Canada Eases Trade Between Provinces to Reduce Reliance on US
Prime Minister Mark Carney Has Repeatedly Said There Should Be '1 Canadian Economy, Not 13'
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Canada and its 13 provinces and territories agreed to knock down more hurdles to trading internally, as the country tries to reduce its reliance on the U.S. amid a punishing trade war.
The Canadian Mutual Recognition Agreement signed Nov. 19 applies to all goods except food and will take effect in December, according to afrom the province of British Columbia.
If merchandise “is good for you in your province, well, it should be good for all of us in other provinces,” Vic Fedeli, Ontario’s minister of economic development, said in a video interview from the sidelines of a trade meeting in Yellowknife, Northwest Territories. “While we recognize that your product is slightly different, we acknowledge that it’s equivalent.”
He gave the example of safety vests for a construction company working across provincial boundaries. “Yours might have an X on the back, and ours might have a cross on the back,” he said. Ontario would now allow the out-of-province vests, saving a construction firm from buying extra gear.
Canada continues to estimate a potential benefit of C$200 billion ($142 billion), or about 6% of the country’s gross domestic product in the second quarter, from itsbroader effortto remove internal barriers. Past analysis from economists, however, peg the uplift more modestly, with a 2019papersuggesting the maximum boost is 4%.
Prime Minister Mark Carney has repeatedly said there should be “one Canadian economy, not 13.”
Fedeli said Ontario’s share of the benefit will be about C$23 billion, because it already has quite a lot of interprovincial trade.
Earlier this year, most provinces and territoriescommittedto allow cross-border alcohol sales directly to consumers — seen as delivering an immediate benefit to ordinary Canadians — by May 2026.
The Canadian Federation for Independent Business applauded the Nov. 19 agreement, calling it “a major step forward” in a statement. But the group pressed officials to further expand the deal to include services, food and alcohol.
As commerce has increased between Canada, the U.S. and Mexico in the wake of North American economic integration, trade within Canada hasfallenas a proportion of total trade, down to 35.2% in 2023 compared with 51.9% in 1983, according to Statistics Canada.
In April, Ontario was thefirstprovince to withdraw all of its exceptions under a countrywide free trade agreement that’s been in effect since 2017. On Nov. 18, Canada’s government said it will soon publish moreabout how it plans to remove barriers.
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