The Current - How do we make interprovincial trade easier?

Episode Date: February 10, 2025

Interprovincial trade barriers on products from beer to toilet seats are getting a rethink in the wake of Trump’s tariff threats. But what would it really take to have Quebec-made products on Ontario store shelves? We hear about a meat producer barred from selling products in part of his own town due to interprovincial regulations, and why past attempts to bring down this bureaucracy have been unsuccessful.

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It's about time we had genuine free trade within Canada. We have to move forward on it. This is one of those moments and opportunities where we actually can there's a window open because of the context we're in we have to jump through it. As Prime Minister Justin Trudeau speaking to a summit of business and labor leaders on Friday they were there to talk about shoring up Canada's economy and the face of possible tariffs in the United States. It remains a looming threat with 25% across the board

tariffs on hold for 30 days and Donald Trump saying that he will announce today 25% tariffs on all steel and aluminum imports from around the world including yes here in Canada. But to the Prime Minister's point if you perhaps are thinking wait don't we already have free trade within Canada? Well no not really. Justin Trudeau was talking about the barriers between provinces that stop that trade from flowing. And with the ongoing tariff crisis with the United States, there has been a lot of talk of late, of getting rid of those barriers within our country, something that has been talked about for years with little change. Jean-Philippe Fournier is an economist and former advisor to Quebec's minister of Finance. He is in our Montreal studio.

JP, good morning. Morning. In an effort to explain the extent of these inter-provincial trade barriers, you posted a thread on social media recently and gave an example from your time working with the Minister of Finance in Quebec. Tell me about car seats and what car seats,

I mean, it seems fairly simple, but what the story of car seats tells us about the extent of those trade barriers. Yeah. So the example I used in that thread, I think it kind of sums it all up real nice. So the example that I used was, it all started back in 2019, it culminated in 2021. Basically, back then, there were two sets of rules for what you could put or what companies could put in your car seat, the filling of the car seat, right? What makes it bouncy. And in Quebec, it had a separate set of rules than Ontario more specifically. And if you look at that rule, what it did was that Quebec and the companies making seats and it wasn't just car seats, it was upholstery seats, it was all kinds of chairs and seats.

The stuff that you could put in a chair in Quebec, well, it was, you know, synthetic materials, more environmentally friendly. You know, when you look at those rules, you would say objectively, pretty good set of rules. Maybe the entire country should follow those rules. But Ontario, with the auto industry, with its big manufacturing base, had a different set of rules where they could kind of put in whatever. And what that meant was that the chair or your car seat being made in Quebec could not be sold in Ontario and vice versa.

And you can see the problem where your two biggest provinces can't trade or exchange on a very basic, you know, you would never think that this is an issue, but on a very basic good. And so what we ended up doing was to harmonize Quebec's rules with, on terrorism rather, really with the rest of the country. But you would think, fine, great. What, you know, I don't know why this problem was there, but good thing that was fixed. Well, actually, there are some people who are not too happy about it. Right? Because these companies who were in Quebec, and who saw the rules changed in front

of them, well, they were used to that set of rules, right? They had just followed the law. They had just done what they were supposed to. And now in the name of inter-provincial trade harmonization, they were forced to spend hundreds of thousands of dollars to change the way that they were making their stuff. I think everyone can agree that it was a good thing, but for them, it was difficult. Now take that and apply it to hundreds of thousands of goods, of services across 10 provinces from coast to coast to coast, and you get what we call inter-permissional trade barriers. But as you can see, there's a very sneaky set of diverging rules that kind of amount to these barriers.

And it's not just goods and services. I mean, we're talking about people as well. In this thread, you talk about, for example, the barriers that prevent doctors from moving from one jurisdiction to another. What are those barriers? Yes. So the labor mobility is a huge, huge aspect, right? I talked about doctors, but construction workers is another huge, huge problem space. So for doctors, you would have, for example, and it depends from, it varies from doctor

to doctor, whether it's a pediatrician, whether it's a heart surgeon, you know, there are a whole bunch of different areas of practice. But you would get a case or many cases where your doctor trained in, I don't know, Edmonton, wants to move to Toronto or wants to move to Quebec and They've been practicing and admitted for you know many years they've been trained etc and they come to move and they realize when checking with the local order of doctors that their training isn't necessarily recognized so they would have to go through an additional set of training of So they would have to go through an additional set of training, of examinations, of approvals.

