Inter-provincial trade deal to open billions in new procurement opportunities

April 6, 2017
by Andy Blatchford, The Canadian Press

OTTAWA—Governments across Canada will on April 7 unveil an inter-provincial trade agreement designed to not only knock down domestic business barriers, but also lay the groundwork for talks to eventually establish a cross-country marijuana market.

Economic Development Minister Navdeep Bains says the long-awaited deal, meant to boost economic growth, will also establish a clear process to help provinces and territories regulate the trade of recreational pot.

Those discussions can only come, of course, once the federal government legalizes marijuana with legislation that government insiders have said would be introduced next week.

Once Ottawa moves forward with legalization, the Canada Free Trade Agreement will offer a transparent mechanism to help provinces and territories discuss standards that will include “making sure that there’s more choice and better price points,” said Bains.

“It’s really about … having an open market,” he said in an interview Wednesday. “It’s all about, again, eliminating any red tape that may exist.”

When it comes to pot legalization, Bains said, the government’s overarching objectives remain protecting young Canadians and getting money out of the hands of criminals.

The reference to marijuana is tucked into an internal-trade deal that is expected to ease regulations across provinces, open up billions in new procurement opportunities and set stiffer enforcement rules for non-compliance.

It’s due to come into effect July 1 to coincide with Canada’s 150th birthday.

Governments in Canada expect the deal to create jobs and amplify domestic trade, which already accounts for $385 billion in annual activity and makes up 20 per cent of Canada’s gross domestic product.

Officials have struggled to pin a number on the potential economic benefits of removing some interprovincial trade barriers.

Bains mentioned an estimate made in a speech last September by Bank of Canada governor Stephen Poloz, who said free internal trade could add as much as 0.2 percentage points to Canadian growth.

“We recognize that we need to all come together, all hands on deck, in order to strengthen our economic outlook going forward,” Bains said of a deal he believes will also help Canada in its international talks on trade and in attracting foreign investment.

The agreement is drawn up in such a way that it allows for the inclusion of new sectors, such as recreational marijuana.

The deal automatically covers almost every economic area, while exceptions are clearly identified.

Had pot not been mentioned in the document, there was a risk it could have become entangled in the same type of regulatory patchwork that has created barriers to the interprovincial movements of alcohol in Canada for decades.

“We are tackling that issue … but it’s been 50 to 100 years of debate across Canada (about) ways to free up the flow of alcohol,” said Ontario Economic Development Minister Brad Duguid, who has chaired the negotiations.

“We can avoid that when new products like cannabis come onto the market, if we get it right at the beginning.”

On alcohol, the negotiations did not produce an agreement to streamline standards for booze across Canada. The governments, however, agreed to establish a working group to continue discussions about how best to liberalize alcohol trade.

“It’s a very complicated policy field,” said Saskatchewan Economy Minister Jeremy Harrison, who is also responsible for his province’s liquor and gaming authority.

“There is going to have to be a lot of work on this. If there had been an easy answer to this, it would have been done a long time ago.”

The agreement will also launch future negotiations on liberalizing trade of financial services, make an effort to address the high costs of healthy foods in the North and establish a process that creates a forum aimed at removing additional inter-jurisdictional barriers.