The Growing Imperative to Create a More Integrated Internal Economy in Canada

Steven Globerman

Regardless of the outcome of the 2024 US presidential election, it is likely that protectionist pressures will intensify in that country, thereby further threatening Canada’s exports to its largest trading partner. The imperative to create a truly integrated internal market will therefore be even more pressing.
There are relatively large economic benefits to Canadians from eliminating or even reducing interprovincial barriers to trade, capital flows, and labour mobility.
There are two main legal instruments to reduce existing interprovincial barriers to trade and labour mobility. One is the Canadian Free Trade Agreement (CFTA) which currently includes all 13 provinces and territories. A second is the New West Partnership Trade Agreement (NWPTA) to which the provinces of British Columbia, Alberta, Saskatchewan and Manitoba are signatories.
The main advantage of using the CFTA is that it mitigates the risk of trade and investment diversion. The disadvantage is that it is more difficult to negotiate trade agreements encompassing a larger number of trade partners than it is to add individual partners to a regional trade agreement.
Whether barriers are reduced by deepening the existing CFTA or expanding and deepening the NWTPA, a major step to a more integrated domestic economy would be for members of both trade agreements to implement a policy of “mutual recognition.” This would mean that an item of commerce (either a good or a service) that meets the regulatory requirements of a member province or territory is deemed to automatically satisfy the regulatory requirements of other member provinces or territories.