The federal government, provinces and territories moved one step closer to free internal trade this week by making it easier to trade goods across Canada’s 14 jurisdictions, but those advocating for

interprovincial trade say keeping up the momentum is crucial. The ministerial committee on internal trade met in Yellowknife on Wednesday, where ministers from provinces and territories finalized an agreement called the

Canadian Mutual Recognition Agreement (CMRA). The agreement aims to reduce barriers on the sale of goods across Canada. This means a good that can be lawfully sold in one jurisdiction can be sold in another without meeting extra regulatory requirements. The CMRA comes into effect in December and the agreement will be reviewed in five years to evaluate its effectiveness.

The agreement governs the sale of goods, but does not include alcohol, food, live animals, cannabis, tobacco or plants. The agreement also doesn’t apply to how a good may be sold or who can sell it.

Keyli Loeppky, director of Alberta and interprovincial affairs at the

Canadian Federation of Independent Business (CFIB), said the signing of the CMRA represents a landmark achievement, but hopes to see the committee go further.

“We encourage Canadian governments to keep the momentum going,” she said in a statement. “The next phase should include expanding the mutual recognition agreement to services, food products, and alcohol, which still face significant

internal trade barriers .” Every year, more than $530 billion worth of goods and services move across provincial and territorial borders, which is about 20 per cent of Canada’s GDP.

The work of the committee on internal trade has become more urgent this year, as the trade war with the United States has weakened

Canada’s growth outlook . “Businesses have been calling for leadership from federal and provincial governments to make progress on removing barriers to internal trade, and in today’s fragile economic environment, momentum isn’t optional, it’s essential,” said

Candace Laing, president and chief executive at the Canadian Chamber of Commerce, in a statement. Reports estimate the potential economic lift from removing all internal trade barriers could be as high as $200 billion annually, although this figure has been disputed and could be overstating the actual benefit. A 2017 study by the

Bank of Canada estimates a more conservative 0.2 per cent annual lift to GDP, if 10 per cent of inter-provincial trade barriers were removed.

Ryan Manucha, author of a book on interprovincial trade called Booze, Cigarettes and Constitutional Dust-Ups and a fellow at the C.D. Howe Institute, said even a slight lift in GDP is worth pursuing regulatory reform.

“Find me other policy reform ideas where the idea is growth and prosperity,” said Manucha. Not all are convinced of the economic benefits. Stuart Trew, senior researcher at the Canadian Centre for Policy Alternatives, said internal trade is not the only barrier that businesses face when deciding whether to trade in another province.

Trew pointed to 2023 survey by Statistics Canada that showed the top three obstacles businesses face when purchasing goods or services from another province are transportation costs, delays in orders and geographical distance.

“We do think it’s been exaggerated,” said Trew. “It’s been hyped up intentionally, to get provinces and the federal government to go big picture and really reducing the role of government to watch over the kinds of goods and services that are available to people in their provinces.”

In the CMRA, provinces have obtained the right to keep exemptions on a certain amount of goods. Manucha said he was surprised to see the level of transparency in the agreement, which will provide a level of certainty for businesses.

Those exemptions vary from beekeeping equipment in Alberta to pharmaceuticals in British Columbia.

“There is a certain level of transparency we have never seen before, and disclosure is cleansing,” said Manucha. “And I know people are going to say look at all those exemptions, but this is a good starting point, and people can understand the gaps.”

In February, the committee said it would encourage provinces to join a mutual recognition project on trucking regulations, a pilot project which was launched by the federal government in September 2024.

Manucha said the provinces have endorsed an MOU on the potential integration of trucking standards, but it was not made public coming out of Wednesday’s meeting. He said he hopes to see more movement on that file.

In July, 10 provinces also signed a MOU promising to sign agreements by May 2026 to facilitate direct-to-consumer alcohol sales across their jurisdictions. The committee reaffirmed their commitment to meeting that deadline.

The CFIB recently released a report that said the Canadian alcohol industry still faces significant internal barriers, including duplicative lab testing requirements, inconsistent mark-up rates and rules.

“If you are a producer or brewer here in Alberta, and you are licensed and your products are approved to be put on the shelves in Alberta, that’s great,” said Loeppky.

“But you go to put your products on the shelves of any other province or territory, there are different set of rules in each province and territory to get your product approved for sale.”

Trew said he sees the benefits of consumer choice but he worries this push for free internal alcohol trade could only lead to further consolidation in the industry, as small and big players will fight over a finite market share across jurisdictions.

“In order for growth to occur in the alcohol sector, you have to drink more, and people can only drink so much,” said Trew. “One province’s beer is going to replace your local beer, some companies will grow, and some will shrink and disappear.”

The federal government has also removed all its exemptions under the

Canadian Free Trade Act and introduced legislation in June to bring about mutual recognition standards in the federal sector.

These regulations include goods and services produced in line with provincial and territorial standards and will be recognized as meeting comparable federal requirements. Workers who are licensed or certified by a province or territory will also be able to work in a comparable occupation in a federal jurisdiction.

Several provinces have tabled legislation to tackle internal trade barriers. Policy actions vary from MOUs signed by provinces to mutual recognition legislation passed in Nova Scotia.

The legislation in Nova Scotia in particular showed the difficulties in implementing mutual recognition for labour standards. Initially, the government of Nova Scotia Premier Tim Houston did not consult several professional standard organizations in the province, who said the legislation would trump their ability to regulate their professions and would put the public at risk.

This included organizations that represented veterinarians, engineers, chartered accountants and social workers. The legislation was eventually amended to address these concerns, and healthcare workers are excluded from mutual recognition.

“The Houston government at first went really fast and recklessly in their legislation,” said Trew. “Without really thinking about those issues.”

It remains unclear how all the policies being crafted will fit together. The CFIB

warned in a report in June that this patchwork approach could end up creating new barriers that are trying to be knocked down.

“If I’m a small business, medium-sized business or worker, it’s so confusing,” said Manucha. “It’s the patchwork we have used to solve the patchwork, and I’m hoping over time we rationalize that.”

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