Premiers reach 'unprecedented' Canadian free-trade deal in Whitehorse

Prolonged negotiations between Canadian provincial and territorial leaders in Whitehorse have resulted in a new agreement on interprovincial trade. But it's unclear how significant the deal is until more information is released.

New agreement covers entire economy, but potentially long list of exemptions not yet released

Canada's premiers have reached a much-anticipated deal to create a Canadian free-trade agreement between provincial and territorial jurisdictions. It's meant to cover a broad range of trade in goods and services. (Jonathan Hayward/Canadian Press)

Prolonged negotiations between Canadian provincial and territorial leaders in Whitehorse have resulted in a new deal on interprovincial trade.

But while the deal is meant to cover most goods and services, it's unclear how significant the Canadian free-trade agreement (CFTA) is until more information is released.

The agreement in principle reached by the 13 premiers this week at the annual summer Council of the Federation talks replaces the 23-year old agreement on internal trade.

"The old agreement covered only specific sectors of the economy," said Yukon Premier Darrell Pasloski at the closing news conference, speaking as the chair and spokesperson for the group this year.

"The new [agreement] virtually covers the entire Canadian economy and will have unprecedented transparency on how the federal government, the provinces and the territories will regulate."

Pasloski said the regulatory burdens on Canadian businesses would decrease. 

"Inconsistencies between jurisdictions creates unnecessary differences that really are barriers to trade, and it raises the operating costs and ultimately the cost to consumers," he said.

Yukon Premier Darrell Pasloski said his territory put exemptions on the list of goods and services that would be excluded from the new interprovincial trade deal. The full list of exemptions from the provinces and territories and the federal government isn't public yet. (Jonathan Hayward/Canadian Press)

Pasloski said the deal establishes a process for standardizing things like transportation safety regulations for the shipping industry, or even the size of Canadian milk cartons.

"This is a wonderful day. We're very excited about it," he said, thanking his colleagues for their work making the announcement possible. Pasloski identified a new internal trade agreement as a priority for Yukon's term as chair of the group.

'Negative list' of exemptions not released

In a news release, Economic Development Minister Navdeep Bains called the agreement in principle "unprecedented."

"For the first time in a generation, Canada has a new and modern framework for trade within our borders," the federal minister said. "Canadians will benefit from increased opportunity and choice."

While the agreement in principle was called "groundbreaking," it wasn't immediately clear how much would change or how fast.

The group took a "negative list" approach to negotiating the deal, meaning everything would be deregulated or harmonized across provinces except for an identified list of sensitive items.

If that list is long, the deal has less impact than if that list is short. Officials said the list would be posted in the coming days.

"This is a great starting point," Pasloski said. "And as we move forward, we will be working towards how we can slowly eliminate over time the exemptions that do exist on those lists."

In response to a question from a local reporter, the Yukon premier disclosed that his territory had put items on the list to protect but did not specify what those items were. 

"The number of exemptions that exist in this new agreement are substantially lower," he said. "What I think is important to recognize is that the federal government has by far the most exemptions."

Procurement dispute

The deal expands access to municipal and provincial government procurement for goods and services. With  infrastructure funds rolling out across Canada amid challenging economic circumstances for some regions, this area proved one of the most contentious to negotiate.

Alberta Premier Rachel Notley, left, seen here with Quebec Premier Philippe Couillard at the Council of the Federation talks on Thursday, fought for the right to give preferential treatment to local businesses and individuals on government procurement contracts in her province. (Jonathan Hayward/Canadian Press)

Sources tell CBC News that Alberta sought assurances that it could give preference in awarding contracts to Albertan businesses and individuals. With its economy slumping and unemployment up thanks to a downturn in the oil and gas sector, Premier Rachel Notley sought a way to make sure the government spending stayed inside her province.

A compromise was reached.

The members of the free-trade area that already exists between Western Canadian provinces, the New West Partnership — B.C., Alberta and Saskatchewan, and possibly Manitoba in the future — were exempted from Alberta's preferential tendering.

The four Atlantic provinces could also be exempted, taking into account their challenging economic circumstances.

But if an Ontario or Quebec company is competing for a contract in Alberta, this deal allows Notley's government to favour a local bid.

It's unclear how this unequal footing is consistent with the municipal procurement deal the provinces helped negotiate — and signed off on — in the Canada-European Union trade negotiations. That deal's provisions for opening up municipal procurement were billed as very significant.

One Alberta official suggested that the arrangements Notley negotiated in Whitehorse may need to sunset before the Canada-EU trade deal comes into force. The comprehensive economic trade agreement between Canada and Europe, or CETA, could be signed this fall and ratified over the next year.

Alcohol not covered

Provincial and territorial trade ministers have been directed to work through some technical issues that remain.

Internal trade headaches have been a political issue for years, with a Senate committee reporting last month that red tape and restrictions cost the Canadian economy billions.

In a news release, the Canadian Federation of Independent Business congratulated the premiers but identified four areas most urgently in need of attention:

  • Standardizing workers' compensation systems across Canada, even if work in a province is only temporary.
  • Harmonizing transportation rules, citing an example of a truck crossing from one province to the next having to pull to the side of the road to change a "wide load" sign.
  • Setting common manufacturing rules, like no longer requiring a manufacturer to adapt machinery to produce different sized dairy creamers for different provinces.
  • Eliminating the need to register a corporation in multiple provinces, which discourages business expansion. 

A working group has been established to explore ways to improve trade in alcoholic beverages, something this deal doesn't cover.

Earlier Friday in Whitehorse, the premiers of British Columbia, Ontario and Quebec announced a three-way deal to make it easier to purchase out-of-province wine.


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