Part of Canada’s strategy for dealing with Donald Trump’s tariffs is expanding our trade options. That should include reducing two kinds of internal trade barriers: legal obstacles and transportation costs.
Conservative Leader Pierre Poilievre has suggested using the federal spending power as a lever to secure increased internal trade. However, the Tories should be wary of expanding the use of the federal treasury to pressure provinces into complying with federal policy objectives. Canada needs more balanced federalism, not more central overreach.
Let us have a look at the express federal powers at the time of Confederation. They were largely about Parliament’s authority to promote an economic union. There are specific powers in areas like banking, currency and intellectual property. There is the general power of “Trade and Commerce.” That power can be used to establish general and Canada-wide norms for doing business within the federation. The potential for federal legislation based on Trade and Commerce, if necessary, can encourage federal-provincial co-operation. If that does not work, Parliament can act.
Trade agreements often look boring and obscure and can take years — decades — to negotiate. However, the international trade system was highly effective in the post-war period because it was driven by simple and powerful principles. Example: national treatment. Every country has to give imports the same regulatory and tax treatment that it affords local goods. The principle pushes down trade barriers without having to specify all the details of how a country taxes and regulates.
I would suggest the following three basic principles.
• First, let’s call it international treatment (legal). Every province must afford to traders from every other province the best treatment it gives to any country in the world, including under both the world trade agreements and any of Canada’s bilateral or regional free trade agreements.
• Second, let’s call it international treatment (practical). Every province could call on any other and on the federal government to consult and make practical efforts to ensure that it is in practice as easy to do trade within Canada as international trade. If it is easy to ship oil and gas to the United States for refining, provinces and Canada should co-operate to ensure that there is a transportation network that enables interprovincial movement. If co-operation fails, a dispute panel could investigate and report on what options might work —including the potential use of federal legislative power such as the regulation of interprovincial pipelines.
• Third, the “best-existing agreement principle.” Every province should be able to invoke the best treatment for its traders under both the general Canada Free Trade Agreement or the New West Partnership Agreement. The latter is generally a more effective agreement but only currently applies to the four western provinces. The provinces should all agree that the latter standards are available nationwide.
These three principles would have the benefit of simplicity and ready application, rather than requiring complex and time-consuming negotiations.
There is much else a fresh-thinking federal government could do within its core jurisdiction. Measures could include expanding transportation and communication infrastructure, streamlining environmental assessment procedures, and basing environmental policy generally on scientific and evidence-based policies that are guided by transparent and real-world cost-benefit analysis.
Federal and provincial governments could also begin to think through, consult, seek agreement, and, as required, legislate how Indigenous governments and territories fit into a robust internal economic union. Some general principles should be established in this challenging area as well. They could include respect for Indigenous rights and interests while still acknowledging that some of the open trade norms that apply between independent states and provinces can be applied in trade relations among Indigenous communities and the rest of the Canadian polity.
In the meantime, the three principles identified here would not require protracted negotiations to identify. They would not be hard to explain to the general public. They are not ideological or partisan. They could be acted upon quickly and produce immediate and long-term results. Rather than focusing only on defensive and retaliatory measures against the United States, a poised and confident Canada should be moving ahead with its own reform and nation-building.
Special to National Post
Bryan Schwartz is the Asper Professor of International Business and Trade Law at the University of Manitoba.