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Interprovincial Trade Barriers Towards Goods and Services in Canada: An Issues Paper for Industry Canada

by John Whalley.

Abstract

This issues paper discusses interprovincial flows of goods and services in Canada. It argues that recent heightened concern over this issue, in part based on surveys of business opinion, needs to be counterbalanced against earlier assessments in the 1980's of the issue as a tempest in a teacup. Three themes emerge from existing work. One is that the direct trade effects of interprovincial barriers seem small. A second is that for the 1970's and 1980's the impacts of federal government policies on interprovincial trade flows substantially outweigh those of provincial barriers. A third is that the costs implied by regulation seem to be large, but little regulation (with the exception of trucking) explicitly differentiates by province. Earlier work also provided inventories of interprovincial barriers and empirically based calculations to support their position, which seems to be missing in more recent commentary. The need is to update this work and assess its applicability to present circumstances. The paper also reviews experience involving other federal states (Australia, Brazil, the United States, Russia). It also comments on the 1995 Agreement on Internal Trade and the 2006 Alberta-B.C. Trade, Investment and Labour Mobility Agreement, setting out further possible approaches for enhancing the impacts of these agreements over the next decade or so. Key knowledge gaps and priorities for future research are highlighted.

Key words: trade, trade barriers, internal trade

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