Canada: Canadian Trade Agreement: 5 Things You Should Know

Last Updated: August 18 2016
Article by Cyndee Todgham Cherniak

On July 22, 2016, the Canadian provincial premiers and the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development announced they had entered into an “unprecedented agreement in principle”:

Some premiers did not make any announcements on their official web-sites, which suggests that they walked away displeased and not wanting to sign on.  Most Premiers said very little, which also indicates a luke warm enthusiasm. It may the that the limited announcements were for the benefit for the media and Canadian businesses who expected more from he leaders.  Breaking down inter-provincial trade barriers will improve opportunities for Canadian businesses at home and should increase employment.  I would expect that Premiers want to take and no one wants to give.

1. With whom is the “Canadian Trade Agreement”?

Believe it or not, the Canadian Trade Agreement is an agreement between the Canadian provinces and the Canadian federal government to reduce inter-provincial trade barriers. Protectionism is alive and well and living within Canada.

2. Doesn’t Canada have a Constitution that covers inter-provincial trade?

Yes, the Constitution Act, 1867 does cover inter-provincial trade.  Section 121 of the Constitution Act states:

“All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.”

The New Brunswick Provincial Court stated in the recent R. v. Comeau decision that:

  • Section 121 should be interpreted as permitting “free movement of goods among the provinces without barriers, tariff or non-tariff…” (See paragraph 191 of Comeau decision)
  • “The Fathers of Confederation wanted free trade between respective jurisdictions … the Union meant free trade, the breaking down of all trade barriers as between provinces forming part of the proposed Dominion of Canada …” (See paragraph 101 of Comeau decision)

Judge LeBlanc was given evidence about the oratory of the Fathers of Confederation. The Fathers of Confederation envisioned internal free trade within Canada as can be read in statements made at the time:

  • “… if we wish … to establish a commercial union, with unrestricted free trade, between people of the five provinces …” Sir John A. MacDonald, February 6, 1865
  • “Union of all Provinces would break down all trade barriers between us” – George Brown, September 12, 1864
  • “Now we desire to bring about that same free trade in our own colonies” – Alexander Galt, November 1, 1865
  • ”Union is free trade among ourselves …Give us Union and the East shall have free trade with the West.” – Alexander Galt, February 7, 1865
  • “… the chief benefits expected to flow from Confederation was the free interchange of the products of the labour of each province” – Alexander Galt, November 23, 1864

3. What does “Agreement-in-Principle” Mean?

Usually, the phrase “agreement in principle” is used when the parties are not in agreement on all aspects, but want to announce that progress is being made.  It is watered-down language.

4. Is the Canadian Free Trade Agreement Public?

No, the text has not been released and is not expected to be released for some time.

5. Do We Know What is In the Canadian Free Trade Agreement?

Unfortunately, little information has been released.  We know that the provinces have developed “negative lists”.  Which means there will be free trade on everything except what is contained on the lists.  However, we have no information on what is listed on the negative lists as being outside the scope of the free trade agreement.  So, we do not know what protected goods will not longer be protected.  We also do not know if new protections will be arising.  we know that wine and alcohol continues to be an issue for the premiers.

We know that the Trade in Services Chapter is more extensive that the Agreement on Internal Trade. However, we do not know that is on the negative lists.

We know that there is a Government Procurement Chapter and that Alberta would like to limit what types of projects must be opened to contractors in other Canadian provinces.

We know that mutual recognition has not moved forward.  We also know that harmonization has not moved forward also.  There may be a mechanism to deal with these issues – but we will not know if it will work until we get more information.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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