Provinces to release details of interprovincial free trade deal Friday

Nearly nine months after Canada's premiers announced they'd reached an agreement in principleon a new Canada Free Trade Agreement, details on what's covered and what's not will finally be revealedin Toronto on Friday.

Ontario's Economic Development Minister Brad Duguid, who's been leading the talks, will be joined by his provincial counterparts as well as federal minister Navdeep Bains and representatives from groups who have been pushing politicians to make this happen.

While many long-standing interprovincial trade irritants won't quite disappear with strokes of theministers' pens, it will turn the process of government regulation on its head:free trade is about to become the default position. From now on, it's adding new barriers that will requirespecial negotiations, not lifting them.

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Emerging industries, like the potentialsale ofmarijuana products acrossCanada once the federal government finishes its legalization process,couldbe regulatedunder this deal. But future negotiations between provinces will have to figure out the smartest and most efficient way to do that.

The Canada Free Trade Agreement (CFTA) will replace the Agreement on Internal Trade (AIT), which has setrules forinterprovincialtrade in Canadasince 1995.

A two-year negotiation for the agreement began under the previous Conservative government but only wrapped up late last year, afterpremiers meeting at the Council of the Federation talks in Whitehorse in July broke through on some contentiousfronts.

Previous attempts at interprovincial trade dealshad tried to make it easier to do business inspecific ways.

By contrast, this deal is "all-in" and covers the entire economy. Alltradebarriers are meant to fall unless they'respecifically excluded in "negative lists" in the deal's annex.

The premiers said last Julythis kind of detail would offer"unprecedented transparency" on what governments regulate. But no list wasmade public, leaving open the question of how comprehensive it would really be.

Friday's release of the full 300-page text will lay outexactly what provinces and territories agreed to eliminate and protect.

Officials caution that itslong list of exemptions about half the size of the deal itself doesn't necessarily mean the deal isn't ambitious. When a province lays out numerous but very targeted items it may in fact be doing more to boost trade than a shorter list carvingout broadareas.

Long-standing beefs

Economic experts from Bank of Canada governor Stephen Poloz on down have pointed out the potential value of making it easier for Canadians to do business with each other.

The hassles of regulatory discrepanciesacross provincial jurisdictionsin Canada are legion. CFTAwon't harmonize everything immediately, but at least it establishes a process for doing so.

Many professions and trades have province-specific licensing systems and credentials. Individuals may be at the top of their field in one province, but unqualified to take work in another.

Discrepancies across transportation and safety regulations are anotherlong-standing annoyance.

For example, atruck driver shipping goods from acoastal port to customers in Central Canada may have to stop several times at provincial borders to make adjustments, so long as different jurisdictions don't agree on when certain trucks can be driven, how things should be loaded or even what tires are required.

And then there's government contracting, where a local politician's instinct to protect and patronize local businesses may not facilitate the kind of competitive bidding that offers the best quality at the best price for taxpayers.

And yet, internal trade can be more stable than international trade in volatile times. Some estimates suggest this interprovincial trade deal, if it rises to its full potential, could boost Canada's gross domestic product by a point or twoat a time of otherwise slow economic growth.

Binding contract between provinces

The existingAgreement on Internal Tradewaslimited toa few sectors where agreement came easily.Politicians of the day were focusedonnational unity fears(amid theQuebecreferendum campaign) andthe newly arrived North American Free Trade Agreement (NAFTA.)

CFTAismore ambitious. And like a binding contract, it willhave more teeth ifa province breaks faith.

It includes a dispute resolution chapter that will eventually allow individuals or companies to pursue remedies and compensation without requiring the endorsement of their home province. The exact way thisarbitration will work remains to be determined.

The goal of this negotiation was a"living document" that canchange asCanada's economy does avoiding the situation withNAFTA, for example,wheree-commerce isn't covered because e-commerce wasn't around when it was drafted.

Officials say negotiators focused on making sure that, as Duguid promised last summer, what Canadians offer to each other in this deal is at least as much, if not more, than what Canada has offered to other countries in recent negotiations like the Comprehensive Economic and Trade Agreement (CETA) with the European Union.

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EU trade deal focused minds

Because CETAopens up government procurement, it set up apolitically unpalatablesituation: by this summer, European companies might have had better access to government contracts than a Canadian company fromanother province.

Now the interprovincial deal willtake effectby July 1, 2017,a similar timeline as the EU deal.

A new online portal being built to help Europeans see what Canadian governments are putting up for tender will also advertise for competitive bids from across Canada.

While CETA only opens up six-figure contracts to European bidders, CFTAopens up smaller procurementdeals, above$25,000.

The interprovincial deal will also include Crown corporations, including energy utilities.

Friday's announcement will disappoint those who were hoping CFTA might soon liberalize alcohol sales across Canada.

Last month's federal budget already confirmed that a separate process is underway for that. It's far from finished, although asmall, early step was taken last summer.

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