Still No Free Trade in Canada
Says the official who oversaw the negotiation of
Canada's Internal Trade Agreement
Contact:
Robert Knox,
R.H. Knox & Associates
Telephone: (519) 922-3459
Fred McMahon, Policy Analyst
The Fraser Institute
Telephone: (604) 688 0221, ext. 569
Release Date: 16October 2000
VANCOUVER, BC — Canada's Agreement on Internal Trade "has failed to ensure free trade in Canada," says Robert H. Knox, the official who oversaw the negotiation of the Agreement. From 1986 to 1992, Knox was federal co-chair of Intergovernmental Committee of Officials on Internal Trade. From 1993 to 1995, he was executive-director of the Internal Trade Secretariat.
Knox says that, based on experience over the last 5 years, some provincial governments lack the political will to make free trade a reality in Canada. If an effective agreement is beyond the reach of Canadian governments working together he calls on the federal government to look to its constitutional power over trade to assure an open and stable domestic market.
"If Canadian governments cannot fix the Agreement, Ottawa should consider using its constitutional power to establish clear and enforceable trade rules for interprovincial trade within Canada. The alternative to action is a continued lessening of Canadian east-west ties in favour of the north-south axis," Knox writes in the current issue of Fraser Forum, The Fraser Institute's monthly magazine.
In many ways, trade between Canada, the United States and Mexico is now freer than trade within Canada, Knox writes. "There are clearer and more enforceable trade rules between Canada and the United States and Mexico, than between British Columbia and Ontario, or Nova Scotia and PEI. This weakens Canada economically and politically."
Noting that federal and provincial governments have just initiated a series of public discussions on the Agreement, Knox details how the Agreement can be fixed. The most pressing need is for a dispute resolution process that works, Knox says.
The current process is "byzantine, expensive, time-consuming and, ultimately, pointless," he writes. "Governments are free to flaunt it with no penalty. The only enforcement mechanism in the Agreement is itself perverse. A provincial government may retaliate against another provincial government that has failed to implement an Agreement-based finding. The result: More, rather than fewer, trade barriers and maybe an internal trade war."
To give the Agreement teeth, Knox suggests that aggrieved parties should be allowed to sue governments that flaunt the Agreement. He also argues that the dispute resolution process should "be radically shortened, simplified and put in the hands of competent third party adjudicators."
The Forum article provides several case studies showing how ineffectual the Agreement has become.
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Is Ontario a Free Trader? A Case Study. Ontario has complained bitterly about Quebec's barriers to construction workers but maintains its own barriers and applies the Agreement on Internal Trade selectively. For instance, Ontario bars some accountants, qualified in other provinces to certify and give opinions on financial statements, from doing this work in Ontario. In a world of business interconnections, this barrier interferes with Canadian economic integration and limits competition. Similarly, while Quebec has been criticized for banning coloured margarine, Ontario maintains barriers to goods which combine soya and dairy products. In both cases, Ontario has avoided resolving these issues through the Agreement on Internal Trade and has not used the Agreement to settle the issues of coloured margarine and construction worker mobility with Quebec. More details on these and other cases can be found in "The Unpleasant Reality of Interprovincial Trade disputes" in October's Fraser Forum at www.fraserinstitute.ca. |
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