Restrictions arise from interpretations of Section 121 of the Constitution, which states: “All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.”
Originally, this meant free trade should be realized between provinces but the section is now almost 150 years old and the Fathers of Confederation couldn’t have predicted the complications that would come as a result of specific wording. For example, it doesn’t refer to trade in services so it can be interpreted in several ways including as only applying to tariffs. It isn’t clear.
What is clear, is it needs to be amended because restrictions on trade aren’t good for Canada. We also know that already existing international agreements are more beneficial and present fewer barriers than those in our own country.
The Standing Senate Committee on Banking, Trade and Commerce released a report after consultations, confirming this. It’s estimated that 40% of the value of provincial and territorial exports go to other provinces and territories and that trade barriers account for $50 to $130 billion of eliminated GDP. That’s huge.
Government overreach limits our choices, denies us lower prices and impedes our fundamental right to purchase goods and services free of trade barriers. Provinces limit incoming liquor for personal use and in some cases, beer bottle, dairy creamers and milk container sizes differ across jurisdictions adding costs as companies require multiple production lines. Limits on the use of efficient tires mean truckers have to change them at provincial borders. Unpasteurized cheeses can’t be shipped outside the borders of Quebec and provincial, territorial and federal standards differ for maple syrup grades.
All of these rules cause issues resulting in protectionist policies that enrich governments, like liquor boards that profit from sales. But government should realize that free trade can benefit them too since it increases competition, productivity and growth which can result in increased exports. This could in turn increase investment in Canada, all of which could raise government revenue through increased business taxes.
The Senate Committee concluded that a renewed trade agreement penned in 1995 had a deadline of March 2016 and if no new agreements are reached by July 1st, 2017, they’ll recommend the Supreme Court get involved to lift restrictions and change laws.