Premier Susan Holt’s bold talk about “eliminating” and “tearing down” interprovincial trade barriers still has a long way to go before it catches up with economic reality.
Holt’s latest shuttle diplomacy on internal trade took her to Newfoundland and Labrador, where she signed another memorandum of understanding with another counterpart.
The premier has championed what she calls an “Atlantic free trade zone” in this region and a push to strip away restrictions on internal trade nationwide as fast as she can.
“Who can move forward with us? How far can we go? Let’s go all the way,” she said earlier this month after signing her first MOU in Toronto with Ontario Premier Doug Ford.
Active verbs aside, Holt’s actual approach has been cautious, focusing on areas such as government contracting and worker accreditation, rather than ending protectionist policies that shield major New Brunswick industries from competition.
“It’s one thing to declare your intent,” said Ryan Manucha, a research fellow at the C.D. Howe Institute who studies internal trade.
“This is where it’s going to get pretty clear how far people are actually willing to go when they say ‘free trade.'”
The two changes Holt cites most often will allow more interprovincial alcohol sales and will let trained workers certified in other provinces start working here more quickly.
Her rhetoric implies more sweeping changes.
“We’re going to continue to move as quickly as possible to take advantage of this opportunity to remove barriers for New Brunswick entrepreneurs and for all Canadians to have trade happen more quickly and much less expensively,” she said April 16 in Toronto.
Susan Holt’s internal trade push has big exceptions
MOUs are not binding agreements. They’re more of a declaration of an intent to negotiate.
The two MOUs recently signed by New Brunswick say provinces will “build on” existing legislation, “strive to” open up trade, “encourage” other provinces to join in and “identity options” for harmonizing provincial regulations.
Ontario commits to go further than New Brunswick.
Ontario pledges to eliminate all of its exemptions under the Canadian Free Trade Agreement — a 2017 national accord on open trade that gives provinces the leeway to choose to keep some protectionist policies.
New Brunswick only commits to “work towards” removing its exemptions — and only as they apply to Ontario.
Holt’s government has already eliminated nine of New Brunswick’s 16 exemptions, but so far she has not touched the big ones: the trade barriers that allow her to protect the province’s major resource sectors from out-of-province competition.
Provincial policies require forestry companies licensed to cut wood on Crown land to sell that wood — with few exceptions — to mills within the province, for example.
Kim Allen, the executive director of the industry group Forest NB, says those policies have created an integrated forestry sector that ensures there is enough wood to keep those mills running.
It also ensures the province gets the maximum value out of harvested wood by ensuring we’re not exporting raw logs but finished lumber, she said.
“The intention is to protect the highly integrated industry here in the province,” Allen said.
“It is the province’s largest economic driver, so changing the flow of Crown wood could potentially lower — could impact the value of the raw product that’s flowing out of the province. It would also put manufacturers at risk and threaten sustainable jobs.”
Holt’s government is being similarly cautious about seafood processing.
The province doesn’t now require seafood harvested here to be processed here, but the existing exemption allows a future government to do so.
The Liberals say they’ll eliminate that possibility — but only for provinces that reciprocate.
That is not going to happen in Newfoundland and Labrador, Premier Andrew Furey said last week as Holt stood by his side after they signed their MOU.
“The premier knows very well — she’s heard me say it today, twice — that there are no-fly zones,” he said.
Ending a minimum in-province seafood processing requirement “would be a death blow to rural Newfoundland and Labrador. We’re not interested in that. We’re not doing that.”
Furey added: “Equally, I’m sure she would not appreciate us taking all her lumber into Corner Brook Pulp and Paper.”
At a recent news conference, Holt’s language on trade barriers for resource industries was considerably more cautious than it is on the general concept of liberalized trade.
“We want to make sure we’re very careful about New Brunswick’s resources and how they are currently protected, and what benefit there might be to gain from getting access to partners and other places and what risks there are to potentially seeing our wood go elsewhere to be processed,” she said.
Furey was more blunt at his joint appearance with Holt in St. John’s.
“It’s a very easy attitude to say, ‘Let’s get rid of every trade barrier,’ but what’s the next sentence?” he said.
Manucha, who advocated for open trade within Canada, said it makes sense for provinces to protect their home-grown industries, but it could slow the momentum for lowering barriers, or lead to inconsistency from province to province.
“Are we now stalling at a threshold question of what is or isn’t going to be lumped in?” Manucha said. “And are we going to have a medley of arrangements?
“Free trade is the classic story of NIMBYism. … As soon as we start to touch your industry, we start to get some concern.”
Holt said in St. John’s that it was still worthwhile to open up as much as possible at a time when the U.S. tariff threat has given it a political impetus.
“It might not be everything,” she acknowledged, “but it is something, and it is progress.”
It is not, however, true interprovincial free trade.
