OTTAWA, ON (February 27, 2025):
Canada’s internal trade barriers and labour mobility restrictions are crippling economic growth and driving away investment, according to a new report by MLI Senior Fellow and economist Trevor Tombe. While national agreements like the Canadian Free Trade Agreement (CFTA) have led to incremental progress, provinces do not need to wait for Ottawa to act – they can independently remove barriers and capture most of the economic benefits of full national reform.
Tombe’s research finds that “unilateral action allows provinces to capture a majority of the potential benefits of full nation-wide liberalization – over 60 per cent for Alberta, 50 per cent for British Columbia, and 67 per cent for Saskatchewan. In Newfoundland and Labrador, over 90 per cent of the potential benefits can be realized independently.”
The report identifies four key actions provinces can take immediately to unlock economic growth:
● Recognize other provinces’ regulations and credentials – if a product, service, or professional certification is legal in one province, it should be automatically accepted in another.
● Eliminate redundant inspections and red tape – goods and equipment compliant in one province should not require costly and unnecessary re-certifications elsewhere.
● Target key industries for reform – “the manufacturing sector alone accounts for over 40 per cent of the total available gains nationally when provinces act unilaterally.”
● Enhance labour mobility – “if provinces are not ready to implement economy-wide reforms, we explain which sectors would benefit most from liberalized trade.”
A 10 per cent reduction in internal trade costs could increase GDP by over 6 per cent in PEI, 4 per cent in Saskatchewan and Nova Scotia, and 2 to 3 per cent in larger provinces like Ontario and Alberta.
The urgency for provincial action is underscored by Canada’s declining economic performance relative to international competitors. “Canada’s current economic challenges are clearest when compared with the United States. While Canada’s real GDP per capita has declined by 3.6 per cent since 2022, the US has seen a 4.5 per cent increase over the same period.”
Provinces can and should act independently. Alberta’s unilateral removal of CFTA exemptions and Ontario’s labour mobility reforms demonstrate that change does not require national consensus.
With rising global trade uncertainty, strengthening internal economic ties is more critical than ever. The report urges provincial leaders to seize the opportunity and take decisive action before it’s too late.
To learn more, read the full paper here:
For further information, media are invited to contact:
Dagny Pawlak-Loerchner
Senior Communications Officer
613-482-8327 x113
dagny.pawlak-loerchner@macdonaldlaurier.ca
