Trade Barriers Estimated to Cost Canada $3B a Year

(Toronto Star via CSCB)

Finance Minister Jim Flaherty said today the provinces should knock down trade barriers between them, which a Senate committee later heard is costing Canada’s economy roughly $3 billion each year.

To do that, Flaherty told reporters outside the House of Commons that Ottawa must help curtail the provincial trade regulations that some argue restrict business and labour and make it harder to compete in global markets.

“There’s certainly a significant role for the national government, the federal government of Canada to play in trying to get rid of these trade barriers,” he said.

Flaherty’s remarks came shortly before a senior Finance Department official told a Senate committee that interprovincial trade rules cost the country about one quarter of one per cent of its gross domestic product.

But Denis Gauthier, the assistant deputy minister of economic development and corporate finance, conceded the department has not recently done any economic modelling to determine the precise cost of the internal trade barriers.

“There’s been so many studies done, and the numbers you’ve heard, you know, between a quarter to three quarters of one per cent of GDP is in the ballpark,” Gauthier said.

“All of the studies point in the same direction,” Flaherty added.

When pressed by Liberal Senator Wilfred Moore, however, Gauthier said the loss stemming from the provincial trade barriers costs the Canadian economy about $3 billion each year.

The provinces have a patchwork quilt of regulations, and companies – some already hard-hit by the loonie’s quick rise to 110.3 cents US last month and gradual decline since – say the different rules make it burdensome to operate in more than one part of the country….

Alberta Premier Ed Stelmach has estimated interprovincial trade issues cost the Canadian economy about $14 billion a year. Alberta is one of a handful of provinces that has signed, or is negotiating, trade deals with its counterparts.

Alberta and British Columbia have a Trade, Investment and Labour Mobility Agreement – also known as TILMA – aimed at removing interprovincial trade barriers. Saskatchewan flirted for months with the idea of joining TILMA, but opted not to in August.

Quebec and Ontario are also looking a similar agreement at would bring into lockstep regulations that govern everything from the weight of trucks to health care, which could boost what’s now about $70 billion a year in interprovincial trade by making it easier for companies to operate in both provinces.