Roll out the barrel, drop the balloons, we have yet another all-party consensus in the Ontario election campaign! Thanks to President Donald Trump’s tariff menaces, Ontario’s three major party leaders (and the Greens too) agree it has never been more important that Canadian provinces eliminate interprovincial trade barriers — the cost of which the Canadian Federation of Independent Business (CFIB) estimates at some $200 billion annually. We could use $200 billion right now.
“We absolutely need to work with other provinces to eliminate … trade barriers and build a truly Team Canada approach to growing our economy,” is the Ontario Liberals’ position. “Promot(ing) interprovincial cooperation and break(ing) down trade barriers” is part of the NDP’s plan to “tariff-proof Ontario.” Ontario must “work with other provinces to remove (these) barriers,” Green leader Mike Schreiner said this week.
Asked about his position on eliminating these barriers on Tuesday, Premier Doug Ford declared “full steam ahead.”
“The games have changed folks,” he told reporters in Ottawa. “I’ve been trying to do this for six years.”
Ford chose an example, and it is one politicians often point to when asked about the issue: alcoholic beverages. He suggested a bottle of wine from British Columbia should have free access to shelves in Ontario — and, presumably, vice versa.
That issue can hardly be overstated: Of the Canadian wine sold by the LCBO, 99.8 per cent by volume is from Ontario. Of the Canadian wine sold by B.C. Liquor stores, 98.4 per cent of it is from British Columbia. The LCBO sells six times more Portuguese wine. B.C. Liquor sells slightly more from Germany.
Booze is probably Canada’s most famous and relatable internal trade barrier. That’s thanks in large part to Gérard Comeau, who in 2012 was nabbed bringing 354 cases of beer — 338 more than he was allowed to — from Quebec (where booze is far cheaper) into New Brunswick.
Ontario’s political leaders sure seem to promote ‘buy Ontarian’ an awful lot more than they promote ‘buy Canadian’
The Supreme Court declined to strike down that trade barrier in 2018, essentially saying it was up to the provinces to sort out amongst themselves. And most have: According to the CFIB’s latest “report card” on internal trade, New Brunswick and Newfoundland are the only remaining Canadian jurisdictions with any restrictions on importing alcohol for personal consumption.
At the same time, however, only Manitoba allows individual consumers to import wine, beer and liquor directly from producers in other jurisdictions. (In Ontario you have to go through the LCBO, which needless to say takes a cut.) B.C. and Nova Scotia allow it from vineyards outside the province, while B.C. and Saskatchewan allow it from some small-scale craft distilleries.
But the situation on Ontario’s and British Columbia’s liquor-store shelves isn’t mainly about byzantine interprovincial rules and regulations. It’s mainly the byproduct of government-run wholesale liquor monopolies that have government mandates to privilege “domestic” production.
“The government is supporting local economic development by directing the LCBO to promote and prioritize small and Ontario-made products,” Ontario’s Progressive Conservative government boasted last summer.
This privileging of “local” products — if Thunder Bay can be considered local to Niagara or Prince Rupert, B.C. to the Okanagan — has been entirely uncontroversial. I suspect most Ontarians and British Columbians alike would consider it absurd if that baked-in advantage were weakened, never mind eliminated. And not just in booze, but in infrastructure projects, which are plagued by so-called “community benefits agreements” designed to ensure local contractors get a leg-up.
Indeed, the really prime meat of interprovincial trade barriers isn’t in a rented truck full of cheap beer. It’s in the costs businesses and workers must pay to manage different licensing standards and fees, health-and-safety requirements, workers’ compensation rules and access (if any) to procurement contracts, and in the myriad “exceptions” provinces (and the feds) have insisted upon to the 2017 Canadian Free Trade Agreement (CFTA).
There has been progress, according to the CFIB. Ontario, for example, has eased up (at least temporarily) on licensing requirements for out-of-province health-care professionals. But as of that report card, Ontario still had 23 exceptions on the books, including in the fields of energy production, real estate, travel agents, forestry and — yes — alcoholic beverages.
University of Calgary economist Trevor Tombe has suggested Ontario simply offer to join the 15-year-old New West Partnership Trade Agreement, under which every province to Ontario’s west has committed to reducing these barriers.(A broadly similar framework agreement exists among the Atlantic provinces.)
“The Ontario economy could grow by over $4.1 billion per year if these reductions appl(ied) to all goods and services,” Tombe projected in June last year. “That boosts worker and business income — about $1,000 per family per year.”
A no-brainer, one might think. But much as they seem to agree on the issue, as united as they claim to be around a “Team Canada approach,” Ontario’s political leaders sure seem to promote “buy Ontarian” an awful lot more than they promote “buy Canadian.” And that seems to be very popular.
Trump will be gone in four years. We have muddled along in this absurd situation for much longer than that. And it’s not the people making these protectionist decisions that have to suffer for them.
National Post
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