Canada/Progress: Inter-Provincial Trade Barriers

 Canada/Progress: Inter-Provincial Trade Barriers

Mark Carney became the Prime Minister of Canada in March 2025. His government, including a commitment to eliminate interprovincial trade barriers by July 1, 2025, has been actively working on this initiative.

Here's a summary of the progress and key actions being taken as of late May 2025:

Overall Approach and Goals:

  • "Free Trade by Canada Day" Initiative: Prime Minister Carney's government launched this initiative with the goal of achieving free trade between provinces by July 1, 2025. This aims to boost Canada's economy by an estimated $200-$250 billion annually by reducing inefficiencies, increasing competition, and improving market access.
  • Federal Leadership: The federal government has committed to removing all its exemptions under the Canada Free Trade Agreement (CFTA) as a first step, aiming to set a precedent for provinces to follow.
  • Focus Areas: The plan focuses on easing restrictions in areas such as transportation infrastructure, energy production and distribution, critical minerals extraction and processing, and digital connectivity.
  • "One Project, One Review" System: This initiative aims to consolidate federal and provincial environmental assessments to streamline approvals for major infrastructure projects.
  • Mutual Recognition: A key principle is the mutual recognition of goods, services, and professional credentials, meaning that what's acceptable in one province should be acceptable across Canada.

Specific Progress and Actions:

  • First Ministers' Agreement (March 2025): The Prime Minister and provincial premiers agreed to build on the work of the Committee on Internal Trade to reduce barriers to internal trade and labour mobility. They committed to:
    • Credential Recognition: Develop a service standard of 30 days or better for professional credential recognition across Canada.
    • CFTA Exceptions Review: Conduct a rapid review of all remaining party-specific exceptions (PSEs) under the CFTA, with all reviews to be completed by June 1, 2025.
    • Mutual Recognition for Consumer Goods: Immediately launch negotiations for mutual recognition of all consumer goods (excluding food), aiming for an Action Plan by March 31, 2025.
  • Federal Exceptions Removed: The federal government has been actively removing its own exceptions under the CFTA, building on removals from previous years. More than half of federal exceptions are slated for removal.
  • Provincial Action:
    • Nova Scotia has taken a leading role by committing to clearing all its exemptions under the CFTA.
    • Ontario introduced the "Protect Ontario through Free Trade within Canada Act" to unlock free trade and labour mobility within Canada. This legislation proposes to remove all 23 of Ontario's current PSEs under the CFTA and streamline certification processes for professionals from other provinces, even allowing for temporary certification within 10 business days for some. Ontario is also exploring allowing American health professionals to work in the province under similar rules.
    • Many provinces have also committed to allowing direct-to-consumer alcohol sales for Canadian products (with Newfoundland and Labrador, and Prince Edward Island being exceptions).
  • Committee on Internal Trade (CIT) Meetings (February 2025): Ministers responsible for internal trade agreed on additional measures to eliminate regulatory barriers, encourage free movement of labour, and standardize regulations. They also committed to exploring "Internal Trade missions" to promote Canadian products.

Challenges and Considerations:

  • Jurisdictional Differences: Despite the progress, challenges remain as provinces have distinct economic priorities and historical regulations that protected local interests.
  • Potential Disruptions: While beneficial overall, economic integration can cause short-term disruptions in specific sectors, and some industries (e.g., breweries in certain provinces) have expressed concerns about increased competition.
  • Constitutional Interpretation: While Section 121 of the Constitution Act, 1867, prohibits provinces from enacting barriers to trade, courts have interpreted this narrowly, leaving room for provincial regulations that act as de facto barriers.

Overall, significant momentum has been building in the lead-up to the July 1, 2025 deadline, with both federal and provincial governments taking concrete steps toward reducing interprovincial trade barriers.

SP

 

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