Saskatchewan Premier Scott Moe, left, and Ontario Premier Doug Ford walk with their counterparts during the Council of the Federation meetings in Halifax on July 15.Darren Calabrese/The Canadian Press
Carlo Dade is director of trade and trade infrastructure at the Canada West Foundation.
Sound bites and statistics are easy to come by on internal trade. Solutions are not; if they were, we would not be having this conversation, yet again.
Every now and then – and especially around times such as these, when the premiers have just met in Halifax – think tanks and business lobbies call for tearing down Canada’s internal trade barriers.
These admonishments have achieved little. It’s time for a new approach. And that means it’s time to address some hard truths to proponents of greater internal trade.
We need new thinking, a new approach and, above all, new language to communicate the importance of internal trade to a skeptical public.
Five years ago, the Canada West Foundation conducted research for the federal government on what could be done to facilitate the movement of goods, services, people and ideas across the country. Since then, there has been some success. Alberta, for example, eliminated most of its exceptions to internal trade agreements, and some of our report’s recommendations were adopted or attempted.
That’s great. For a country that relies on trade for two-thirds of its gross domestic product, there are few issues more important than trade liberalization at home and abroad.
However, as we continue to tackle the issue, we should not forget that there are also valid trade barriers that are deeply seated, deeply believed to be valid and tied to many jobs in many communities. We need to communicate this understanding when talking about change.
For example, is a requirement to provide services in French, the official language of Quebec, a barrier to trade? Of course, it is. Is eliminating the requirement a good idea? No. Unless you’re just looking to pick an unwinnable fight and provoke opposition to internal trade.
This is the first problem with our national conversation about internal trade. Simplistic slogans and pronouncements such as “eliminate all internal trade barriers” immediately provoke anger, fear and resentment, and not just from special interests.
Second, what look like simple barriers and solutions are often neither.
One of the CWF’s research recommendations was that the feds show leadership and unilaterally cut their exemptions to the Canada Free Trade Act. The act aims to break down provincial trade barriers, but it contains so many exceptions as to make it toothless, critics have said. To lead by example and cut exemptions would seem a simple idea.
This simple idea ran aground on calls from Global Affairs Canada, the Department of National Defence and other ministries, citing foreign treaties and other international obligations.
But the biggest issue Canada faces is that, generally, we have had success only in areas with the least political opposition due to low impact – or the perception of low impact – on jobs.
That’s because all trade liberalization creates winners and losers. With internal trade in Canada, the benefits of liberalized trade are usually broadly dispersed gains to consumers, sectors and communities spread widely across the country. Hence, there are no natural champions outside of think tanks and academia. Losses, on the other hand, are generally concentrated and well known by anyone (read voters) who will suffer.
Opening provincial government construction bids, for example, will see added competition. Some companies will be immediate winners. But the greater benefit is that the move will lower costs for governments and taxpayers. The overall benefit is big when captured in GDP numbers.
But it comes about gradually, across a relatively wide group. Meanwhile, uncompetitive local companies, previously propped up by restricted construction bids, suffer and cut jobs – and that effect is sharp and immediate.
To deal with the problem, when most countries face the costs of opening their markets to external trade, they provide adjustment assistance to help people and businesses harmed. In Canada, we expect anyone who experiences the pain of liberalization to simply suck it up and take one for Team Canada while others benefit. And we’re surprised by the resistance to trade liberalization?
Liberalized trade is supposed to have real benefits. The University of Calgary scholar Trevor Tombe estimates that $15-billion in federal revenues alone could be generated annually. If that is the case, there should be money to back a process to help the losers.
We need to stop banging our head against the same wall. It’s time to try something different, starting with an honest conversation.