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The Ontario-Quebec Deal: TILMA 2.0 ?

Today, Premiers McGuinty and Charest kicked off “free trade” negotiations between their provinces. The key question is whether this process will be a sweeping “race to the bottom” like the BC-Alberta Trade, Investment and Labour Mobility Agreement (TILMA) or a focused effort to develop common standards in the few areas where problems may exist. As usual, the rhetoric about “inter-provincial barriers” is based on barely any concrete examples of alleged barriers.

The worst-case scenario is that today’s initiative will revive the TILMA model of allowing business to directly challenge public policy, which no other provinces have signed onto after 18 months of Alberta and BC shopping it around. Indeed, McGuinty initially seemed very positive about TILMA.

Alternatively, McGuinty may have publicly flirted with TILMA to (successfully) pressure Quebec to come to the table regarding a narrower set of issues. The Toronto Star’s Ian Urquhart alluded to this possibility a few months ago.

The Ontario-Quebec negotiations must also be assessed with reference to the federal government. McGuinty and Charest have appealed for federal support for manufacturing. Conservative pundits responded that the Premiers should eliminate inter-provincial barriers rather asking for federal handouts. Today’s initiative addresses this argument.

However, McGuinty and Charest should be careful. As the C. D. Howe Institute recently noted, “support to producers in the aerospace, automotive, and natural resources sectors could be subject to disciplines under the TILMA.”

The Premiers may also want to publicly do something rather than waiting for the federal hammer to come down, as threatened in last month’s Throne Speech.  However, one concern was that TILMA would spawn a system of regional “trade blocs” within Canada. Today’s announcement reinforces that fear, which may give the federal government more of an opening to move in with the trade and commerce power.

In last month’s provincial election, McGuinty wrote, “We will not sign an agreement that would lower or would allow for the lowering of environmental, labour, health and safety standards for Ontario workers.” Progressives should hold him to this promise.

UPDATE (Nov. 26): I drafted the above post from a computer without sound, before watching the content-free message on McGuinty’s website. In two minutes of speaking about the agreement, he makes a single, vague reference to “unnecessary barriers” but does not come close to identifying any. 

The document signed in the video is available through Charest’s website. Refreshingly, it acknowledges that Ontario and Quebec “benefit from already integrated economies” rather than repeating the bogus claim that it is harder to trade across provincial borders than across international borders.

The document also refers to “maintaining and enhancing, governments’ policies for labour, environmental and consumer protection standards, health, education, culture and regional economic development.” Again, no barriers are named.

Comments

Comment from Stephen Gordon
Time: November 27, 2007, 7:14 pm

It’s fair enough to say that the benefits to TILMA-type arrangements are small. But that’s not the same thing as saying that the costs are greater than the benefits.

Comment from Erin Weir
Time: November 27, 2007, 7:47 pm

I would support a focussed effort to attain the very small potential benefits of ironing out the few minor inter-provincial problems. My concern is that Ontario and Quebec may adopt an all-encompassing deal like TILMA, the costs of which would almost certainly exceed any benefits.

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