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Proponents argue that enhancing internal trade supports economic competitiveness by creating jobs, helping businesses expand, enhancing consumer choice, and increasing Canada’s overall economic growth. Opponents focus on the importance of regional economic development, jurisdictional autonomy and the importance of government policy promoting local workers and local business.
For small- and medium-sized businesses in Canada, the reality of internal trade is often acutely felt when expanding into multiple jurisdictions or when attempting to capture local government contracts. From duplicate regulatory and business registration requirements across jurisdictions on one hand, to rules prohibiting a government’s ability to direct procurement to a local company on the other, the rules that govern internal trade impact the cost of doing business in Canada and shape economic opportunities.
The internal trade framework in Canada consists of three sources of rules that govern the flow of goods and services, investment, labor mobility, technical barriers to trade, procurement coverage, and regulatory cooperation within Canada. The primary source is the Canadian Free Trade Agreement (CFTA) which came into force on July 1, 2017. The CFTA covers nearly every sector of the economy, including most of the service economy, which alone accounts for 70 per cent of Canada’s GDP. The remaining rules are federal and provincial and territorial (PT) (including municipal) and are either exempt from the CFTA or outside its scope. This includes areas such as health and social services, consumer protection and policies that provide preferences and support local companies and workers.
The federal government and all provinces and territories (PTs) are signatories to the CFTA. It commits governments to a comprehensive set of rules that apply automatically to almost all areas of economic activity in Canada, with exceptions being clearly identified. Governments made precedent-setting commitments including:
- prohibitions on barriers to the movement of goods within Canada
- open and transparent procurement practices
- the obligation to adopt the least trade restrictive technical regulations and standards possible
- the establishment of a regulatory reconciliation process to address regulatory differences across jurisdictions
- strengthened dispute settlement and consultation provisions for governments and business whose rights have been violated
In short, CFTA establishes opportunities and constraints on business activity within Canada that can have positive and negative impacts which are important to understand. To that end, HPBAC is designing a survey for distribution to collect information on how internal trade rules impact industry. The survey is expected to be sent out the first week of June 2021.
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