The Agenda with Steve Paikin (Audio) - Why Do Provincial Trade Barriers Still Exist?

Episode Date: January 29, 2025

February 1 is the day Donald Trump declared the U.S. will impose import tariffs on Canadian products. In the meantime, leaders at the federal and provincial level have been debating responses to those tariffs. One idea that has cropped up again... and it's by no means a new one... is bringing down interprovincial trade barriers. Why do they still exist and what could easing them mean for the Canadian economy? See omnystudio.com/listener for privacy information.

I'm Matt Nethersole. And I'm Tiff Lam. From TVO Podcasts, this is Queries. This season, we're asking, when it comes to defending your beliefs, how far is too far? We follow one story from the boardroom to the courtroom. And seek to understand what happens when beliefs collide. Where does freedom of religion end and freedom from discrimination begin? That's this season on Queries in Good Faith,

a TVO original podcast. Follow and listen wherever you get your podcasts. February 1st is the day Donald Trump declared the U.S. will impose import tariffs on Canadian products. In the meantime, leaders at the federal and provincial level have been debating responses to those tariffs. One idea that has cropped up again, and it's by no means a new one,

bringing down inter-provincial trade barriers. Why do they still exist, and what could easing them mean for the Canadian economy? For their thoughts, let's welcome, in the nation's capital, Jeffrey Simpson, for more than three decades, national affairs columnist with The Globe and Mail, he's also the author of eight books.

And here in studio, Ryan Mnuchin, research fellow at the C.D. Howe Institute and the author of Booze, Cigarettes, and Constitutional Dust-Ups, Canada's Quest for Interprovincial Free Trade. And Ryan Maloe, vice president, Legislative Affairs Ontario and VP Communications for the Canadian Federation of Independent Business and as I welcome everyone to the program we have to say off the top the producer of this segment Mike Attenborough clearly has a sense of humor because he's got two guests here in Toronto both named Ryan both of the last names starting with M last names sound very similar and

just to rub it in he's booked Jeffrey Simpson to be on the show from Ottawa and Jeffrey and I saw each other at the Leaf Senators game this past Saturday And just to rub it in, he's booked Jeffrey Simpson to be on the show from Ottawa. And Jeffrey and I saw each other at the Leafs Senators game this past Saturday night where the Senators defeated the Maple Leafs. And I guess I wasn't quick enough to veto your appearance on this program today and you're no doubt feeling pretty, a little extra bounce in your step, Mr. Simpson,

which you're not entitled to, but there we go. Anyway, welcome everybody, great to have you here. Jeffrey, let me start with you. 30 plus years covering these issues for the Globe and Mail. How many times has this issue cropped up over the years? How many lights are there on Yonge Street? I've lost track. Look, I used to go in the first half of my columnist career

to the inter-provincial premieres conferences in the summer. they were always in a nice place, so it was hardly a hardship assignment. And the communicates at the end would have this, premier A from let's say Atlantic Canada was griping about the fisheries and what Ottawa wasn't doing. And premier B from Saskatchewan wasn't happy with the way Ottawa was handling the grain industry, et cetera. So it was a of, you scratch my back, I'll scratch yours. And I finally stopped going. I said, this is a complete waste of time. They don't talk about inter-provincial issues, qua inter-provincial issues, such as, and one could go through a long list,

that had been provided over the years by think tanks such as the ones for which the Ryans work or international or national business associations, academics, think tanks. Episodically the federal government would say, you know, wag its finger and say we really do something about this. Just doesn't happen. Too many vested interests, too many established ways of doing things. No votes in it, I guess. One last point.

