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Nearly nine months after Canada’s premiers announced they’d reached an agreement in principle on a new Canada Free Trade Agreement, details on what’s covered and what’s not will finally be revealed in Toronto on Friday.
Ontario’s Economic Development Minister Brad Duguid, who’s been leading the talks, will be joined by his provincial counterparts as well as federal minister Navdeep Bains and representatives from groups who have been pushing politicians to make this happen.
While many long-standing interprovincial trade irritants won’t quite disappear with strokes of the ministers’ pens, it will turn the process of government regulation on its head: free trade is about to become the default position. From now on, it’s adding new barriers that will require special negotiations, not lifting them.
Emerging industries, like the potential sale of marijuana products across Canada once the federal government finishes its legalization process, could be regulated under this deal. But future negotiations between provinces will have to figure out the smartest and most efficient way to do that.
The Canada Free Trade Agreement (CFTA) will replace the Agreement on Internal Trade (AIT), which has set rules for interprovincial trade in Canada since 1995.
A two-year negotiation for the agreement began under the previous Conservative government but only wrapped up late last year, after premiers meeting at the Council of the Federation talks in Whitehorse in July broke through on some contentious fronts.
Previous attempts at interprovincial trade deals had tried to make it easier to do business in specific ways.
By contrast, this deal is “all-in” and covers the entire economy. All trade barriers are meant to fall unless they’re specifically excluded in “negative lists” in the deal’s annex.
The premiers said last July this kind of detail would offer “unprecedented transparency” on what governments regulate. But no list was made public, leaving open the question of how comprehensive it would really be.
Friday’s release of the full 300-page text will lay out exactly what provinces and territories agreed to eliminate and protect.
Officials caution that its long list of exemptions — about half the size of the deal itself — doesn’t necessarily mean the deal isn’t ambitious. When a province lays out numerous but very targeted items it may in fact be doing more to boost trade than a shorter list carving out broad areas.
Economic experts from Bank of Canada governor Stephen Poloz on down have pointed out the potential value of making it easier for Canadians to do business with each other.
The hassles of regulatory discrepancies across provincial jurisdictions in Canada are legion. CFTA won’t harmonize everything immediately, but at least it establishes a process for doing so.
Many professions and trades have province-specific licensing systems and credentials. Individuals may be at the top of their field in one province, but unqualified to take work in another.
Discrepancies across transportation and safety regulations are another long-standing annoyance.
For example, a truck driver shipping goods from a coastal port to customers in Central Canada may have to stop several times at provincial borders to make adjustments, so long as different jurisdictions don’t agree on when certain trucks can be driven, how things should be loaded or even what tires are required.
And then there’s government contracting, where a local politician’s instinct to protect and patronize local businesses may not facilitate the kind of competitive bidding that offers the best quality at the best price for taxpayers.
And yet, internal trade can be more stable than international trade in volatile times. Some estimates suggest this interprovincial trade deal, if it rises to its full potential, could boost Canada’s gross domestic product by a point or two at a time of otherwise slow economic growth.
The existing Agreement on Internal Trade was limited to a few sectors where agreement came easily. Politicians of the day were focused on national unity fears (amid the Quebec referendum campaign) and the newly arrived North American Free Trade Agreement (NAFTA.)
CFTA is more ambitious. And like a binding contract, it will have more teeth if a province breaks faith.
It includes a dispute resolution chapter that will eventually allow individuals or companies to pursue remedies and compensation without requiring the endorsement of their home province. The exact way this arbitration will work remains to be determined.
The goal of this negotiation was a “living document” that can change as Canada’s economy does — avoiding the situation with NAFTA, for example, where e-commerce isn’t covered because e-commerce wasn’t around when it was drafted.
Officials say negotiators focused on making sure that, as Duguid promised last summer, what Canadians offer to each other in this deal is at least as much, if not more, than what Canada has offered to other countries in recent negotiations like the Comprehensive Economic and Trade Agreement (CETA) with the European Union.
Because CETA opens up government procurement, it set up a politically unpalatable situation: by this summer, European companies might have had better access to government contracts than a Canadian company from another province.
Now the interprovincial deal will take effect by July 1, 2017, a similar timeline as the EU deal.
A new online portal being built to help Europeans see what Canadian governments are putting up for tender will also advertise for competitive bids from across Canada.
While CETA only opens up six-figure contracts to European bidders, CFTA opens up smaller procurement deals, above $ 25,000.?
The interprovincial deal will also include Crown corporations, including energy utilities.
Friday’s announcement will disappoint those who were hoping CFTA might soon liberalize alcohol sales across Canada.
Last month’s federal budget already confirmed that a separate process is underway for that. It’s far from finished, although a small, early step was taken last summer.