Chancellors’ Challenge: Interprovincial Trade Barriers

The Chancellors’ Challenge is an innovative cross-listed North American Studies and Political Science course run in cooperation with the Laurier Centre for the Study of Canada and the Laurier Library. Senior undergraduate students engaged in collaborative, student-centred learning and employed digital tools to develop online projects addressing some of the biggest issues confronting Canada today.

Chancellor Mercier’s Challenge:

Interprovincial Trade Barriers

 

Canada lacks a unified system for dealing with interprovincial trade. Can we break the logjam and foster better federal-provincial cooperation to remove trade barriers and improve labour mobility?

CHANCELLOR MERCIER’S challenge was taken up by students Vicky ChuMitchell EinwechterArdin HajdarpasicEmily Nguyen and Aashna Patel, who presented their findings on StoryMap.

The difficulties associated with trade barriers in Canada calls for a collaborative effort, involving both governmental and private stakeholders. Among the proposed solutions suggested by the students are tailored, industry-specific approaches and government-backed incentives that could pave the way for a more efficient and competitive national business environment. In their StoryMap (below) the students write that this multifaceted challenge requires an integrated approach uniting federal, provincial, and territorial governments with the private sector, in the pursuit of dismantling barriers to boost the country’s economic potential.

Interprovincial trade barriers are deeply rooted in the Canada’s historical fabric, and emerged as a consequence of events such as the National Policy, the tumultuous impact the Great Depression, and the shadow cast by the Second World War.

During the Great Depression, interprovincial trade barriers had a significant influence on various industries, particularly agriculture. Statistics Canada reported a substantial decline in wheat yields. Other grain crops, such as oats, barley, rye, and flaxseed, saw similarly dramatic declines in yield. This crisis led to a 56 per cent drop in cash income from farm products. Unemployment skyrocketed to 25 per cent in 1933, not returning to pre-depression levels until 1945. It wasn’t until after the Second World War that the National Policy Act was amended, allowing all Canadian provinces the ability to regulate their own interprovincial trade agreements. This amendment aimed to foster a more liberalized economy between provinces.

The 1950s and 60s marked a period of increased efforts to reduce interprovincial trade barriers. These efforts led to the establishment of the Royal Commission on Canada’s Provincial Economic Prospects. Chaired by Walter Gordon in 1955, the commission investigated barriers to interprovincial trade, as Gordon questioned the government’s policies regarding the sale of Canada’s natural resources and business enterprises to foreign entities. A team was assembled to conduct 33 studies, examining the issues surrounding interprovincial trade barriers and their impacts on various sectors like timber, wheat, and manufactured goods within Canada. The commission submitted 50 proposals and suggestions to guide policy, regulation, and legal changes in interprovincial trade.

The Agreement on Internal Trade (AIT) is a key element in the ongoing efforts to address interprovincial trade barriers. Despite its implementation in 1995, the International Monetary Fund (IMF) identified several shortcomings, including discriminatory practices, unharmonized practices, and inequitable application of administrative practices. The AIT aimed to harmonize regulations and standards to facilitate interprovincial trade. Six general rules, such as non-discrimination, right of entry and exit, no obstacles to internal trade, legitimate government objectives, regulatory practices, and high transparency, were established to govern internal trade and promote equal opportunity.

The project highlights the importance of federalism as a foundational element of Canadian governance, dividing legislative authority between federal and provincial governments. While this division allows provinces to regulate trade within their borders, it poses challenges for businesses operating in multiple provinces. Labor and employment, environmental regulations, and other factors are subject to different rules and requirements in each jurisdiction. This can increase costs and administrative burdens for businesses and hinder trade across provinces. The fragmentation of regulations results in inefficient processes, higher costs, and complexity for companies.

The project presents two strategies aimed at mitigating these trade barriers: an industry-specific approach and a government financial incentive plan. The industry-specific approach focuses on empowering sectors, with a spotlight on nursing and trucking due to their substantial influence and prominence.

In the nursing field, where labour mobility restrictions and the necessity for standardized practices and nationwide registration persist, this approach seeks to harmonize policies and standardize procedures on a national scale, ultimately enhancing the industry’s operational efficiency. Simultaneously, the trucking and transportation industry, plagued by inconsistent regulatory interpretations across provinces, stands to gain from this approach, as it strives to rectify these inconsistencies, streamlining operations and reducing inefficiencies.

On the other hand, the government financial incentive plan is an alternative strategy designed to offer financial incentives and support to industries and businesses, with the goal of encouraging them to adapt and align their practices with the larger national trade agenda.

Click here to view the StoryMap in fullscreen at KnightLab.

Canada’s interprovincial trade barriers are rooted in historical and bureaucratic complexities. Addressing these issues involves streamlining processes, harmonizing regulations, and establishing national regulatory bodies. While it is a complex and multifaceted challenge, the proposal of an industry-by-industry approach and government incentives provides a potential path forward. By addressing these trade barriers, Canada can improve its economic prospects and provide a more efficient and competitive business environment for all. Ultimately, it requires the collaboration of federal, provincial, and territorial governments, as well as the active participation of the private sector to bring about the changes needed to dismantle interprovincial trade barriers.

 

Post written by Kyle Pritchard, Digital Content Manager at the Laurier Centre for the Study of Canada and a PhD Candidate at Wilfrid Laurier University.

StoryMap by Vicky ChuMitchell EinwechterArdin HajdarpasicEmily Nguyen and Aashna Patel.

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