My call with the Senator

Out of the blue yesterday I got a call from the Chair of the Senate Committee on Banking, Trade and Commerce, Jerahmiel S. Grafstein. An honour, I suppose, because he was personally inviting me to testify before the committee on interprovincial trade barriers. I was somewhat caught by surprise and had no idea who he was (turns out he’s a Liberal, who was appointed by Trudeau!) when he launched into a tirade about how there were lots of them, that they were one of the reasons holding back Canadian productivity, and that TILMA was the greatest thing since Viagra (OK, he didn’t actually say Viagra).

Apparently, he has not read my work on the topic and I told him I disagreed but would be happy to participate any way I could. I could barely get a word in after that. The Senator can talk! He admitted that he only had anecdotes, some on labour mobility, one on the need for national corporate registration, and one on the need for a national securities regulator (a good idea though a couple hours later I noticed that Alberta Premier Ed Stelmach says no way). He then meandered over to the need for upgraded border crossings with the US (he makes a compelling case but this of course has nothing to do with interprovincial trade).

Being opposed to TILMA does not mean opposing any efforts to remove real barriers if they exist. The Senate Committee should compile a list of real barriers, ensure that addressing them would not adversely affect public interest regulation, and start a process for dealing with them. There are also areas of provincial jurisdiction that could be uploaded to the federal government (if the provinces would only agree). Some of these issues are just modernizing federalism rather than “interprovincial trade barriers”.
This should not be controversial, but nor would it be a magic bullet for Canada’s productivity. I pointed out that the MacDonald Commission found that barriers back in amounted to 0.05% of Canada’s GDP, and that since the Agreement on Internal Trade had reduced most of that. He thought that MacDonald was missing some things, but even if that is correct, and we doubled the MacDonald Commission estimate and forgot the AIT altogether, we are still talking small change.

I did not have time to get into the details on how Canadian provinces trade more with each other than with US states, nor did I cover the recent trends that show faster interprovincial than international trade. And I only got in about two words about how TILMA undermines public interest regulation. So I will have to save those remarks for my presentation to the Senate committee.