Leaders across Canada have talked a good game about eliminating interprovincial trade barriers. Nova Scotia Premier Tim Houston is putting his money where his mouth is.
There can be no doubt about it: Interprovincial trade barriers are holding Canada’s economy back. The rules and regulations preventing the free flow of goods, services and workers across provincial borders is costing our economy more than $200 billion a year.
With U.S. President Donald Trump promising to bring in sweeping tariffs as soon as next week that would devastate the Canadian economy, it’s never been clearer that we need to trade more at home and boost economic activity within our borders.
Enter Houston.
At a campaign stop in support of Ontario Premier Doug Ford’s re-election bid, Houston announced plans to table a bill called the Free Trade and Mobility Within Canada Act in the Nova Scotia Legislature.
The legislation would take a reciprocal approach to trade barriers: According to Houston, Nova Scotia will eliminate any barriers standing in the way of trade with another province so long as that other province responds in kind.
In other words, so long as any other province is willing to drop its trade barriers and allow Nova Scotia’s goods, services, and workers to flow freely across its borders, Nova Scotia will do the same.
Canada’s internal trade barriers now represent the equivalent of a 21% tariff. Eliminating those barriers is critical.
Houston’s new legislation could be a game changer for the Canadian economy. Once Nova Scotia passes this bill into law, the onus will be on other provinces to reciprocate: if they want more access to the Nova Scotia market, all they have to do is remove trade barriers of their own.
In the past, provinces have been reluctant to remove trade barriers for a number of reasons. One is that even if a province removes a trade barrier, there’s no guarantee that other provinces that benefit from the elimination of that barrier will respond in kind.
Houston’s legislation would require Nova Scotia to reciprocate action taken by any other province, offering a guarantee that a gesture of goodwill won’t go unmatched.
The proposed legislation could lead to a domino effect. Ontario, for example, might see the benefits of reciprocal trade with Nova Scotia and could choose to introduce similar legislation to facilitate more reciprocal trade with other provinces.
By having politicians commit to matching each other’s moves toward freer trade, they don’t have to take a leap of faith when they stand up to special interest groups and tear down trade barriers.
Houston’s move comes at a critical time. Trump is threatening to introduce punishing across-the-board tariffs as soon as next week. Canada needs to be doing everything possible to strengthen the domestic economy to head off the impact of those tariffs.
Exports represent more than one-third of Canada’s GDP and 77% of Canada’s exports go to the United States. It’s hard to overstate just how devastating U.S. tariffs would be on Canada’s economy.
That’s why strengthening internal trade, in concert with growing Canada’s exports to markets other than the United States, will be crucial in the months ahead.
But unlike trading with other countries, where complex bilateral agreements must be negotiated, internal trade barriers in Canada could be eliminated tomorrow. All that’s been missing is the will to make it happen.
Houston is showing that eliminating internal trade barriers can be done swiftly. With a single piece of legislation, Houston is laying the groundwork for eliminating Nova Scotia’s trade barriers with other provinces, so long as they do the same.
Provincial governments across the country should follow Houston’s lead, introduce reciprocal domestic trade legislation, and unleash the true potential of Canada’s domestic economy.
Interprovincial trade barriers are holding Canada back at a time when we can least afford it. Canada’s premiers should embrace Houston’s plan to fix it.
— Jay Goldberg is the Canadian Affairs Manager at the Consumer Choice Center