Writing in the Globe and Mail, MLI Managing Director Brian Lee Crowley says Canadian premiers have again shown that they are incapable of reducing internal trade barriers.
At their most recent meeting in August, he writes, they only managed to produce some vague phrases that sounded vaguely like progress but instead represented yet more stonewalling.
The Globe ran an edited version of this column.
Brian Lee Crowley, Sept. 4, 2014
Former prime minister Pierre Trudeau used to ask, “Who speaks for Canada?”.
Based on their behaviour this summer, the premiers have answered yet again “Not us.”
The issue was the perennial one of whether we will honour Canadians’ rights to full citizenship in every part of the country, including the right to exercise your trade or profession, buy and sell goods and services and otherwise be an “economic Canadian” as much as a linguistic, social or cultural one. It is to this vital issue of national identity and individual rights that we give the unfortunate bureaucratic name of “internal barriers to trade”.
If you ask Canadians what they think about these obstacles to full citizenship they often shake their heads over the foolishness of it all, as if it were self-evident that these barriers should not exist. And yet they do, and have done so since our young country first emerged in 1867. It is high time, therefore, that we stopped impotently lamenting them and understood why they exist. Without such understanding we will never overthrow them.
This is where the premiers’ summer musings come to the fore.
Remember that protectionism taken on its own terms isn’t illogical and trade barriers don’t come out of nowhere. They universally arise from politicians’ desire to placate powerful local interests at the expense of consumers. A barrier to importing wine or construction workers gives income to local wine producers and carpenters at the cost of higher prices for local consumers who buy those products.
Thus the totally foreseeable reaction of Ontario Premier Kathleen Wynne to suggestions that internal trade barriers should be torn down: what about Ontario wine producers? And how can I let infrastructure spending in this province benefit construction firms and workers from elsewhere?
Protectionists never get the answer, which is that Ontario wine producers and construction workers will benefit from opportunities opened up in other provinces, because that is an economic answer when the question is a political one: how do I keep the support of powerful local interests who benefit from the status quo?
The premiers are not of one mind on the issue, of course. Premier Brad Wall emerged as the leading spokesman for the free trading provinces, but his reaction to protectionism among some of his colleagues demonstrated why the provinces are ill-equipped to fix this problem. He threatened a trade war, erecting ever higher barriers to punish provinces who wouldn’t play free trade ball. Shades of former prime minister R.B. Bennett’s ill-advised promise to use tariffs to blast Canada’s way into international markets. This kind of protectionist tit for tat was a key contributor to the Depression of the 1930s.
This may give you some insight into why protectionist provinces love the current approach to removing trade barriers, which reposes on two pillars. First is the idea that no sector is covered by free trade unless everybody agrees it is. That means that the most recalcitrant provinces are in the most powerful negotiating position. If you work by consensus, all you need to block progress is one naysayer.
The second pillar is that the provinces are the ones we should expect to remove the barriers. That too benefits the recalcitrant premiers because Ottawa, the only government that does not benefit from local provincial preferences, is portrayed as an illegitimate interloper despite its constitutional power over trade and commerce.
Thus when federal Industry Minister James Moore made noises about a possible federal role in moving things along, the Ontario minister responsible for internal trade reacted with the usual stage-managed outrage. Ottawa had no business intruding in a provincial process that was working perfectly well he fumed. At their annual August jamboree the premiers managed to cobble together a few words on internal trade that sounded vaguely like progress but reeked of yet more prevarication. I’d be willing to bet anything that even that was just a desperate move to prevent momentum moving to Ottawa on the internal trade file, an outcome that would fatally weaken the protectionists.
Of course Ottawa is where leadership on Canadians’ economic rights of citizenship belongs. It was in part to throw down these barriers that Ottawa was created in 1867. It is why federal governments are universally tasked with creating national economies in the face of local protectionism. Australia’s states tried to negotiate away their barriers and finally admitted defeat, whereon the Commonwealth government was asked to do the job. Canberra spoke for Australia. It is long past time for Ottawa to do the same for Canada.
Brian Lee Crowley (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa:www.macdonaldlaurier.ca.