
For Lee, the supposed economic gains blur the line between beneficial economic outcomes and baseless political theatre.
“Is this an actual issue, or is this just politicians kind of creating political theatre to make it look like they’re acting in the best interest of Canada in response to the Trump tariffs?” Lee asked.
“For some things, it’s super innocuous. If we could eliminate those differences, ideally by ensuring that we raise standards, then there could be some gains to be had there. But, largely, these differences are around environmental protection and consumer protection against things like fraud and health and safety for workers. Those are the big three areas where there are some differences.”
One such area discussed was the difference in trucking regulations from province to province.
“When you come to know the context for the trucking regulation conversations, that, well, there may be some differences province to province, but how you resolve them matters, right?” Lee explained.
“So if we raised everyone in Canada to the B.C. [trucking] standard, this would arguably be a good thing, in my opinion. But if we just said, ‘B.C. now has to recognize certifications across the board from Saskatchewan.’ Then it’s like, well, that’s going to [potentially] lead to trucks falling into deep valleys and having major accidents. We will never be able to resolve these differences simply because of geography, industrial structure and what local populations want. To some extent, I think the whole discourse is like, ‘Well, you know, there are all these invisible barriers that are preventing commerce from happening!’ But they’re not really preventing commerce from happening. There may be some paperwork issues associated with that, but there’s not an actual barrier. There are no quantitative restrictions across [provincial] borders. There are no customs inspection stations. There are no [provincial] tariffs. Basically, goods and services flow freely across borders within Canada, with the exception, as I mentioned, of alcohol, which has its own sort of set of kind of public policy issues.”
That’s not to say there are no benefits to be seen in opening up interprovincial trade. However Lee thinks any gains to be realized will be slight.
“Where there are any outstanding differences, and there are not that many, so therefore there’s not much economic gain to be had,” said Lee.
“But it’s still worth trying to improve the situation.”
For Lee, the emphasis should be on improving standards across provinces rather than mutual recognition of services that aren’t equal.
“Another example that comes up is around the labour market,” said Lee.
“Almost the entirety of Canadian workers can just pick up and operate in another province. There are a few areas where they haven’t harmonized very well.”
One of these areas is where someone can and cannot practice law. But, Lee outlines that these so-called barriers will likely remain for the foreseeable future.
“Lawyers are one, and that’s largely because of just differences in provincial law,” said Lee.
“Quebec, in particular, has its own kind of civil law tradition. So there’s always going to be some barrier there, right? If I want to move to Ontario and start practising law, I need to get called to the Ontario bar. That’s not a trade barrier, that’s just reality.”
Another common area of inter-provincial discussions is in healthcare.
“Doctors and nurses generally flow pretty freely, at least registered nurses,” said Lee.
“But there’s a category called licensed practical nurses, [who are] sort of halfway between an orderly and a registered nurse. [In that area,] there are some differences from province to province. Similarly, things like dental hygienists. So, those are a few of those that they haven’t totally figured out yet.”
Still, Lee believes the best path forward is in raising standards, not lowering them.
“Let’s elevate the standard so that we have a high, common standard for dental hygienists across the provinces. I don’t think anyone’s going to really argue with that,” said Lee.
“We don’t want jurisdictions competing with each other by lowering their standards. With Red Seal trades, you know, in construction or industry, those are all harmonized across the country. So really there’s only a couple of holdout areas [which remain.]”
Even in these cases, Lee said those are the exception, not the rule.
“Sometimes, when you move, you need a certain certification in that jurisdiction. In order to get that certification, you may need to take some additional education and training. So, generally, what they’re trying to potentially do now is to sort of shift the onus,” he said.
“Instead of having to move and then get all that stuff, the education, the training, and the certification before you start working. Instead, you can move there and start working, and you still have to complete the certification, but you can do that while you’re already working. In some places, that could be a modest improvement, but again, we’re not talking about the vast majority of jobs out there.”
The only area where Lee said there might be some latent economic potential is in alcohol sales.
“If we had a little bit more choice in the liquor store over spirits and wine, and whatever from different parts of Canada, I don’t think that’s necessarily a bad thing,” he said.
“We don’t necessarily want major price competition and an increase in the amount of alcohol that Canadians are consuming. There’s a whole public health angle to this, which is why governments regulate the area so intensely. They also make taxes from managing that in that way. It’s not entirely clear how they would resolve it.”
Despite the nebulous nature of how to proceed with interprovincial alcohol sales, the Ontario government has proposed some potential solutions.
“What Ontario has been pushing for is the idea of direct-to-consumer alcohol sales,” said Lee.
“I could just order from Ontario here in Vancouver, and I don’t really have a problem with that. The problem is that it’s just expensive, right? If I order a few bottles of wine from Ontario, how much is the shipping on that going to be? I think that illustrates the key point, which is the barriers between trade within Canada, to the extent that they are there, they are much more about distance and transportation cost than they are about barriers in regulation at the border or anything like that.”
So, if the crux of the issue is shipping and transportation costs, the conversation should focus there rather than on so-called interprovincial trade barriers.
“The sort of distance to markets is still a pretty big factor. Here, where I am in Vancouver, it’s like 4,500 kilometres back to Toronto or Ottawa,” said Lee.
“I love the idea of expanding high-speed rail across the country. That’s something that would [potentially] make goods and people be able to connect more quickly. It’s hard to say, but ultimately, that’s the core challenge within Canada, and that’s why a lot of trade goes North-South to the United States. I’m all for an agenda on this stuff that tries to address practical problems, but I feel like a lot of the conversation is just at this higher level where they’re pretending there’s a problem, and they’re pretending to solve it politically, but they’re not really solving a whole lot … The agenda, to me, should be like, ‘Let’s focus on practical issues where there are barriers,’ and I’m still waiting to see a list of what serious barriers should be addressed.”
While Carney and the premiers spin their wheels stuck in the rut of interprovincial trade barriers that don’t exist, or at least don’t exist as the government suggests, Lee suggests that people, professionals, and politicians lower their expectations.
“We should all lower our expectations of what’s possible here,” said Lee. “All we’re seeing right now is just a flurry of news releases saying we’ve signed a memorandum of understanding, which really doesn’t mean anything. It’s just like, ‘Oh, we’re in agreement to keep talking.'”
For Lee, the focus should be on macroeconomic factors.
“The real issues in all of this are the bigger macro issues. They’re Canada-U.S. trade and what happens with that. They’re how the federal government [stands] in terms of its overall budget, budget deficit and spending in response to that,” said Lee.
“How that all plays out is going to have a much bigger impact on Canadian households than any [of the proposed] changes that we make here. Even if you take the study at face value, that $200 billion is the maximum end of a large range; these are gains that happen over, like, 10 to 20 years. They’re not writing that you just flick a switch and all of a sudden, there’s $200 billion.”
