A New Report Highlights the Potential Gains for Businesses and Consumers
A recent report by the Canadian Federation of Independent Business (CFIB) has shed light on the significant economic benefits that can be achieved by removing interprovincial trade barriers in Canada. The report, titled "The State of Internal Trade: Canada’s Interprovincial Cooperation Report Card," suggests that the removal of these barriers could add as much as $200 billion to Canada’s economy each year.
The Current State of Interprovincial Trade Barriers
Interprovincial trade barriers refer to the regulations and rules that govern the movement of goods, services, and people between different provinces in Canada. These barriers can be frustrating for businesses, particularly small ones, who often find it easier to trade with companies from other countries than with those in their own province.
"We have a lot of members who have told us that it’s actually easier for them to trade and do business in the States than it is to do business in another part of Canada," said Keyli Loeppky, director for Alberta and interprovincial affairs at CFIB. "That really speaks to just how significant these barriers can be in hampering business growth and expansion."
The Economic Benefits of Removing Interprovincial Trade Barriers
The report highlights several ways in which removing interprovincial trade barriers can benefit businesses and consumers:
- Increased Productivity: By reducing the number of regulations that businesses must navigate, productivity is likely to increase.
- More Choice for Consumers: With fewer barriers to trade, consumers will have access to a wider range of goods and services from different provinces.
- Addressing Labour Shortages: Removing interprovincial trade barriers can help address labour shortages by allowing businesses to hire workers from other provinces more easily.
- Fostering Innovation and Investment: By reducing the costs associated with navigating multiple sets of regulations, businesses will be more likely to invest in research and development and innovation.
The Current State of Implementation of the Canadian Free Trade Agreement
In 2017, the provinces came together to sign the Canadian Free Trade Agreement (CFTA) to create a way to solve these trade regulation differences. However, the report notes that progress has been slow, with some provinces making more efforts than others.
"Businesses are certainly not feeling it on the ground when it comes to the barriers they’re facing," Loeppky said.
Domestic Trade Barriers That Cause the Most Challenges to Small Businesses
The report highlights several domestic trade barriers that cause the most challenges to small businesses, including:
- Restrictions When Selling Alcohol and Food: Different provinces have different regulations around the sale of alcohol and food.
- Registering with Multiple Workers’ Compensation Boards: Businesses must register with multiple workers’ compensation boards across different provinces.
- Recognition of Certifications in Different Jurisdictions: Certifications obtained in one province may not be recognized in another.
- Complying with Different Occupational Health and Safety Standards: Different provinces have different occupational health and safety standards.
Solutions to Removing Interprovincial Trade Barriers
The report suggests several solutions to removing interprovincial trade barriers, including:
- Mutual Recognition: Every province allows any good, service or credential to automatically be considered compliant.
- Streamlining Regulations: Reducing the number of regulations that businesses must navigate.
"Removing these barriers is a low-cost way to spur business investment," Loeppky said. "I think at a time when Canada’s economy is not doing great, and productivity is a big word on everyone’s mind, governments would do well to look into this."
Conclusion
The removal of interprovincial trade barriers in Canada has the potential to add as much as $200 billion to the country’s economy each year. By streamlining regulations and implementing mutual recognition agreements, provinces can reduce the costs associated with navigating multiple sets of regulations and increase productivity. As Loeppky noted, "There are a lot more benefits to removing these barriers than there are harms."
