The threat of U.S. tariffs has put a renewed focus on easing internal trade in Canada, and some legal experts say different product labelling and packaging rules pose a big barrier.
Canada’s Committee on Internal Trade is set to meet again on Friday to discuss ways to open up trade between provinces and territories.
This comes as U.S. President Donald Trump is poised to impose sweeping 25 per cent tariffs on all Canadian goods next week.
Among the measures the committee is seeking to act on is the “removal of regulatory and administrative barriers to the movement of goods in Canada.”
When it comes to packing and labelling products, there’s a “split authority” in Canada.
There are regulations from the federal government and provincial add-ons that create hurdles moving goods from one province to another, said Robert Kreklewetz, managing partner at Millar Kreklewetz LLP, a Toront0-based law firm that specializes in customs and trade.
“The current system that we have where you’ve got federal government implementing certain rules, provincial governments implementing their own rules, and it becomes a bit of a dog’s breakfast for trying to trade interprovincially in many goods and services that we have in Canada,” he said.
What are the labelling barriers?
The Canadian Food Inspection Agency (CFIA) is the main federal authority that regulates how food products are labelled and packaged across the country.
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However, provinces are also able to put in place their own rules.
For instance, in Quebec, under the charter of the French language, all labels on food products and other consumer goods are required to be in French.
So, any producers from other provinces who are looking to sell in Quebec will have to adjust and rejig their labels to meet those requirements and that comes with an additional cost, said Laura Gomez, a partner at Gowling WLG in Ottawa, who practices food regulatory law.
“If you’re a producer in British Columbia, for example, you might have a very minimum amount of bilingual information on your label based on the federal rules,” she said.
For local producers, who might even be exempt from some of the federal rules, the jump to trading out of their province adds an extra layer of labelling requirements, which can be expensive if they have to work with an artist to redesign labels, Gomez said.
Another example is B.C.’s Organic Certification Regulation.
Organic products must meet specific certification requirements before they can be sold in the province.
Licencing and quotas
Another challenge that local businesses face when trying to cross provincial borders is licencing.
In the case of food, this means a producer will end up having to work with CFIA inspectors instead of the local inspectors and get a new licence, Gomez said.
The licence themselves are not costly – they cost about $250 — but meeting the obligations for those licences can be more challenging and may require a pre-licence inspection, which can pose a barrier to internal trade, she said.
“When it comes to selling products, sometimes it’s easier to export your product to an adjacent U.S. state than it necessarily is for a producer in Ontario to ship their product to Newfoundland or British Columbia or the Yukon.”
In particular, selling dairy, alcohol and meat from one province to another is not easy.
“Each province effectively has its own quota system that restricts how much dairy can be produced and sold and a producer in one province can’t freely go to the other province to sell those products unless they actually have quota in the destination province that they’re trying to sell in,” Kreklewetz said.
Canadian whisky, wine and other alcoholic beverages are also heavily restricted by provinces and meat products inspected in one province generally can’t be sold elsewhere, he added.
“From a legal perspective, that’s huge barrier to trade and creates a lot of problems in terms of trying to open up Canada to be a free trade environment, especially given that we’re about to lose our free trade environment with the United States,” he said.
As Canada looks to improve the flow of internal trade amid U.S. tariff threats, Kreklewetz said harmonization of packaging and labelling rules should be prioritized to encourage as much free trade within the country as possible.
“Not only should it be high in the priority list, it needs to be done yesterday,” he said.
“I worry that we are about to experience an economic shock that we as a country have not experienced in many, many years.”
