The flawed 1994 Agreement on Internal Trade had promised to reduce, if not eliminate, barriers to trade between the provinces.

OTTAWA, Nov. 6, 2014 – The provinces’ insistence on protecting narrow regional interests has undermined an accord designed to remove barriers to trade within Canada, the Agreement’s former executive director observes in a new commentary for the Macdonald-Laurier Institute.

Anna Maria Magnifico served from 2004 to 2012 as the executive director of the Agreement on Internal Trade, a deal federal, provincial, territorial governments first reached in 1994 designed to knock down trade barriers among the provinces.

But two decades since the original agreement, businesses hoping to ply their trade across provincial boundaries are scaling barriers that stubbornly persist.

How did the expectations of 1994 yield a result so detrimental to the Canadian economy?

Magnifico, who oversaw implementation of the interprovincial trade liberalization accord during her tenure, says the Parties were more interested in protecting local economies than furthering the national interest.

“It became more and more apparent the commitment and co-operation required for the AIT to succeed withered away – underlying distrust, regional loyalties, even rivalries, not to mention personality clashes among officials surfaced”, she writes.

The commentary, titled "What Has Gone Wrong on Interprovincial Trade", details how the lack of senior political and bureaucratic leadership in implementing the deal left a vacuum for middle-ranking officials to aggressively assert local interests.

Bilateral accords that emerged among individual provinces and regions, meanwhile, further undermined attempts to fully execute the AIT.

“So much time and precious resources were squandered in failing to make the AIT work in the national economic interest”, Magnifico writes.

Of particular concern is the dispute mechanism. Magnifico says an enduring weakness of the AIT is that decisions from panels charged with resolving disputes are not binding.

Both Ottawa and the premiers have individually trumpeted promises to reach a new agreement, but she says these strategies appear to be at cross purposes. Instead, it is high time for the two sides to come together and re-launch comprehensive negotiations on a bold new national trade accord.

Failing to reduce those internal trade barriers will continue to debilitate Canadian companies’ ability to compete internationally, she says.

“Time waits for no man – the global economy will not wait for Canada to get its economic act together”, Magnifico writes.

The commentary is based on an article that is set to appear in the November edition of Inside Policy, the magazine of the Macdonald-Laurier Institute, which will focus on internal trade issues and feature articles by Martha Hall Findlay, Ian Blue, Brian Lee Crowley and others.

To read the complete commentary, click here.

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Anna Maria Magnifico is a Senior Advisor on Public and International Affairs as well as Governance, and served as Executive Director of the Agreement on Internal Trade from 2004-2012.  The views expressed are her own.

The Macdonald-Laurier Institute is the only non-partisan, independent national public policy think tank in Ottawa focusing on the full range of issues that fall under the jurisdiction of the federal government.