Is Canada a country?

I always thought so, but apparently this is not the case, according to an oped in the Nationial Post by Sean McPhee, president of the Vegetable Oil Industry of Canada, and Carole Pressault, a VP with the Certified General Accountants. It is one thing for business interests to call for deregulation – that is to be expected – but to question our very essence as a nation-state seems just plain silly to me.

Here is the charge:

One hundred and forty years after confederation, Canadians cannot be certain that they can do business in other provinces, sell their goods, make investments or pursue their profession or trade.

This is a bold claim. What evidence is cited in support? All I can find is this:

[W]e shouldn’t have these non-tariff regulatory barriers among provinces that, among other things, impose different provincial standards on how one should stack cargo in a truck, or what colour margarine should be, or what are acceptable qualifications for an accountant or teacher, trained in one province but wishing to practise in another.

Now, comparing the two quotes, it seems clear that the basis of the sweeping claim above is rather weak, and in line with the economic interests of the two authors. This is about differences in regulations and standards across provincial lines, not whether businesses are barred from selling goods or making investments.

In the case of trucking there is a practical consideration: the way cargo is stacked on a truck needs to change not because of arbitrary provincial decisions, but because driving in flat Saskatchewan is not the same as mountainous BC. And it should be noted that nothing is barring that truck from crossing provincial borders, and for the vast majority of trucked goods the containers are standardized so there is no issue whatsoever.

For margarine, which speaks to McPhee’s industry, the gripe has been about Quebec’s requirement that margarine not be coloured the same as butter. This may be one of the only bona fide restrictions out there, but note that the sale of margarine is not banned, just artificial colouring. The costs of this policy are extremely low – in their testimony to the Senate Banking Committee, their own estimated cost of the barrier was roughly 0.2% of their total revenues, and since removal of the barrier would mean a loss elsewhere in the existing marketplace, the net benefit is likely to be rather small.

Finally, they cite labour mobility issues, which used to be more of a problem but most issues have been resolved under the existing Agreement on Internal Trade. One holdout is the accounting profession, Pressault’s vested interest, and this is under discussion. But surely it is an overstatement to say that as a result Canada is not a country, and that sweeping deregulatory agreements like TILMA are needed to resolve it.

They also make the same spurious claim that Canada-US trade is freer than inter-provincial trade:

Following the signing of the U.S.-Canada Free Trade Agreement in 1988 and the subsequent signing of NAFTA to include Mexico, Canadian governments came to the realization that Canadian domestic trade should be as free and open as international trade, and so they signed the Agreement on Internal Trade (AIT).

Last I checked, there was this thing – a border – between crossing Canada and the US, and crossing it often requires lots of time waiting in lines. A paper presented at the Canadian Economics Association conference estimated the costs in the billions of dollars. There is also the need to convert currencies, not to mention myriad exemptions to full free trade and investment in the CUFTA.

Interestingly, there are substantial differences in regulation among US states themselves that make any issues across Canadian provinces seem very minor indeed. But no one in Canada or the US is charging that the USA is not a country.

While there is a gaping chasm between the rhetoric of trade and investment barriers and any actual harms, the authors at least concede that there is a solution that does not involve TILMA-like agreements:

Maybe the federal government should do something. Section 91(2) of the Constitution Act, 1867, allows the federal government to regulate trade and commerce between provinces in Canada.

On a case-by-case basis, I have no problem with this approach, as long as it generally raises standards on a national basis. But it will not make for much work in Ottawa, since actual examples of  trade barriers are so scarce.

One comment

  • Excellent post, Marc.

    Like this op-ed, the National Post’s latest editorial on the subject suggested that “Canada is not a real country” due to supposed inter-provincial trade barriers:
    http://www.progressive-economics.ca/2007/08/14/national-post-tilma/

    In contrast to that editorial, this op-ed does not even mention TILMA. Corporate Canada may be changing tactics because of mounting opposition to TILMA.

    I agree that common national standards could be beneficial in some areas. My quibble with the Section 91(2) argument is that, if provincial rules violated this part of the Constitution, the courts would strike down these rules. No federal-government action would be required.

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