The National Post on TILMA

On Friday, the National Post’s lead editorial suggested that inter-provincial trade barriers are significant enough to validate the Quebec-separatist view that “Canada is not a real country.” The following edited response from yours truly is printed as a “Counterpoint” in today’s edition.

UPDATE (August 16): BC’s Minister of Economic Development has responded to my op-ed.

In a recent editorial, the National Post called for all provinces to join the Trade, Investment and Labour Mobility Agreement (TILMA), which came into force between Alberta and British Columbia in April (“Let TILMA Grow,” Aug. 10).

According to the Post, TILMA is needed to eliminate inter-provincial trade barriers, “which, in certain sectors, actually make it easier for Canadian firms to trade with the United States than Canadian firms in different provinces.” Yet the Post identifies no sector for which this claim is accurate. From 2000 through 2006, inter-provincial exports grew four times faster than Canada’s international exports.

Canadian courts have consistently struck down provincial attempts to directly interfere with inter-provincial trade. What the Post calls “regulatory non-tariff trade barriers” are merely differences in provincial policy that may or may not have side-effects on inter-provincial commerce. These include occupational certification, procurement and trucking registration. The Post approvingly notes that Alberta and B.C. “are now bound to recognize the other’s occupational standards.” But the effect of this approach will be to turn the lowest standard in any province into the minimum standard for every province.

Prior to TILMA, all provinces except Quebec and B.C. maintained a common set of Red Seal standards for many skilled trades, ensuring inter-provincial mobility for tradespeople. Under TILMA, Alberta employers must accept people trained to lower standards in B.C. A far better approach would be for B.C. to adopt Red Seal standards.

The existing Agreement on Internal Trade prevents provincial governments from favouring local suppliers. TILMA will extend this regime to municipalities, school boards and Crown corporations. This is supposed to generate savings by expanding the pool of available suppliers for any given job. But at the municipal level, the cost of complying with arm’s-length procurement rules is likely to eclipse any potential cost savings.

Registering in multiple provinces undoubtedly creates a small additional cost for trucking companies under current rules. However, the Post‘s suggestion that these companies are returning significant numbers of trucks empty to avoid registering in other provinces is unfounded. TILMA would encourage companies to register only in whichever province maintains the lowest standards.

Of course, provinces might reasonably choose to adopt common standards in some areas, but doing so hardly requires TILMA’s legalistic approach. This agreement’s enforcement mechanism allows private interests to sue for up to $5-million based on alleged violations by provincial governments, municipalities and school boards.

Rather than simply preventing measures that are discriminatory against businesses in other provinces, TILMA purports to “eliminate barriers that restrict or impair trade, investment or labour mobility.” The problem is that almost everything that governments do influences investment opportunities and could be challenged. TILMA’s limited, temporary exceptions protect a policy only if the government can prove that there is no conceivable alternative policy.

Commercial tribunals that meet behind closed doors, rather than provincial or federal courts, will interpret the extremely broad language of this 36-page agreement. Uncertainty about potential interpretations is already having a chilling effect on regulators in Alberta and B.C. who fear legal challenges. It makes no sense to sign a comprehensive agreement if there is no guarantee that tribunals will restrict its provisions to instances of genuine trade barriers.

Saskatchewan is the only province to have held public consultations on TILMA. Both the governing NDP and the right-wing Saskatchewan Party rejected the agreement because it severely constrains the capacity of provincial governments, municipalities and school boards to act in the public interest.

All provinces should join Saskatchewan in negotiating specific solutions to any minor inter-provincial barriers that may exist. At a minimum, Alberta, B.C. and any provinces considering joining TILMA should hold public consultations on this sweeping agreement.

Erin Weir is an economist with the Canadian Labour Congress. His presentation to Saskatchewan’s public hearings on joining TILMA is available at www.policyalternatives.ca.

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