Despite the fact that they've been practicing in this country for a number of years. Exactly. I don't think anyone could challenge the fact that we have great universities and great training programs across the country, but it's just that each individual local order order and provincial order is kind of keeping, guarding their little sandbox of training and of, I mean, some politicians would use the word gatekeepers, but I think it's a good summary of what we're seeing. Let me hear from one of those politicians, because we are a country, but we are also, you know,

10 provinces, three territories, and, and everybody in those jurisdictions has their own pressures. Have a listen to what the premier of Ontario, Doug Ford, said about this recently. This has been going on forever and enough's enough. Let's, let's sit down and come up with a list

because everyone wants to protect something, no matter if it's the, you know, the dairy cow in Newfoundland or the wine in BC or salves, everyone's guilty. Pete Slauson Everyone's guilty. Do you think if everyone's guilty, that leaders across the country will commit to making the sacrifices to create truly open trade? Jared Slauson I really hope so. Pete Slauson You really hope so, but you also said to succeed,

this will require a war effort and in your words, people and provinces will be pissed and yell. Yes. Everyone agrees that this is bad, that these barriers are bad. I think a poll came out yesterday or over the last few days. 95% of Canadians agree that these barriers should come down. And yet, I mean, there are, and you've pointed out about this, I mean, whether it's the people who stuff the car seats in Quebec or, I mean, our colleague, Peter Cowan in Newfoundland said that fish caught in Newfoundland need to be processed there.

Mega projects in Newfoundland, you have to hire Newfoundlanders first. Are politicians willing to sacrifice those fish processors or the Newfoundlanders who would be going to work for Churchill Falls to create inter-provincial trade. Yeah, historically the answer has been no. Right. Historically the answer has been let's take a look as everyone is nominally in agreement, but the second you start digging and start looking, okay, what are we going to change?

Where do we start? And then you go down the list. First of all, you have to actually make the list because that's not super easy. But once you get the list and then you go down each individual item, it goes, hmm, maybe this one, you know, if we change this, the, I don't know, the lumber industry in northern Quebec, they're not going to be too happy because it's important to keep jobs in that area. Or, you know, the car seat manufacturers in Ontario, they want to keep their market as well. And you start going down there and then you get the confirmation of those exceptions because

no one wants to fight. They don't see the incentive to get those changes going. Is this why we have a hundred pages worth of exemptions in the 2017 Canadian Free Trade Agreement that was meant to create inter-provincial trade? Yes. And that trade agreement is actually very interesting. It's a very interesting document because Quebec obviously has, well, not obviously, but it unfortunately has the most number of exceptions. But you can see provinces in

the past getting rid of those rather easily. Alberta, for example, in 2019 got rid of almost all of their exceptions and now they're down to about six. And they were around 14 or 15 a few years ago. So it's possible to whittle them down, but you need to make sure, and this is what has not happened in the past, and hopefully the tariffs will have, you know, quite frankly, scared the premiers into action. But you have to make sure that the desire to get those changes through is stronger than the fear of potential pushback from the people's whose lives, quite frankly, you will impact right here.

Peter Polly said that if he is elected prime minister, he will reward provinces that remove barriers with a free trade bonus. Would that help, I mean some sort of incentive? I think it won't hurt. I think it's definitely a step in the right direction because when, say you harmonize everything, get everything on side, change everything, well, you have to make sure that

these things stay harmonized, right? Because there are a set of diverging regulations that weren't made explicitly to stop trade, but they kind of came up over years and years. And so if you harmonize something in any given time, you have to make sure that this doesn't start up again. And so a financial incentive could go a long way, of course, to get to that set of harmonized regulations, but also potentially keep us there, which is a whole other argument. We're almost out of time. Let me just ask you a couple of things quickly.