Our Supreme Court has not been helpful. One of the reasons there are many, many, why the U S economy is very strong is because there the Supreme Court has had rulings, plural, reinforcing the interstate commerce clause, preventing Georgia from doing something that would impede problem trade with Tennessee or Texas. Our Supreme Court, going back to before there was a Supreme Court, back when the British high courts ruled, has usually favored provinces. In the most recent case involving taking liquor over the board from New Brunswick to Quebec,

the court ruled yes, you could put infringements on that because provinces are responsible for health and public safety. So the court has been complicit in this failure as a country to get a grip on this problem. Lots of good stuff there and we're going to deep dive on all of those points that Jeffrey made through the course of our discussion. Ryan Minutia, let's get you in here. We have something in Canada called the Canadian Free Trade Agreement, which is among the provinces. It's been in place since 2017. How well is it working?

Great. The CFTA 2017 is actually the replacement of the agreement on internal trade from the early 90s. So we've kind of been using an internal free trade agreement for about 30 years. And the 2017 iteration, I think, was a huge mark forward in advancing. They introduced this concept of, it's called the RCT, where you hash out these regulatory differences that Jeffrey was alluding to. And these things are really technical

and require folks to come together and hash out the subject matter experts to hash things out and they're kind of unsexy issues when you really get into them. We're talking about the differences in what high vis apparel is across the provinces. Excuse me, what is? High visibility apparel. Oh, okay. We're talking about the contents of first aid kits. We're talking about varying driver

qualifications for a long combination vehicles. But you need the folks in the room who have the domain expertise. And that's what the CFTA and its RCT are really helping out with. Too many acronyms here, Ryan. Too many acronyms. How did the lives of your members get better as a result of these agreements? So I think it's still very much a work in progress. Ryan mentioned things like first aid kits. Before the most recent internal trade agreement, you had rules where every province had different requirements for what is in a first aid kit.

So if you were producing first aid kits as a company and you were selling to Quebec, it had different requirements than Ontario, than Alberta, than BC. And it started to make very little sense to produce for 10 provinces. You're just going to produce for one and stay in your backyard.

So in recognizing across the board, the kits that apply in BC should be able to apply to Ontario, that sort of thing makes life easier. As good as the, or as much progress as the agreement has made though, there are still a lot of barriers that remain very frustrating, in particular, credential and certification recognition,

getting labor to move across borders. While we recognize that a plumber in Quebec can be a plumber in Ontario, there's still licensing requirements. There's still some fees that are there. There's still paperwork that needs to be filled out. And that's still really slowing things down. Does it, Jeffrey, by your eye, I mean,

you pointed out at the top of your last answer, this seems to sort of rear its ugly head over and over and over and over. How can we expect to have free trade with other countries when we can't seem to figure it out within our own borders? Well, the last Ryan who spoke put his finger on something in my part of the world, in Ottawa. If you go across, sorry, on this side of the border, you see lots of Quebec companies building things, developers, you see people, Quebec plumbers, Quebec electricians. You go on the other side of the border, which I do often, you don't see any Ontario companies

because there are restrictions in Quebec that prevent that. So that's a wonderful little tiny microcosmic illustration. The kinds of things the Ryans are talking about are useful, but there are a lot bigger things that could be done. For example, it has been suggested that we need one national securities regulator. Well, Manitoba wants one because they've got some insurance industries and BC wants one because they have money and Quebec wants it because it's Quebec. And they are all afraid that Toronto would suck it all up. Here's another idea. Drug costs.

Okay. At the moment, every province has its own drug But if the provinces all got together and said, no, we're going to have one negotiator for us, let's say two provinces negotiate on all of our behalf, you'd be negotiating on behalf of 40 million people instead of nine or 10 in Ontario and whatever is in Saskatchewan. So there's lots of those big things that could be done that would actually save money and efficiency, but the provinces are too determined to hold onto the jurisdiction that they have and not share it even with other provinces to the detriment of the whole country. And it is very ironic, I think, that Donald Trump, who's disliked by 75% of Canadians, according to polls, that was before he threatened the tariffs.

