OTTAWA — Canada’s premiers and Ottawa have agreed to move at lightning speed—by the standards of regulatory action, at least—to overcome stubborn obstacles to internal trade, paving the way for greater labour mobility and, yes, for most Canadians to buy alcohol from other provinces.

“This is a pivotal moment for Canada to take bold and united action,” the provincial and territorial premiers said Wednesday in a joint statement with Prime Minister Justin Trudeau.

“We must increase our economic resilience, reduce dependence on one market” the statement said, adding: “One key step is to make it easier for Canadians to do business with each other from coast to coast to coast.”

How could this help?

Getting rid of internal trade barriers on goods alone could lift Canada’s real GDP per capita by 3.8 per cent, according to a seminal paper on the issue published by the International Monetary Fund in 2019. That would be about $2,900 per person in 2023 dollars. The threat of a trade war with the United States, which began in earnest Tuesday, has prompted calls for bigger—and faster—moves to improve trade within Canada’s own borders to help domestic industries weather the storm.

Reducing exceptions

The 2017 Canadian Free Trade Agreement (CFTA) was negotiated between Ottawa and the provinces to allow people, goods and services to move more freely across provincial boundaries. Provinces and territories still have their own exceptions,but premiers have agreed to a “rapid review” of what remains on the list by June 1. Last month, Internal Trade Minister Anita Anand announced Ottawa would remove 20 more federal exceptions, largely in the areas of financial services and procurement.

Freeing (most of) the beer, plus wine and spirits

Alcohol is a relatively small aspect of internal trade, but it has long been a symbol of the fight to liberalize it. In 2018, the Supreme Court of Canada issued a controversial ruling in what became known as the “free the beer case” involving Gerard Comeau. He had received a ticket after he was caught bringing beer he had bought in Quebec back into his home province of New Brunswick. The ruling upheld the barriers to the free flow of alcohol across provincial borders.

The federal government and most provinces agreed to remove those barriers, which would open the door allowing wineries, breweries and distilleries to sell their products directly to consumers, even those in other provinces. It remains to be seen where the provincial liquor boards will fit in and how that will affect the prices for out-of-province customers. Prince Edward Island and Newfoundland and Labrador did not sign on. Right now, Manitoba is the only province completely open to direct-to-consumer sales.

Mutual recognition of consumer goods

This gets less attention, but could have a much bigger impact. Provinces, territories and the federal government all have their own sets of regulations, with paperwork needed to show they have been met. That can make it not worth the hassle for a business to ship goods across provincial boundaries instead of to the United States.

Now, the first ministers have agreed to immediately begin negotiations for the mutual recognition of all consumer goods, excluding food, with an action plan due March 31. Under a mutual recognition agreement, a good that meets regulatory requirements in one province or territory could be sold in every other one. 

The statement specifies goods, not services, but notes parties could pursue a broader deal covering other sectors through “unilateral, bilateral or multilateral initiatives.” Some of that work is underway. Last month, Nova Scotia Premier Tim Houston introduced legislation that would treat any good or service as if it were produced in his province, so long as other jurisdictions respond in kind. Most provinces and all three territories were also involved in a pilot project to mutually recognize each other’s regulatory requirements in the trucking industry.

Labour mobility

The agreement says “certified professionals with credentials in one jurisdiction should be able to work anywhere in Canada.” The Committee on Internal Trade, which oversees the implementation of the CFTA, has been asked to come up with a plan to recognize professional credentials across Canada by June 1. They will also strive to have someone relocating to another region of Canada be able to start working within 30 days. (Quebec, where French is the official language, is not part of that plan, but the statement says the province “intends to implement measures for credentials recognition when it deems it in line with its own objectives.”)

Ontario started moving in this direction in 2023, when it began allowing some health-care professionals licensed and registered in other provinces to start their new jobs in Ontario right away. Previously, they had to first join a regulatory college in Ontario. 

How big a deal is this?

“Huge,” said Ryan Manucha, a lawyer and author of Booze, Cigarettes, and Constitutional Dust-Ups, which chronicles Canada’s oft-thwarted efforts to liberalize internal trade. While there are many details to be worked out, Manucha said it is hard to overstate how quickly things moved from announcing the pilot project on trucking last fall to negotiating the economy-wide mutual recognition of consumer goods. “Yes, in isolation, it feels like nothing. But you really have to put this in perspective with the historical context,” he said.

Trevor Tombe, an economics professor at the University of Calgary, agreed the announcements are “incredibly encouraging.” But the devil is in the details, he said, noting provinces will need to follow through in negotiations and consultations. “If they do, and they match the kind of verbal statements they’ve been giving on each of these files, then this is a dramatic improvement in our ability to trade internally.”