Don't be sloppy and simplistic about interprovincial trade
I keep hearing that a solution to the Trump problem is to foster more interprovincial trade. If we just “broke down the barriers” and “eliminated regulatory burdens” and yadda, yadda, yadda.
I’m certainly not convinced this is a ‘solution’ but it certainly could be one good option to reduce reliance on the U.S. market.
But if you look at the data, it’s not primarily about barriers or regulatory burdens, it’s about good old fashioned business development. Ontario imported $1.3 billion worth of wood (hardwood, wood pulp, etc.) from outside Canada in 2019 and $4.1 billion worth of paper products (toilet paper, containers, etc.). There are no ‘regulatory’ reasons why they are not buying those products from New Brunswick or elsewhere in Canada. It is just easier or more cost effective to import - mostly from the USA.
In theory, New Brunswick could sell all of its wood, paper, potatoes, maple syrup, blueberries, lobster, etc. in Canada (not sure about refined oil as other provinces have refining capacity). Ontario imports nearly $2 billion in fish and seafood each year from outside the country. Ontario imports nearly $3 billion in fresh fruit and nuts.
There are no ‘barriers’ to New Brunswick blueberry producers selling into Ontario. Again, over time, it has become easier or more cost effective to import - mostly from the USA.
So, rather than Canadian Premiers getting together to pitch their pet projects (BC wants to sell more wine to New Brunswickers), they should think about what regulatory changes and what other initiatives or incentives could lead to the reforming of longstanding business relationships and supply chains from south-north/north-south to east-west/west-east.
It might be more expensive to ship lobster from Shediac to Calgary than to Boston but maybe not if there is a 25% tariff or the threat of tariffs hanging over our heads.
If it was me, I would go line by line through the $800 billion international imports to Canada each year (goods and services) and see what makes the most sense from an interprovincial trade opportunity perspective. In 2019, Ontario imported $2.4 billion worth of natural gas from other countries (I assume the US), $1.1 billion iron ore, and $1.1 billion ‘radioactive ores and concentrates’. Gotta power those nukes.
Any of that have potential to source in Canada?
Alberta imported $300 million in fresh vegetables and $614 million in fresh fruits and nuts. Could a couple of hundred million of that be sourced in Canada? British Columbia imported $1 billion in aviation fuel from outside Canada. We have refineries in Canada that produce aviation fuel.
Then we should consider services. Across the country, provinces imported $21 billion worth of office administrative services and business support services. It just so happens that New Brunswick is really good at office administrative services and business support services.
Canada imported $7 billion worth of architectural, engineering and related services in 2019. Likely most from the U.S. We imported another $8.6 billion in custom software design and development services and other $2.8 billion in computer systems design and related services (IT services).
Again, these markets develop over long periods of time and in many cases there are no or few Canadian suppliers that could do the work at a similar cost or quality.
But if you are serious about expanding interprovincial trade don’t tinker around on the edges. Get in there and look for real opportunities.
I would like to believe that the reason we don't do more inter provincial trade is because, usually, the less expensive option is the shortest distance from point A to point B. This is a very large country. For provinces along the boarder it would make sense to procure product from nearby states. I also believe if tariffs are placed on American goods we should break that habit. Many businesses that I have worked with over the years suffer from, "but this is the way we've always done it" syndrome. In a way it's sad. Canada has so much raw talent and material but we always believe another country does it better.
I agree that we need more specific targets in anything like this and can see how there could be business development connections made (though I'd assume a lot of these have been considered organically and will automatically be reconsidered as a result of any change in equilibriums brought about by tariff imposition).
Yet I'm inclined to believe focus on regulation and internal barriers is a very good direction.
From RBC earlier this year: "The International Monetary Fund has estimated that internal trade barriers (for example, regulatory differences across regions, paperwork requirements for businesses in multiple jurisdictions, and certification differences that limit labour mobility) cost the equivalent of a 20% average tariff between provinces." The same paper notes how little productivity gains have contributed to our GDP growth and points to a trend of poorer returns on investment in Canada which is causing more of our dollars to be invested south of the border.
Now, I've never been part of any regulation efforts in my career, but it seems that there's a lot of variability between jurisdictions. That variability must make business more expensive as a result. In my experience, a lot of businesses sit at a comfortable position just before they need to explore other markets because of these regulatory environments. Our economy has to spend more time understanding the variety of systems (often requiring expensive specialized gatekeepers to navigate the complexity for us). Without being an expert or having a particularly advantageous line of sight (I'm not operating any business), I can see complex government procurement policies (often attempting forms of protectionism), different labour standards (e.g. for training, working conditions, taxation), supply management systems, liquor control laws (which make it hard to get any product to shelf), and provincial inspection systems (e.g. for abattoirs) are but a few challenges.
To what extent do differences in building code standards impact trade? There would be impacts on how easy it is for a construction company from Ontario to set up shop in NB (I'd think). We could harmonize across Canada to automatically adopt building codes within a year of their publication (a lag for inspector training and anything required to stand up the code enforcement). What could we do to standardize zoning.
Maybe a closer look at internal trade barriers is a great opportunity to get the more detailed tactics that we'd all like to see...