New buzzwords have emerged from the mindless trade war, most notably Interprovincial Trade Barriers (ITB). Media pundits, academics, and marketing prophets have pronounced that if ITBs were eliminated, our economy would save billions, the scourge of Trump tariff terrorism would be diminished, and peace and prosperity would return to Canada. I sus-pect for most citizens, ITBs are somewhat mysterious. But in many sectors of the econo-my, they are a long-time fact of life. ITBs are all about provincial power, local economic fa-vouritism, and political manoeuvring.
ITBs use fees, restricted memberships, and devious bureaucratic schemes to keep out competition from other provinces. The genesis of ITBs comes from provincial industries, unions, and professional and producer groups who successfully lobbied their governments to erect barriers that gave their interests an advantage over outsiders, particularly competi-tors. Provincial governments and political parties are happy to oblige as it could mean more votes in their pockets and less opposition from those groups at election time. Some provinces are worse than others in setting up ITBs – as expected, Quebec is the King of ITBs and is fervent about maintaining its hegemony.
Since the return of President Trump, provincial governments, in desperation to find ways to mitigate his trade war against Canada, have suddenly found that eliminating ITBs could save the country. That sudden divine revelation involves all provinces except Alberta and Saskatchewan, who have diligently been working on ITB reduction for decades. It should be noted that interest in ITB reduction in Western Canada is ideologically driven. Progress is made when governments have conservative free-trade leanings. Whenever an NDP gov-ernment is in power, it loses enthusiasm for ITB reduction efforts. That’s happened with BC and Manitoba over the decades.
NDP political philosophy inherently favours more government control over the economy and citizens. That allows empire-building bureaucrats and union bosses to erect more bar-riers favouring their interests and members – but that’s no secret. However, thanks to Pres-ident Trump, even NDP and xenophobic Quebec governments are now converted believers in ITB reduction. However, as one might expect, it’s hard to teach old dogs new tricks, es-pecially when provincial governments see jobs and revenue at stake.
The easy targets are transportation rules affecting trucking and commerce. I recall absurd rules between provinces about the number of axles and truck tires allowed. The tough one is liquor trade barriers that are blatantly protectionist, with only Alberta being the free-trade exception. Even then, it has had to use marketing threats to get other provinces to change even minor restrictions on Alberta products. Another long-standing ITB unknown to most consumers is meat inspection barriers between provinces.
Every province licenses provincially inspected abattoirs and meat processing facilities for food safety purposes. However, retailers cannot buy meat products from provincially in-spected meat plants in other provinces. To cross borders for sale, meat must be from more expensive federally-inspected facilities. Although livestock producer groups make a big deal about this issue – if this ITB were eliminated, it wouldn’t have much of an impact on the overall meat business. Few provincially inspected abattoirs could meet a large retailers’ demand for hundreds of carcasses a week. Abattoirs survive on local and custom business involving a variety of animal species.
The biggest provincial barrier that is almost never mentioned in the stampede to eliminate ITBs is dairy, poultry and egg supply management (SM). Radically reforming SM would in-deed significantly change how dairy products in Canada are produced and marketed. The consumer would benefit, and it would eliminate a target in Trump’s trade war. However, the infamous dairy lobby controls the issue, and it seems few, if any, political parties or gov-ernments are willing to arouse the wrath of that fearsome lobby.
The ruling imperial godfather of dairy SM, Premier Legault of Quebec, recently thundered that “Supply Management was not negotiable” before a row of seemingly concurring prem-iers. The Premier is so blatantly adamant – because any real reform would mean significant milk production and processing would move out of Quebec’s control and relocate to Alber-ta and Saskatchewan, where large-scale, least-cost agronomics are much more favoura-ble.
Beyond SM, reforming or eliminating ITBs would save costs; however, it would probably not be at the hundred-billion-dollar level many wildly claim. In many cases, such as SM, remov-ing economic and logistical barriers would just move gains and losses around the country more. Would it make for a better and more efficient economy? It would, but overcoming old, entrenched ITB politics will be complicated.
Will Verboven is an ag opinion writer and policy advisor.
