Breakenridge: Kenney becomes standard-bearer for free trade; let's hope others follow his lead

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It is a sad commentary on the mess that is interprovincial trade in Canada when acts of common sense are seen as bold and even revolutionary.

While Premier Jason Kenney is indeed deserving of plaudits for taking steps to reduce trade barriers in Alberta, the inaction and intransigence of his peers is ultimately the much bigger issue. Hopefully, all it takes is one premier to break away from the protectionist consensus and then the other dominoes will fall.

Perhaps the biggest obstacle to overcome is the notion that by reducing trade barriers we are somehow giving something up. Kenney has certainly been criticized here at home for eliminating trade roadblocks without receiving anything in exchange from any other provinces.

That, however, is the approach that has contributed to our broken status quo: the idea that any small steps of progress must first be endlessly negotiated to everyone’s satisfaction. We should absolutely be able to come to an agreement to facilitate better trade within Canada. The Canadian Free Trade Agreement, which took effect two years ago, was a step in the right direction but still falls well short of where we need to be.

This is not some abstract concept for economists to debate; trade barriers have significant economic costs. A study released earlier this year by the International Monetary Fund (which included work from University of Calgary economist Trevor Tombe) estimated that Canada’s GDP could receive a four per cent annual boost through liberalized internal trade — that’s about $80 billion in yearly economic activity. Moreover, their research also demonstrated that even by acting alone, a province can still realize significant economic gains.

To look at it another way, a 2017 study from Statistics Canada calculated that trade barriers represented the equivalent of a 6.9 per cent tariff on interprovincial trade.

The costs of protectionism are considerable and the very idea of erecting trade barriers runs counter to the very idea of this Confederation. The Constitution Act of 1867 reads very plainly that “all articles of the growth, produce, or manufacture of any one of the provinces shall … be admitted free into each of the other provinces.”

The approach for far too long seems to have been more “how do we get around that?” rather than “how do we aspire to that?”

Fortunately, at least one province is now in the latter camp.

Coming off the heels of the announcement two months ago from Kenney that Alberta would immediately remove 13 of 27 “exceptions” under the free trade agreement, he went a step further last week and announced that we’d eliminate eight more and narrow two others. That means our province, which once had the third-highest number of trade exceptions, will now have the lowest.

And the premier has hinted that his government isn’t done yet. The remaining exceptions are still being reviewed and there’s also been talk of opening up the New West Partnership — a pact involving B.C., Alberta, Saskatchewan and Manitoba — to other provinces. If the New West Partnership were to supplant the existing free trade deal, that would represent a major improvement.

Again, it seems strange to heap praise on a politician for grasping the obvious, but that’s a testament to how low the bar is set in Canada on this issue. That’s not to say that Kenney stands alone. Three other provinces have obviously embraced the New West Partnership and there have been calls in Ottawa — from both the opposition Conservatives and from voices in the Senate — to loosen the free trade agreement even further.

What’s encouraging about Alberta’s actions, however, is that they demonstrate just how straightforward this can be if provincial governments muster up the political will to do so. I’m not sure if Kenney’s trying to shame his fellow premiers into action, but if that’s the end result, then so be it.

The sooner we can fix Canada’s system of internal trade, the better.

“Afternoons with Rob Breakenridge” airs weekdays 12:30-3:30pm on 770 CHQR rob.breakenridge@corusent.com  Twitter: @RobBreakenridge