Canada's trade deal with itself now in effect, as EU deal waits

July 1 was supposed to be not only Canada's 150th birthday, but the day that two wide-ranging trade deals would kick in. Canada's agreement with the EU has stalled, but the liberalization of trade in goods and services between provinces is still on.

July 1 implementation date for Canadian Free Trade Agreement timed to match now-delayed European deal

Canada's provinces and territories have had 150 years to realize one of the original goals of Confederation: free trade. A new interprovincial trade deal takes hold this weekend, but the changes it's meant to bring may take a while longer. (Mike DePaul/CBC News)

July 1 was supposed to be not only Canada's 150th birthday, but the day that two wide-ranging — and interrelated — trade deals kick in.

Canada's agreement with the EU has stalled, but a domestic deal covering trade in goods and services between provinces is still on.

"This agreement is the most ambitious trade deal ever to cover Canada," Economic Development Minister Navdeep Bains said in a press release Thursday, calling the deal "historic" and saying it "leads to a better Canada."

But that better Canada is coming slowly. So slowly that it's unclear very many Canadians will notice any difference in the early days of the agreement.

The full text of the Canadian Free Trade Agreement (CFTA) came out last April.

It applies to all interprovincial trade, but — and it's a rather big but — a detailed list of exemptions was negotiated for each province and territory.

Laura Jones from the Canadian Federation of Independent Business (centre) presented golden scissors to federal, provincial and territorial ministers in April for the commitment to "cutting red tape" in their new interprovincial trade deal. (Janyce McGregor/CBC News)

The list for some is long, outlining many sensitivities and priorities. For others, the list is shorter, but certain items are broad enough to be significant.

Business groups believe the CFTA has potential. But very little's been fixed yet.

There are new processes for harmonizing things like transportation safety rules and professional credentials. A new dispute resolution system has been established to sort out cross-border grievances.

But the arrival of July 1 didn't throw a switch and standardize food packaging, energy efficiency standards or the myriad of other discrepancies that cause headaches for businesspeople trying to expand nationally or move between jurisdictions.

Even when common standards are worked out, any province that doesn't like it has the right to opt out.

Free the beer? Not yet

CBC News requested an interview with New Brunswick's Roger Melanson, the provincial minister now chairing talks between provinces and territories to implement the measures agreed upon so far.

His office sent a statement.

"I am committed to ensuring its implementation is smooth, and that its benefits flow to all Canadians," the statement said. The reduced barriers help "increase choice for consumers, lower costs for public contracts, and create more jobs for Canadians," it said.

Gerard Comeau was all smiles in April after a judge dismissed a charge against him of bringing too much alcohol into New Brunswick from Quebec. A Supreme Court appeal of his case will rule on interprovincial alcohol trade restrictions. (Bridget Yard/CBC)

Some of the thorniest issues, such as Canada's patchwork of restrictions for beer, wine and alcohol sales, remain unresolved.

Four working groups were announced in April to:

  • Report back within a year on options for liberalizing alcohol distribution and sales.
  • Report back within six months on how financial services might be covered.
  • Boost trade in the fish sector.
  • Develop options within six to 12 months to develop the food sector in the territories.

Nearly three months on, Melanson's statement this week said the working groups haven't yet been finalized. It's unclear whether the timing laid out in April still applies.

CETA forced open government contracts

Provincial ministers were compelled to drop some barriers while staring down a deadline.

Large provincial and territorial government contracts will soon be open to European bidders under the Comprehensive Economic and Free Trade Agreement that Canada negotiated with the EU.

Under the EU deal, foreigners could have had more access to Canadian government contracts than Canadians from other provinces. 

The interprovincial deal fixed this.

Out-of-province bidders can now compete on goods contracts above $25,000. That's a lower threshold than the one set for European companies. 

CFTA also opens up contracting for Crown corporations like energy utilities.

The interprovincial deal was timed to kick in the same day the EU deal starts to apply.

But the EU deal's now held up.

While it's not the biggest snag slowing up CETA's implementation, Europeans are concerned that some provinces aren't opening up their procurement on the timetable they were expecting.

Proof of compliance?

Canada's approach seems to be to fix a date for CETA's implementation first, and then change the required regulations. But the EU wants to see the regulatory changes, particularly for Ontario and Quebec, before it agrees to a date.

Potential European bidders watch municipal and provincial infrastructure announcements — such as a recent contract by Metrolinx, the Greater Toronto Area's transit authority — with interest.

Future sole-source contracts could violate the open bidding the EU bargained for.

Quebec has been at the forefront of the push to implement Canada's trade deal with the European Union. Large provincial government contracts will soon be open to European bidders, and that pushed provinces and territories to open procurement to out-of-province Canadian bidders too. (Francois Lenoir/Reuters)

CBC News has been asking the federal trade department for information about these regulatory changes in order to confirm provinces are ready to comply. The department says all the jurisdictions support CETA and have committed to making the necessary changes to statutes, regulations or policies.

Negotiating and ratifying trade deals falls under the jurisdiction of the federal government. But provincial governments were consulted extensively on CETA, because if provinces fail to comply, the government of Canada is on the hook.

"Provinces and territories continue to be important partners," the trade department said in a recent emailed statement. "Government of Canada officials are in close contact with colleagues in all provinces and territories to monitor implementation and have received assurances from them that they are taking the necessary steps for CETA's provisional application."

PM Justin Trudeau responds to the delays at implementing the free trade deal between Canada and the E.U. 1:34

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