Kenneys Government Lauded for Dropping Internal Trade Barriers, Leading by Example

Kenneys Government Lauded for Dropping Internal Trade Barriers, Leading by Example

Its been said, and it was—just earlier this month by the Canadian Chamber of Commerce—that it can be..

Its been said, and it was—just earlier this month by the Canadian Chamber of Commerce—that it can be easier to trade with a foreign country than with another province.

But Alberta Premier Jason Kenney is doing his utmost to change that, by taking a leadership role in dropping barriers that prevent greater commerce between his province and others.

Getting rid of trade barriers between Canadas provinces and territories has the potential to help unify the country after a divisive federal election, according to Peter St. Onge, senior economist with the Montreal Economic Institute (MEI).

“There are huge benefits in terms of reinforcing that we are all Canadians. Were all in this together,” St. Onge said about dropping protectionist stances. “This is perfect timing, unfortunately, with the conflicts between people in Alberta and specifically in Quebec, but also among the other provinces that are not as welcoming about importing energy.”

St. Onge is a collaborator on a research paper introducing the MEIs newly created Internal Trade Provincial Leadership Index (ITPLI). The ITPLI, launchedNov. 14, was established primarily to track progress toward a Canada free of internal trade barriers, which could raise economic growth by almost 4 percent, according to the International Monetary Fund.

The index ranked the 10 provinces and three territories based on having the fewest barriers to internal trade. Alberta ranked No. 1, thanks to Kenneys efforts to eliminate large swaths of trade exceptions from the Canadian Free Trade Agreement (CFTA).

The CFTA, a joint project of the federal, provincial, and territorial governments, took effect in 2017 and was intended to be a significant step toward freeing up trade in “virtually every sector of the economy,” as noted by the federal government at the time. However, its so loaded with exceptions that it prompted the MEI, in collaboration with the Canadian Constitution Foundation, to create an index to monitor advancement toward eliminating those impediments.

Alberta Doing the Right Thing

Government procurement is one such crucial area filled with multiple exceptions.

The report also points to sections in the CFTA that support monopolistic behaviour at the provincial level if the government owns the monopoly. For example, Article 317 allows the provinces to discriminate against external investors in order to protect a monopoly.

“The perfect is the enemy of the good is the logic there,” St. Onge said, adding that by creating the index, it keeps pressure on the provinces and territories to get rid of awkward rules, special fees, certain licensing requirements, etc. that hinder commerce.

Simply put, the index appears to show that Canada has some provinces that want free trade and others that dont. The western provinces of Alberta, Manitoba, B.C., and Saskatchewan lead the rankings while Quebec ranks last.

“By unilaterally disarming on protectionism, Alberta Premier Jason Kenney is doing the right thing. … This is going to be an easier province to invest in, to make money in, to hire people in. Thats positive for an economy,” said the research reports author, MEI senior fellow Mark Milke, in an interview with BNN Bloomberg.

Its also good for Alberta to diversify its economy, and it promotes national unity, Milke added.

Related Coverage

Ontario ranked poorly in the index, at fourth-last among the 13 jurisdictions, but St. Onge says Premier Doug Fords rhetoric on reducing trade frictions and red tape has been excellent. The Conservatives in Ontario on Oct. 28 introduced legislation to cut more red tape and make doing business in the province easier.

However, the index focuses on reducing interprovincial trade barriers, and Ontario still needs to make greater progress on this front.

“Because of Premier Kenneys move, there was a follow-up by Manitoba soon after that, so were hoping its a question of dominos falling. Hopefully, the largest economy within Canada, Ontario, will be next,” St. Onge said.

Unlocking Potential

The report states that internal trade liberalization, based on the calculations of some economists, would add $50–$130 billion to Canadas overall GDP, which represents between $3,500 and $9,200 per Canadian household every year.

“Its hard for people to see what theyre missing,” St. Onge said. “If its been this way for 50 years, then, for example, for trading alcohol between provinces, for trading agricultural goods, they cant see what theyre losing.”

The quagmire of trade impediments is partially created out of the laudable intention—and pressure—to devolve power to the local level. But these powers can be co-opted by special interest groups, which can then rewrite the rules for their own benefit, explains St. Onge.

“When you put a particular power at the local level, then it becomes attractiRead More – Source

CATEGORIES
Share This