Internal free trade by Canada Day? It'll take longer than that

Globe and Mail

30-06-2025

As Prime Minister Mark Carney swept to power this spring, he vowed to establish internal free trade by Canada Day to blunt the impact of the U.S.-driven trade war. Reality is proving more complicated.
In recent months, the federal government and several provinces have introduced legislation aimed at reducing regulatory hurdles between jurisdictions and to recognize labour credentials across the country. The goal is to dismantle rules that hinder the flow of goods, services and workers within Canada.
But governments still have much work to do, and the responsibility for tearing down barriers will eventually fall on regulators who will have to implement the new laws.
Success will ultimately be based on whether internal trade increases in the months and years to come.
'July 1 is just the beginning,' said Ryan Manucha, an internal trade researcher with the C.D. Howe Institute.
A guide to The Globe's Canada Day coverage
Even with new laws in place or about to be passed, provincial governments still have to work out how mutual recognition will apply.
Ontario, Quebec, Manitoba, British Columbia, Nova Scotia and Prince Edward Island have drawn up bills to accept regulatory standards set out by other provinces and territories.
But the laws are written differently from province to province, with some jurisdictions including more carve-outs than others.
Quebec Minister for the Economy Christopher Skeete has already indicated, for example, that his government will exclude the construction industry from new credential recognition rules, arguing that other provinces don't have the equivalent certificates Quebec requires.
Meanwhile, Manitoba excluded goods and services provided by Crown corporations from its new law. That means Manitoba Liquor & Lotteries, for example, will not have to respect the new rules.
'You've seen all this provincial legislation, but it looks and smells quite different across the country. And it's my fear that it confuses the marketplace,' Mr. Manucha said.
Indeed, the regulatory landscape is far from simplified with the new patchwork of legislation. Businesses have to keep track of which provinces have struck agreements, and which exceptions apply.
In its annual report card on interprovincial trade released Monday, the Canadian Federation of Independent Business called the policy shifts across jurisdictions a 'potential turning point.'
But the report also lists all the exceptions made in the new laws.
'It's too early to tell how far this legislation goes. It has the potential to go quite far and be very good. At the same time, seven jurisdictions approaching it seven different ways gives us reason for pause,' Ryan Mallough, CFIB's vice-president of legislative affairs and communications, said in an interview.
'There's absolutely potential for this to become a patchwork and very confusing very quickly, if they all really deviate from doing the same things,' he added.
Among the CFIB's recommendations is the publication of a consolidated list of trade exceptions written in plain language for businesses.
Meanwhile, Ottawa still has to work out the regulations that will govern new federal legislation on internal trade, which will also help guide regulators on how to implement the law.
While most trade barriers are provincial, the federal government also regulates the flow of some goods and services. For example, the Canadian Food Inspection Agency requires businesses to obtain licences when packaging food for interprovincial trade.
The Carney government's Free Trade and Labour Mobility in Canada Act, which became law last Friday, establishes that a good, service or worker compliant with provincial or territorial requirements also meets any comparable federal requirements. Federal regulators, in turn, are allowed to determine what exactly is 'comparable.'
'There's a lot of discretion, a lot of latitude, being given to the regulatory authorities in that bill,' Mr. Manucha said.
Privy Council Office spokesperson Daniel Savoie told The Globe and Mail the federal government will work on 'further defining comparable regulations' as it implements the new law.
'The regulations will also establish a process to exclude certain federal requirements from the application of the legislation if there are unacceptable risks to the health, safety and security of Canadians, their social and economic well-being, the environment or international trade objectives,' Mr. Savoie said in a statement.
And the government will publish a plain-language user guide to help businesses and workers, he said.
On Monday, Ottawa announced that it is removing all its remaining exceptions to the Canada Free Trade Agreement.
Mr. Mallough said it will likely take until the fall to evaluate the new laws, noting there's also a national effort under way to facilitate the mutual recognition of regulations between jurisdictions.
Mr. Carney announced in early June that a mutual recognition agreement would be implemented by December, though it's unclear how that will affect provincial legislation that's already been introduced.
The economic benefits of removing internal trade barriers will take even longer to assess. Mr. Manucha said research suggests results start showing up in a couple of years, but the impact will likely be felt over five to 10 years.
Meanwhile, provinces have yet to make progress on direct-to-consumer alcohol sales.
British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia have agreed to work on alcohol sales between interested provinces.
Ontario has also signed several memorandums of understanding with other provinces that commit to reaching a framework, and it has pledged to reach a bilateral deal with Manitoba by June 30.
Colin Blachar, a spokesperson for Ontario's Finance Minister, told The Globe on Monday that details of a deal with Manitoba are still being finalized, and that an agreement will likely be reached in the near future.
With a report from The Canadian Press