Unwinding interprovincial trade barriers rising to top of Canada’s tariff-fighting agenda

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Interprovincial trade barriers are costing Canada’s economy hundreds of billions of dollars a year, but a new Statistics Canada survey has one major researcher hopeful that the window it opens into businesses’ day-to-day struggles gives politicians the necessary ammunition to free up trade across the country.

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“It’s great to have this data,” Ryan Manucha, lawyer and trade researcher at C.D. Howe Institute, said. “You need to understand with stakeholders, what does this actually mean for you? What are the actual barriers?”

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The first-ever survey of its type by Statistics Canada, released on Feb. 14, said 41 per cent of businesses bought goods and services from another province, while 26.9 per cent sold goods and services in another province.

The agency also said nearly 90 per cent of the businesses that didn’t engage in cross-province commerce indicated there was “no need or interest in doing so.”

Opening interprovincial trade has risen to the top of the national agenda in the wake of United States President Donald Trump threatening to impose tariffs on Canada as well as the country’s sovereignty.

Experts, including Manucha and University of Calgary economist Trevor Tombe, estimated in a report in 2022 that trade barriers between provinces were annually costing the country as much as $200 billion in commerce.

“We don’t have 13 different jurisdictions unable to trade. We also don’t have one economic union,” Manucha said. “Do we want to see zero trade barriers?”

Manucha said he thinks Statistics Canada’s survey data is an important piece of the puzzle to figuring that out.

For example, Statistics Canada said the top complaint businesses face in interprovincial trading is the cost of transportation, followed by delays in placing and receiving orders, and the distances between a starting point and a destination.

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Manucha said that resonates with the research he and Tombe did on the barriers created by different transportation rules and regulations from one province to the other, including varying qualifications and long-truck laws that the pair estimate cost about $1.6 billion a year.

“What’s really cool … we’re seeing it in the actual reporting by businesses that transportation costs are really hurting them,” he said.

The agency conducted the survey from June 2024 to October 2024 of businesses with five or more employees, $50,000 in revenues and in one of 13 sectors, including agriculture, mining, construction, manufacturing and wholesale trade.

The survey went out to 30,000 businesses, with 20,000 responding, according to Jessica Bossé and Chris Johnston at Statistics Canada’s Centre for Special Business Project.

There are currently no plans to repeat the survey, but that could change, Johnston said.

“When we started this project, this was something that was top of mind, but maybe not as top of mind as it is today — you can imagine,” he said. “I wouldn’t be surprised to find that there is some decision that (will mean) we need to do more work in this area in the future.”

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Among the other nuggets Manucha noticed in the survey was that it asked about seemingly innocuous things such as paperwork, which businesspeople perceive as more of an annoyance than a trade barrier.

“I love the way that they use paperwork as one of the questions, because paperwork is often, again, a trade barrier thing,” he said. “People are not trained to think about their day-to-day in terms of a trade barrier.”

Statistics Canada said businesses in Nunavut were most likely to purchase goods and services from other provinces, while businesses in Ontario and Quebec were least likely to do so at 34.4 per cent and 33.3 per cent, respectively.

Alberta has the most businesses that sold to companies in other provinces at 31.9 per cent.

Wholesale and manufacturing operations were most likely to engage in interprovincial trade among the sectors that Statistics Canada examined.

Sector-by-sector insight into trade weak spots and stronger areas inside Canada will prove valuable to governments, Manucha said.

“It’s a really great launching point for our provinces and territories to do their own deeper focus,” he said.

• Email: gmvsuhanic@postmedia.com

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