It's probably 80% or 85%. Now, we can thank him for once again focusing attention on this issue that has only in the past received intermittent attention and minor adjustments. Ryan, let's do, Ryan Minuccia, let's do an example here of something I think I remember from your book. Wasn't it the case once upon a time that if you wanted to sell beer in a particular province, you actually had to make it in that province, and then they finally figured out a way where you actually could have more liberalized trade

of beer province to province without necessarily making it there. So they somehow managed to figure out how to do that. What was the magic elixir that allowed that to happen? Yeah, I'd just like to point out that the interprovincial trade story in Canada has been quite dynamic and has evolved over time. And folks, if we're looking at it in a snap

from the past 10, 20, 30 years, we can get frustrated because we see episodes like that. But if we look at the dawn of confederation, we had varying weights and stamps. We had different potion systems, different currencies that were acceptable in provinces. We had border agents at the border of upper and lower Canada monitoring the passage of goods.

And yes, we're kind of stuck with a little bit, with our, with our, the Kumo decision, with the beer, the gentleman going across the border into New Brunswick, coming back into Quebec. But even if we're frustrated with that decision, we did make incremental gain. I do want to say that we have been making progress. And yes, when Kumo did that, the politicians rallied around

and they lifted the cap on how many beers you can bring back into the province. So there is political will to do something. This was the nation of building the Trans-Canada Highway. That was far harder than lifting the restrictions on long combination truck drivers. This Ryan's glass is clearly half full. How about yours?

Again, I don't disagree, but it seems like we never go the whole way. Like the Como example is a good one. And like I was a student at the University of Ottawa. It was not an uncommon thing to walk across the bridge into Gatineau, grab a case of beer, and walk back. That was only legal in Ontario in, I believe, 2019, 2020. And you still can't have it delivered to you, right?

It's 2025, and we can't do delivery. You can physically go, but delivery is a hangup because we've got the LCBO and the various other liquor authorities. And as Jeffrey alluded to, the provinces tend to put their barriers up. So I think there is a lot of progress in the story, but in 2025 that we're still talking about it

is just immensely frustrating, and you get a lot of business owners think a lot of Canadians going, why? Well, we actually have in the Justin Trudeau cabinet a minister for internal trade. That's Anita Anon. And here's what she's had to say about all this. Here's the comment, and Sheldon, bring this up.

I'll read it for those listening on podcast. Enhancing internal trade and removing barriers will be a key tool to ignite the domestic economy, enhance foreign investment, and counter the impact of potential tariffs. We said to Canadians that we would be ready and that we would fight for Canadian interests, and we are. And further, she made some other comments in a recent interview about the potential economic benefits of removing or easing trade barriers. Let's hear from Minister Annan.

Sheldon, if you would. It's estimated that removing these internal trade barriers could lower prices by up to 15 percent, boost productivity by up to 7 percent, and add up to $200 billion to the domestic economy. Jeffrey, at the risk of beating a dead horse here, if that upside is so obvious, why doesn't this happen? Well, I agree with what the Ryans have said. We've been making what I would call minimal or incremental progress over the last 10 or so years, but she's talking about a much, much bigger leap. And because of the internal barriers that already exist and the interest groups that stand behind those barriers, it's going to take quite a long time before a number of them are diluted or eliminated entirely.

This is not something one can do very quickly. We've been talking about products. Let me give you some other examples. Provinces have often been very reluctant to allow certain major internet major national projects. And I give you a classic example. Every day when the river is open, large freighters come down, tankers I should say, the St. Lawrence River to deliver oil to the refineries in the East end of Montreal.

They come from the Middle East, wherever. But Quebec wouldn't allow the Canada East pipeline to send Alberta oil to Quebec, through Quebec, into Atlantic Canada, where it could be shipped offshore. Now you tell me why oil is more dangerous in a pipeline, environmentally speaking, than it is in freighters or tankers coming down to St. Lawrence. Now is that an inter-provincial trade barrier? Yeah. It's not a regulation. It's just a decision that the Quebec government has made, pursuant to the sense of public opinion, but it's contrary to the national interest. And also, I think, to Quebec's interest. But I say that as an outsider.