One is, do you have a sense as to how much money we as a nation are leaving on the table when this is not? The way that business could be done. It's a massive amount estimations vary but we're talking about potentially two hundred billion dollars in GDP That we're leaving on the table. Thanks to these tariffs to these barriers and these barriers kind of equal about 21 to 25 percent tariffs on the provinces between each other. You mentioned tariffs. What kind of urgency are we facing now? Not just with the threat of tariffs coming from the United States, but also, I mean,

Donald Trump keeps saying this. He wants Canada to become the 51st state. Yeah. I think now is the time to do it. And I think that, you know, Anita Anana said that 30 days, we can get a whole bunch of barriers down. I'm not sure how far we can go in 30 days, but that's the kind of spirit, and the kind of, you know, direction that we need to go into. And like I said, we need a total war effort. And there's nothing as scary and as potentially existential as

these terrorists, as this potential US administration, to kind of shock us into action, to finally do something that everyone agrees on. We'll see whether the shock actually motivates that action. JP, good to talk to you, thank you very much. Thank you so much. Jean-Philippe Prunier is vice president at the communications firm Teneo,

also a former advisor to Quebec's minister of finance. He was in our Montreal studio. I'm Dina Temple-Reston, the host of the Click Here podcast from Record of Future News. Twice a week, we tell true stories about the people making and breaking our digital world. And these days, our digital world is being overrun by hackers. I was just targeted by a nation state. And they range from reflective. It's a crime, bro.

And I live with that every day. To ruthless. Do you feel guilty about it? No, not really. Click here from Recorded Future News. You can find us wherever you get your podcasts. You know, it's one thing not to be able to trade with a buyer many kilometers away. What if the border ran right through the center of your town? That is the case in Lloydminster,

the Alberta Saskatchewan border cut straight down the middle of that community and until recently, that meant in some ways it was a city divided. The local co-op, for example, could not make deli sandwiches in their grocery store on the Alberta side and then sell them at the gas station that is on the Saskatchewan side. And some headaches as well for Aaron Lindquist. He is the owner of Diamond 7 Meats in Lloyd Minster, Saskatchewan. Aaron, good morning. Good morning. Tell me about your business.

What kind of, I said it's a meat shop. Tell me how big it is. We not sure how to start with this. We're, uh, what I consider a small processor. We process, uh, for our surrounding community. Our trade radius maybe stretches out about 300 kilometers. We'll do about 25,000 pounds a week, uh, whether

we're custom processing or processing to go to our retail store where we're going to service our community. Where we run into is we're a Saskatchewan based business. We operate under the Saskatchewan public health license and everything we do for the purpose of resale has to stay within the province of Saskatchewan. But if we're processing for custom processing where somebody bring in an animal, drop it off with us and then pick it up in the package, that can go home to the Alberta side for personal consumption.

We just have to be very careful, keep our customers informed what they can and cannot do with their product, depending on which side of the highway they go to. Because as you've mentioned, the border splits right up through the middle of our community. And we have to acknowledge the laws on both sides of the border. So help me understand this and for people who haven't been to the community,

kind of paint this picture, you mentioned the other side of the highway. There has been this change in the rules in Lloyd-Minster, but before that, what were the restrictions on what you could and couldn't sell on the other side of town, on the Alberta side? Well, for us, that's where it was frustrating. on the Alberta side? Well, for us, that's where it was frustrating. The city of Lloyd-Minster is split, Saskatchewan, Alberta, 50-50,

predominantly a little bit more Alberta than Saskatchewan, but the entire city is governed under Saskatchewan Public Health for all their public health inspections. So something so small as going to a farmer's market on the southwest corner of the city, we couldn't access, or any of our customers that would want to resell a product could not access because the farmers market was on the Alberta side. Even though the farmers market was inspected under Saskatchewan Public Health. So we found that

to be quite a challenge. As you mentioned, our local co-op store, which is amazing, the great business, they have four retail stores outside of the main store where they have their gas pumps and very, very good convenience stores. They couldn't cross to go to two of them, but they could service two of them. How long would it take for you to drive from your shop to where the farmer's market would be

that you weren't allowed to sell the meat side? How long would it take you to do that? 10 minutes. Yet under my Saskatchewan licensing, I could go anywhere in the province of Saskatchewan. I could drive eight hours away, have product for resale, no questions about it. But like my, my store, when I look out my glass door,

