By Ian Munro
It’s enough to make you cry in your beer.
Almost 20 years after Canada signed a free trade agreement with the United States, after almost 15 years since we signed an expanded deal to include Mexico, and 13 years after the provinces signed an agreement to reduce inter-provincial trade barriers, what is the main issue of the day here on the trade front? Squabbling over the details of – rather than eliminating – provincially-imposed charges that add to the cost of the tall cold one you enjoy after a hard day’s work.
However, while the governments of New Brunswick and Nova Scotia engage in petty suds-slinging, other provinces are actually getting on with the job of making their economies stronger and making their citizens better off.
The Alberta-British Columbia Trade, Investment and Labour Mobility Agreement (TILMA) will come into effect in a few weeks (on April 1). The TILMA is the most aggressive attempt to tear down inter-provincial trade barriers in Canadian history and will create the second-largest economy in the country after Ontario. (Interested readers should note that the latest issue of the Canada West Foundation’s Dialogues magazine is devoted entirely to articles on the TILMA and its potential repercussions across the country.)
To be fair, after Canada signed on to NAFTA, we did turn our attention to an inter-provincial Agreement on Internal Trade (the AIT), but almost 13 years after the AIT was signed, we are still two years away from a deadline (April 1, 2009) for provinces to be in compliance with its labour mobility provisions, a meaningful AIT chapter on energy has yet to be finalized, the issue of business subsidies is still under study, and an enforceable dispute resolution mechanism remains missing from the agreement.
The TILMA appears to have the potential to leave the moribund AIT process in the dust. Saskatchewan’s Premier Lorne Calvert has commissioned a study on joining the TILMA, and an Ontario cabinet minister recently visited Alberta and noted Premier Dalton McGuinty’s strong interest in the agreement.
So as the TILMA partnership expands, what will this mean for New Brunswick? There are three broad options.
First, New Brunswick could sit on the sidelines and remain outside a growing “Canadian” marketplace. This would be a mistake. Smaller economies have the most to gain from entering free trade arrangements with larger partners, and the most to lose by being excluded. With their relatively small populations and domestic markets, the four Atlantic provinces in particular should be leading the charge to liberalize trade.
Another option is for the Atlantic provinces to work first on an east coast TILMA, rather than join our western and central Canadian cousins. This too would be a mistake. The last thing that we need in Canada is a set of duelling trade blocks within our national borders.
Expending effort to improve trade conditions only among the four smallest and poorest provinces, rather than working to maximize access to the biggest markets and the most dynamic economies in the country, would be a regrettable waste of time and energy.
New Brunswick has a long and proud history as a trading province and it should seize the opportunity now to join the TILMA group and build momentum towards real free trade within Canada. Premier Graham recently joined his Atlantic Canadian counterparts on a trade mission to Alberta, and one would hope that the benefits of liberalized trade and the future of TILMA featured prominently in those discussions. Sadly though, the recent evidence suggests that the instinct for protectionism remains all too alive and well.
There’s something strange about the fact that more than a decade after Canada negotiated a free trade agreement with two foreign nations – and experienced tremendous economic benefits as a result – that we even have to talk about reducing barriers to trade among provinces.
There’s something sad about the fact that rather than discussing the opportunities that an agreement like the TILMA could generate for New Brunswick, Premier Graham chooses to spend time and energy on finger-pointing over beer tariffs that should have been eliminated a long time ago. While the TILMA will not remove all trade hindrances, it at least represents an opportunity for meaningful progress. Let’s get on board.
Ian Munro is the Director of Research at the Atlantic Institute for Market Studies (AIMS, a non-partisan public policy think tank based in Halifax.