Ryan Milloe, how does that story that Jeffrey Simpson just told make any sense at all? Yeah, I think largely when you're a Canadian citizen, it doesn't. And it's frustrating to hear that these are the kind of things that pop up. But I think, too, that's part of why pinning down inter-provincial trade and the barriers have been so difficult. I mean, you'll hear the alcohol example comes up very often, because it's easy to understand. Provincial meat inspection, you can't pass meat

between borders that's provincially inspected, has to be federally inspected. Lloyd Minster is the one city in all of Canada where that rule has only now just been gotten rid of after a lengthy pilot to make sure that meat traveling across the street was in fact okay. And I think it comes back to the, you know, in a crisis like we have with the Trump tariffs, there's a big Team Canada approach and you hear the premiers generally speaking on board with it, there's always a little bit of division.

When we don't have that external threat, though, that protectionism comes right back very quickly. And I think that's always been the frustration is, it's a focus when it's a focus, and then we've got 900 other things to ask for, we're gonna move on to that, and we don't actually get that thing done. Which province, if there is one, is the worst

in terms of perpetuating these internal trade barriers? So I think generally speaking, it's our friends in Quebec. They have the most exceptions to the Canada Free Trade Agreement. I think it's 36, 37, somewhere in there. And again, some of that is language oriented. But I will say that one of the things that has been lacking for a long time is a true champion

among the premiers. I think we had that a little bit in Jason Kenney. He was starting to make moves in Alberta where he didn't need everyone else to move. He said, we're going to get rid of our barriers. You should get rid of yours too, but that doesn't mean we can't do anything. But since he left, we've been lacking that person. Premier Ford seems to be stepping up during the tariff negotiations. Maybe he's that guy.

But that's what we really need is someone motivated to get it done, and that's what we traditionally lacked. How, I mean, you're the glass half full guy. So I'll ask you, how do premiers come together to negotiate these things in the first place? Is that happening at all right now? Absolutely. They're coming together right now. And I think two things, or three things. One is, if I were them right now, what I would do is I would change.

We have an internal trade court where you can launch trade claims against other governments. And I think you let the market discipline each of the other provinces for violating the tenants of liberalized trade under the free trade agreement I think that's what I would do make it easier for small medium-sized businesses who are impacted the most so if I'm rallying around that table that's what I'm pushing for and I think they should be looking to unlock Anita Nunn puts the outer bound at 200 billion if they can come up with an intergovernmental prosperity commission that finds $50 billion in savings

over the next two years, kind of like what we saw south of the border with Doge, that would be incredible. What a story, what a win. We identify, unlock, and actually advance. And we know a lot of these early issues, and if we open up the trade court, we are flagged even more by, the inboxes are flooded, for those who study this We get we hear a lot about this and just being able to push

the envelope on so many fronts would be incredible. Jeffrey based on your experience of watching either provinces work with each other or not or the federal government lead or not, what do you think it's going to take to... I don't know, can the provinces do this on their own? Do they need the federal government to lead them through this process? How do you think it's going to take to, I don't know, can the provinces do this on their own? Do they need the federal government to lead them through this process? How do you see it? Well, you need Donald Trump.

I mean, you need the fear of God, or I won't say God, the fear of Trump, let's put it that way. And that's why at the moment we have this discussion that is rekindled with a brighter flame than in the past. And good. And we'll see where it leads. I like very much what Ryan just said about a trade tribunal or court, because as I said,

if these matters have to go to the Supreme Court, the Supreme Court takes years before it hears a case, and then it takes a long time to render a decision. And as I say, it's pattern is not an not, it's not an encouraging one in this area. So I think that would be a real step forward, but I want to just repeat, it's not just a question, these are important of regulations, you know, for trucking and all these things, but that's extremely important, but there are big national projects that go across borders. You ask what the federal government can do.

