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Canada’s Internal Market Barriers William Dymond & Monique Moreau Center for Trade Policy and Law Carleton University / University of Ottawa Forum of Federations Project Addressing Internal Market Barriers • Forum of Federations’ Canada Program • Provide practical recommendations to federal & provincial govts re: trade barriers within Canada • Focus on constitutional, institutional, and informal arrangements • Papers from USA, EU, Switzerland, Canada, Australia 2 Canadian Experience • T&C power assigned by the Constitution to federal government • Objective: create a common Canadian market • Court decisions have narrowed the scope of federal power • Effect: weak capacity to create & enforce a single internal Canadian market 3 Constitutional & Legal Provisions BNA Act Constitution Act, 1982 POGG powers s.91(2) and s.121 case law 4 Case Law • Citizen’s Insurance Co. of Canada v. Parsons • trade in matters of interprovincial concern, but not regulation of contracts, intraprovincial trade • does not include production (i.e. transformation of primary products to food) 5 Case Law • Ontario Hydro v. Ontario (Labour Relations Board) • s.92A – powers re: natural resources • CIGOL v. Government of Saskatchewan • sends power back to feds (sort of) • Other heads of power • Banking & currency • Securities market 6 Major Internal Barriers • Technical standards & regulation • overlapping, inconsistent, excessive • Agriculture • concurrent jurisdiction (fed/prov) • e.g. dairy supply management, meat packing • Government Procurement • limited to local suppliers 7 Major Internal Barriers • Securities Regulation • 13 separate regulators • Investment • impose conditions (i.e. local employment) • Labour mobility • natural, institutional, language & regulatory barriers, professional associations • AIT amendments from Dec 2008 8 Are barriers important? • Range of studies found that trade barriers have a minimal effect on overall GDP • Whalley (1983) • MacDonald Commission (1984) • Whalley (1995) • Rutley (1991) criticized by Copeland (‘98) • Statistics Canada data 9 Are barriers important? • McCallum (1995) • gravity models; trade between US & Canada • Helliwell (1996) • Engel & Rogers (1996) • Confirmed McCallum • Helliwell, Lee & Messinger (1999) • gravity model for Canada-USA FTA • IMF (2005) 10 Processes & Means for Addressing Barriers • • • • • Constitutional reform negotiations (1980s) Canada- US FTA (1980s) AIT (1995) TILMA (2007) Ontario & Quebec (2008) 11 Constitutional Amendment • no amending formula in BNA Act or BNA Act (2) • Repatriation of constitution (1982) • s.121 common market clause – no support • similar efforts in 1980s & 1990s went nowhere 12 AIT Achievements & Failures • Progress in some sectors… • • • • procurement wine labour & mobility appeal & enforcement mechanisms for dispute settlement procedures • But failure in others… • agriculture, energy goods, scope of AIT 13 TILMA • AB & BC unhappy with architecture + slow progress of AIT = creation of TILMA • positive (AIT) vs. negative (TILMA) listing approach • TILMA liberalizes more • More effective dispute resolution mechanism (consultation & mediation, then arbitration) • Other provinces critical of TILMA 14 Council of the Federation Initiatives on internal trade: • Address key issues not resolved in AIT • Strengthen economic union • Workplan on Internal Trade led to Declaration Regarding the AIT • mechanisms to improve labour mobility, enhance dispute settlement • Amended agriculture chapter (Aug ‘09) • Transport initiatives 15 International Agreements • Initially, Canada had no power to manage its own foreign affairs • Statute of Westminster (1931) granted power • International agreements not selfexecuting in Canada • Must be implemented with Canadian law 16 International Trade Agreements • Less problematic than international agreements • Govern instruments such as customs tariffs (s.91) • GATT art. XXIX:12 - hard obligation • Provisions in US-Canada FTA, NAFTA • BUT fed govt cannot compel the provinces 17 Conclusions • Compelling political & economic case for a single common market • Canada not big enough to exist on internal economy alone • Need industries for export • Internal market barriers are result of political failure to exploit natural dynamics of Canadian economy • Global value chains becoming important 18 Questions? Comments? Contact Us Bill Dymond ([email protected]) Monique Moreau ([email protected]) 19