I look at the Alberta border and I can't cross the highway for the purpose of resale. So we watch, you know, a lot, a lot of business on the other side of the highway that could potentially be accessed that we cannot go for knowing what the laws are. Does it burn up your brain thinking about that? No, I've been doing it for so many years that you

just know what you can and can't do and you just acknowledge, yeah, we can do this or know what we can't do that. It's just cut and dry for us. There was a pilot project that was launched a couple of years ago to allow businesses like yours to sell across the border within city limits. Um, yes. How difficult was it to get to that point?

Oh, the chamber of commerce. I'm amazed they got that done. Uh, they were very, very diligent working with the Canadian food inspection Agency to carve out this exemption which is only the City of Lloyd-Minster and it has made it so much easier that all of a sudden now if a restaurant on the Alberta side wants a quote on product or would like to purchase product to take it back to the restaurant to sell for the purpose of resale within the City of Lloyd-Minster we can now sell to that

local restaurant. Might be a restaurant that I take my wife and kids and go to for supper. Whereas three years ago, we couldn't even have the discussion about selling to them. Now is a reality because of the hard work of the chamber of commerce. Can you understand at all the basis for rules

like that? Is there any grain of sense in what you're talking about? Oh yeah, absolutely. Cause every province is regulated under their own provincial rules when it comes to food processing. But it's literally across the road, as you said. Yeah, but Alberta has such a very, very different standard than Saskatchewan.

British Columbia has a different standard than Alberta. So every time we switch provinces, we have to follow the rules laid out by our provincial government. We are overseen by the Canadian food inspection agency in many aspects of our business. But at the end of the day, our base

licensing always starts within the province. And since every province operates at such a different level of inspection, I can't ask Alberta to say, hey, give up on this. I can't ask Alberta to say, hey, give up on within the province. And since every province operates at such a different level of inspection, I can't ask Alberta to say, hey, give up on this because I want to do this. You know, every province has a different level and having such, and that's where it's been the discussion, like I've been in the industry for many years. It has always been, well, we can't do this because our rules are so different. And we've sat in meetings, we've gone down to

Regina many times and sat in with ag ministers. We've had many, many discussions over the years. What it boils down to is we have such different provincial rules that until the provinces can get on the same page, which would cost industries millions of dollars as

independent businesses, to upgrade to somebody else's rules. And we have to restructure all the inspection levels and the safety of the cost industries millions of dollars as independent businesses to upgrade to somebody else's rules and we have to restructure all the inspection levels and hire new inspectors and it would be a very, very costly venture that I would be nervous if we were to rush into this without proper planning as to who's going to give up on what and who's going to become more stringent and force new stuff. It would, it would take some time. It would be very achievable, but it would just take

time to implement the policies. Fair enough. I mean, I have to let you go, but just very briefly, given what you've gone through in your own town, what does that tell you about how difficult it is? People talk with great gusto about, you know, removing inter-provincial trade barriers, but how difficult do you think it's actually going to be?

Oh, I'd love to see them removed immediately. Uh, it would be, it would just take a lot of planning. Uh, it would have to let every processor, every retailer know what the new rules and regulations are. They would have to plan for it and they'd have to make a financial decision. Can I afford to, to make these changes, to keep current with what the industries are asking?

The snapshot that you paint in your town, I think is really helpful in terms of people trying to understand what it will take to move this forward across the country. Aaron, thank you for joining us. Thank you for having us. It's good to talk to you. Aaron Lundquist is the owner of Diamond 7 Meats.

He was in Lloyd Minster, Saskatchewan. If you were a business person, are these rules and regulations in your province making sense? Are there rules that have stopped you from trading from one jurisdiction to another? Maybe you are in a profession where you can't just up and move across the country despite the fact that you might think that your training is suitable and would fit in a different part of the country, let us know how those barriers are impacting you. You can email us at thecurrent at cbc.ca. For more CBC podcasts, go to cbc.ca slash podcasts.