I always thought that a political party in an election campaign, a federal election campaign, you have to be careful how you phrase this, should say, we stand ready as the government of Canada to assist provinces that want to build inter-provincial links. I'm thinking in particular of hydro links, of oil and gas links. We stand ready. We can't force you to do this,

but it's in the national interest and yours. And by standing ready, that means money, that means technical help if that's required. So as you have a national government that wants to join the provinces, work with the provinces to build these large national projects. We just saw two provinces, to be fair, resolve a long standing problem

between Newfoundland and Quebec. Yes. Newfoundland signed a deal years ago. I won't go into the details. They got the short end of the stick. They've been complaining about it ever since. They went to the Supreme Court and the Supreme Court did not rule in their favor. But now they've got an agreement with Quebec that when the terribly injurious contract that has hurt Newfoundland so much ends,

they are going to have a new agreement which will be much fairer to Newfoundland and Quebec. And that's a wonderful sign of two provinces getting together and doing good things after a long period of substantial irritation. Now that is a great example plucked from the headlines from not too long ago. It's an example of the Federation working, which we don't see enough of. Ryan Maloe, is there any other obvious, call it what you want, low-hanging fruit, deal in the making, deal in the offing that you see out there right now? So I think there's some low-hanging fruit

that we're seeing that's in progress, and then there's sort of the big home run ball that I want to say is low-hanging fruit because I really want the government to do it and approach it. And it comes off of what we're seeing right now is eight of the 10 provinces and a couple of the territories are involved in a mutual recognition pilot

in the trucking industry. We heard that a little bit earlier, that there are rules around trucking where the wide load signage between Alberta and Saskatchewan has to change. You'd literally have a trucker stopping on the side of the highway, getting out of his vehicle, switching the sign, and getting back in.

The driving requirements, tonnage, that sort of thing. So eight out of 10 provinces, I believe it's BC and Quebec that are the holdouts. BC because they had election, Quebec because they traditionally have been a holdout. But we're very excited because the principle of mutual recognition, I think, is the real low-hanging fruit. I think a lot of times when we talk about rules

and things between government, the word harmonization gets thrown around a lot. And what we see in harmonization is we tend to go to the highest standard, there's a lot of negotiation, it gets very ticky tack. If we can do mutual recognition and say, hey, working at heights training on a tower in Winnipeg isn't really that different than working at heights in a tower in Toronto, that construction worker should be able to come over and not need to retake the training

or get recertified, we can just get them to work, that would be massive progress. So that's really what we're looking for with Minister Anand's leadership too, is let's get the mutual recognition ball rolling and just say, hey, if it's good enough in Manitoba, if it's good enough in Alberta, it's good enough in Ontario and Nova Scotia too. Do you see any other obvious wins out there? We should take the Australia model for the movement of labour. It's not just goods, as Jeffrey has said, it's about people. If you can take your labour elsewhere there's a bit of a freedom there. So I think if you move over to another province with you

know your certifications it should be 30 days for you to find out that you can't practice your craft. Let's take that's what Australia did in the 90s they've known it long ago. It's practiced in the EU. Let's take that mutual recognition concept for labour and implement it and and just and just see that liberalization for people. And again, we have a province that does this under Jason Kenney, Alberta. Alberta said, hey, if you're going to come to Alberta, we're going to tell our colleges, our regulatory authorities, that person comes in, they're signing up for their registration. You have 20 days to get back to them.

Let them know so that they can get going to work. We saw during the pandemic as well with Ontario, we passed as of right legislations that nurses do not need to wait to get their paper in order with the college. They can start practicing immediately so that we can get the help and hospitals we need as their paperwork is getting sorted out,

because they've already been recognized in another province. So there are some smaller examples, but we've shown we can get it done. Let's get it done big and broad. Jeffrey, let me get you to amplify on an example you gave earlier. We talked about a national securities regulator.

