From time to time, we've heard Quebec separatists express the view that Canada is "not a real country." If you were to throw out subjective factors holding the country together, and confine your analysis to Canada's economy, you might have trouble proving the separatists wrong.
For years, the provinces have been promising to do something about the regulatory non-tariff trade barriers between them, ones which, in certain sectors, actually make it easier for Canadian firms to trade with the United States than Canadian firms in different provinces. The Agreement on Internal Trade (AIT), signed in 1994, makes a resounding statement of the need for free trade inside Canada, but hasn't led to much practical progress.
At this week's premiers' meeting in Moncton, B.C.'s Gordon Campbell and Alberta's Ed Stelmach will be pitching their bilateral Trade, Investment and Labour Mobility Agreement (TILMA) to the rest of the country. They have left the door wide open for other provinces to join their free-trade bloc, which went into effect in April. But it seems they are unlikely to find any takers; premiers will surely be too busy with pointless one-upmanship on environmental issues.
TILMA, simply put, is AIT with teeth. It puts a binding dispute-resolution mechanism behind the idea of equal treatment for each province's businesses inside the other's borders. Both provinces are now bound to recognize the other's occupational standards and business licensing. No favouritism will be permitted in government procurement. B.C. tenders will be open to Alberta firms and vice versa, saving the taxpayer money in both provinces and allowing suppliers to expand. And in 2009, the MUSH sector (municipalities, schools, hospitals and other public agencies) will come under the agreement. Commercial vehicles will be allowed to travel freely across the border without having to register in both provinces, which is a big win for the environment: It will make shipping more efficient and cut down on the number of empty loads travelling down backhaul routes.
Naturally, TILMA is being attacked by labour unions as "carving up the country"; as soon as something comes along that might threaten the total cashflow to union labour, it seems they discover and passionately adopt a sacred constitutional principle of provincial sovereignty. That's what has sealed the fate of the agreement in Saskatchewan; told that the deal would allow Alberta business equal access to the largesse from that province's swollen public sector, all of the major parties there, including even the supposedly free-market Saskatchewan Party, balked at supporting TILMA. Lorne Calvert's government essentially had a decision to make between the interests of the provincial economy as a whole and those of the public sector, and took the easy way out. For now, too much of Saskatchewan's economy ultimately depends on preferential tenders and other sweetheart deals with the provincial government to permit the adoption of east-west free trade.
That makes Saskatchewan a literal trade barrier in the path of any other province that wanted to join TILMA, and Manitoba has resisted the suggestion for much the same reasons. In any event, recent history suggests that free-trade zones tend strongly to grow larger over time, and almost never shrink. (They also grow more numerous; some economists estimate that there are now more international free-trade agreements in the world than there are individual countries.)
In the long run, the provinces that are so eager now to preserve the status quo are bound to have more and more trouble convincing their voters that they can afford to compete with Alberta and B.C. on an uneven playing field.