For decades Canadian politicians have waxed on about the need to reduce barriers to interprovincial trade, with little progress. All it took for them to act was the existential threat of U.S. President Donald Trump’s trade war and his repeated attacks on Canadian sovereignty.
It’s not that Canada’s provinces don’t trade among themselves. In 2023, roughly $530-billion of goods and services moved between the provinces, accounting for 18.1 per cent of the country’s gross domestic product, according to a new report from Statistics Canada.
The problem is, that’s exactly the level internal trade has been stuck at since the early 1990s.
“As a share of the economy and total trade, internal trade has changed little since the 2017 Canadian Free Trade Agreement, or even since NAFTA in 1994,” wrote Bank of Montreal senior economic Sal Guatieri in a note. “However, recent efforts by governments to remove barriers could shift this trajectory.”
Ottawa has already said it would ditch half of federal internal trade barriers, while Nova Scotia’s own trade reform bill would go even further.
Then on Wednesday the Quebec government said it would withdraw at least five of the 36 trade exemptions to the CFTA, though they were piecemeal steps. One change means individuals who wish to register racehorses or become funeral directors will no longer have to already live in Quebec, while another allows ferry operators to live outside the province.
But more importantly, the province is also looking at harmonizing rules with other provinces for most consumer goods, excluding food, beverages and tobacco.
At the same time, New Brunswick said it will change its liquor rules to allow consumers and producers to move booze more freely across provincial boundaries.
Decoder is a weekly feature that unpacks an important economic chart.