By Kate Jackman-Atkinson, myWestman.ca
NEEPAWA, Man. — While most people think of trade agreements in international terms, trade between provinces isn’t always as free as we think. In November 2016, Manitoba joined the New West Partnership, which aims to create a western Canadian free trade zone. The goal of the agreement is to allow for the better mobility of trade, investment and labour, with the end result of reducing costs. The original partnership was signed between British Columbia, Alberta and Saskatchewan in 2010 and came into effect in 2013.
For those of us who live and work in one province, it’s easy to forget that there are interprovincial barriers to trade. A Statistics Canada report published last fall found that between 2004 and 2012, interprovincial barriers to trade amounted to a 6.9 percent tariff. These manifest themselves in a number of different ways. For example, a lack of cross-provincial recognition of professional and trade credentials can make it hard for workers to change provinces and business registration requirements mean companies have to complete an often duplicate registration process for each jurisdiction in which they want to do business. Additionally, in each province, there are often different rules and regulations. While you might not have to stop and pay duty at the provincial border, for some products, such as alcoholic beverages and dairy products, there are substantial non-tariff barriers to trade.
The New West agreement creates a trade block of $11 million, with a combined GDP of over $750 billion. The partnership has two major components. The first is that it opens government procurement contracts to any bidders within the partner provinces. This applies to all levels of government, including health authorities, school boards and Crown corporations. The trade deal also allows seamless registration of a business in more than one province.
As a province that relies heavily on trade, trade deals are good news for Manitobans, but the deal doesn’t entirely level the playing field. While Manitoba businesses can now bid on contracts for the Alberta government, the different tax rates and costs of doing business remain. The deal doesn’t take into account the differing rates of PST or the fact that Manitobans pay more in income taxes. It also doesn’t let residents do business in the cheapest jurisdiction. For example, the New West document specifically states that a person must license and register their vehicle in the province where they live and not wherever it’s cheapest.
Despite the intent of the agreement, other partner provinces are finding ways around the rules. In December, the Saskatchewan government announced that for new Ministry of Highways and Infrastructure projects, vehicles with Alberta licence plates will no longer be allowed on job sites. The new restrictions were in response to similar regulations already in place in Alberta with respect to vehicles with Saskatchewan plates.
The deal also explicitly prevents provinces from subsidizing private operations within their borders. Meeting this requirement has been one of the major motivating factors behind the recent changes to how Manitoba Crown lands are leased for hay and grazing. The new legislation, which came into effect January 1 of this year, opens Crown leases to any Canadian citizen or permanent resident, as opposed to just Manitoba residents, as was the case previously.
While I support trade deals and the associated requirements that provinces do not subsidize production in their jurisdiction at the expense of others, I still believe that Crown land should first benefit those whose taxes support it. The New West partnership presents great opportunities, but there are also challenges and it falls to our provincial government to make sure that the disadvantages Manitobans face aren’t further amplified.