Day two of the Council of the Federation talks in Whitehorse sees the provincial and territorial leaders wrestle with one of the most perennially dysfunctional aspects of Canada's economy: how hard it is to do business across provincial borders.

An agreement on internal trade was worked out by first ministers over two decades ago, but it's proven inadequate to streamline a host of jurisdictional snags that restrict growth at a time when some regions really need a boost.

"We should have a free-trade zone in Canada, between us," British Columbia Premier Christy Clark told reporters on her way into the talks Thursday. "It makes no sense that you can get B.C. wine more easily in China than you can in Ontario."

"I think we're close," she said, adding that although it's within spitting distance, "the devil's always in the details on these things."

Several other premiers shared her optimism on their way in, but declined to elaborate on what the final sticking points might be, saying that was a conversation best left for the meeting room.

During a morning break, Nova Scotia Premier Stephen McNeil confirmed that an element important to his region, labour mobility, had been worked out.

"We know our citizens are moving," he said, offering the example of apprentices who may have gone west previously and started to gain experience only to find that their hours aren't transferrable to another jurisdiction. With major projects like shipbuilding on the horizon for his province, "we want to make sure that there's no barriers to bring them back."

McNeil, who describes himself as "bullish" on internal trade, said the trucking industry in his province too needs common safety standards to make sure the interprovincial shipping business isn't more complicated than it needs to be.

"As a nation, we're trying to sign these huge international trade agreements. It's a bit ironic that we have as many barriers inside our own country," he said. Although issues remain, "in the pursuit of perfection, let's not stop and not do anything."

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Manitoba Premier Brian Pallister, arriving here with P.E.I. Premier Wade MacLauchlan, says it's 'seriously wrong' that it's easier to do business with neighbouring states than neighbouring provinces. (Jonathan Hayward/Canadian Press)

"For too long we've let barriers exist among us that I think are very difficult to defend the continuation of, and when you can do trade better with neighbouring states than with neighbouring provinces, then something is seriously wrong," Manitoba Premier Brian Pallister said.

This year's chair of the premiers meeting, Yukon's Darrell Pasloski, said that if the premiers don't get this done right away, it's will be a big priority for him moving forward.

Close, but hung up?

Earlier this month, Ontario's Minister of Economic Development Brad Duguid hosted his provincial and territorial counterparts in Toronto to hammer out the makings of a deal premiers could finalize and announce this week.

Federal Economic Development Minister Navdeep Bains was at his side then, calling the proposals "historic."

The deal was worked out on a "negative list" basis — seeking to liberalize everything by default, except for a set of excluded, sensitive items.

"The difficulty is how much you start pulling aside," Alberta Premier Rachel Notley said. "I think that's a concern that some people have."

But leading up to the premiers gathering, some provinces warned that a deal wasn't as close as Duguid let on, particularly in terms of liberalizing interprovincial trade in beer and alcohol.

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New Brunswick has argued this part of the deal should wait for the appeal process to finish in a much-discussed case of a man charged with bringing home beer from across the border in Quebec. A judge had tossed his charges, suggesting provincial prohibitions need to be dropped. 

Another case at a tipping — or is that tippling? — point: a dispute between Alberta and Saskatchewan that escalated Tuesday over Alberta deciding to tax a small Saskatoon brewery (that employs Albertans) some $7 a case because it's not considered as local as its Prairie competitors.

Prairie neighbours are supposed to trade freely under the New West Partnership both provinces signed with British Columbia in 2010.

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Alberta Premier Rachel Notley said premiers have made 'tremendous progress' and are close to an interprovincial deal. (Jonathan Hayward/Canadian Press)

Alberta and Saskatchewan's premiers are set to meet on the margins at midday to see if they can sort it out. Alberta's Notley downplayed the connection between the dispute and the internal trade talks Wednesday morning.

"Every province has always wanted to protect itself in some way, shape or form," Conservative finance critic Lisa Raitt said earlier this week, as she called on premiers to get an internal trade deal done for the sake of the economy. "Some provinces are going to have to put a little water in their wine to ensure that they get this job done."

"What I would say to premiers is, have some courage."

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An aboriginal drummer welcomed premiers and the leaders of Canada's five national Aboriginal organizations to a cultural event in Haines Junction Wednesday afternoon. The group was originally set to hold their meetings there all day, but fog and heavy rain delayed their flights and forced an improvised Whitehorse location for the first day of talks. (Jonathan Hayward/Canadian Press)