At the moment, they seem to be province by province by province by province. I remember Jim Flaherty, when he was Minister of Finance, talking about trying to bring this in. That's many years ago already. What would be the advantage of having a single national securities regulator as opposed to the checkerboard provincial types we have now? It's just more efficient for companies that want

to list their companies on the exchange and raise money, etc. It's less paperwork, less bureaucracy, easier for private investors all around. I mean, you look at the United States, they don't have a market in Los Angeles and Chicago. They've got a big one in New York and we, who are a much smaller country. I don't think this will ever happen. Quebec will never. There is a, if I can put this, there is a bit of an underlying sentiment in inter-provincial affairs in some areas, where Ontario has always been in the forefront of making the arguments in favor of this.

And the other provinces sense that they're doing it because they're the biggest province and that they would somehow gain disproportionately. And this has been very present in the attitudes of Quebec. There's a whole other set of reasons why. So there's always been a kind of unspoken underlying sense that if we did this, the principal beneficiary would be the largest province. I just end by saying there's a cliche, like all cliches, it contains an element of truth that from crisis comes opportunity. And if we are hit with 25% tariffs, that's like, Like all cliches, it contains an element of truth that from crisis comes opportunity.

And if we are hit with 25% tariffs, that's like two slaps in the face. And if we don't wake up and realize that we've got to deal with our own internal economy, not that it's going to be a complete antidote to what Trump intends to do, because it'll take a fair bit of time. And even if we accomplish a number of objectives here, we can't lose sight of the fact that we're going to be penalized here and with our tariffs in the U.S. market. This is a tipping point for us, because since the last years of Pierre

Trudeau's government, when they were thrashing around trying to find out what to do, they began to talk about sectoral free trade with the United States. And ever since then, our political leaders and our businesses have been turning more and more of their attention to the U.S. market and preaching the virtues of North American integration. Mr. Trump doesn't believe in that. So if we keep assuming that the past, the future will be like the past, we're

completely misreading the man who's in the White House. Ryan Minichie, is it possible that through Trump's bullying of this country right now, something positive in terms of our own inter-provincial trade barriers could benefit. 100 percent, and we just need to look to our history. So in our Constitution, we have what we call the Free Trade Clause. That came out in 1867. Why did that come into our Constitution?

Because the Fathers of Confederation, who were 50, 55 years old, had twice in the past 25 years at that point, had their economic worlds upended. Once by the Brits in the 1840s when they canceled some imperial preferences, and once by the US when they canceled the US-Canada, an early US-Canada free trade agreement in 1866. In response, one of the catalysts for that free trade clause that we now get to rely on,

and Kumo tried to rely on in his case for beer in Quebec. It takes these external moments for us to get our house in order, and I think this is another episode where we're seeing that take place. And we have a brief window for our leadership to overcome their differences and break out of these provincial fiefdoms of regulation and legislation that protects domestic entities. One chance to really kind of do this in, you know, a very 10-year, 20-year cadence, and this is it.

Ryan Malone, our last minute here. Do you see this moment as being the moment for striking? Absolutely. Again, as Jeffrey said, in crisis, there is opportunity. You wish you didn't need to get to the crisis to take it. This has always been the right thing to do and a good idea. But if all eyes are on it now, the premiers are in order. Even Premier Legault is talking about it in Quebec.

Let's get it done. You're sounding a lot like a certain premier of a certain big province when you keep saying get it done, get it done. It's a good mantra. Well you know we're about to go into a writ period here now right, so I've got to have equal time. You want to use some liberal or NDP expressions as well? Honestly I think that this is going to be a piece of the election too. I mean the trade is going to be a big part of it, the tariffs are going to be a big part of it. I'm hoping we see all going to be a big part of it. The tariffs are going to be a big part of it.

I'm hoping we see all parties in Ontario get on board because again, it's a good idea. It always has been. Let's follow through. We shall see. Let's follow through as a little more non-partisan. There we go. Mr. Director, can I have a three-shot of our guests there? We go, thank you very much.

From right to left, Jeffrey Simpson, the author and journalist joining us from the nation's capital. Ryan Maloe from the Canadian Federation of Independent Business in the Middle, Ryan Manousia, Sidi Howe Institute and author. We thank the three of you for coming on a TVO tonight and making sexy one of the least sexiest topics out there.