Reflections by Richard Darveau on the Elimination of Interprovincial Trade Barriers

The Mark Carney government is determined to eliminate all barriers to trade between provinces—an issue identified by manufacturers who participated in the Well Made Here survey a few weeks ago. The President and CEO shares some key information here to help understand the challenge, while also reminding us why, over the decades, certain provincial governments considered such protections necessary.

First, what exactly is an interprovincial trade barrier?

Interprovincial barriers refer to regulatory, fiscal, or professional restrictions that complicate the movement of goods, services, and workers between provinces.

Although these are technically prohibited under Section 121 of the Constitution, courts have allowed exceptions deemed to serve legitimate public policy goals (R v Comeau, 2018).

The Carney government has made the One Canadian Economy Act (Bill C‑5) a priority.

This legislation aims to:

Eliminate all federal-level exemptions from the Canadian Free Trade Agreement (CFTA) by July 2025;
Establish the Free Trade and Labour Mobility in Canada Act, which guarantees that any good or service complying with the standards of one province is automatically accepted in all others. It also includes mutual recognition of professional certifications.

Mark Carney believes that eliminating these internal barriers could:

Reduce trade costs by up to 15% and boost GDP growth by 4 to 8%;
Strengthen the economy amid global uncertainty, particularly due to external tensions;
Facilitate trade in goods such as alcohol, food products, services, and professions—particularly enhancing worker mobility and e-commerce.

However, even if federal CFTA exemptions are removed, many obstacles remain at the provincial level: distinct standards, additional requirements, and limited recognition of credentials. Some provinces (Nova Scotia, Quebec, Ontario) have enacted their own legislation to support this regional harmonization.

Unions (such as CUPE) and Indigenous groups have raised concerns about Bill C‑5, warning of potential impacts on labor standards, environmental regulations, and ancestral rights.

The associated infrastructure bill (Building Canada Act) contains facilitation measures, but there are concerns about how the principle of “prior consultation” will be respected.

Even with the law’s passage, experts note that it is only a starting point: interprovincial negotiations will be essential to eliminate legacy exemptions and move away from sector-based protections.

Why the urgency?

With just 18% of GDP generated by interprovincial trade versus 34% by international trade—compared to roughly 30% each in 1981—there’s ground to regain.

This urgency is driven by a desire to shield Canada from external disruptions (especially from the U.S.) and to reinforce domestic economic autonomy.

However, the projected economic benefits may be overstated or uncertain.

Some economists and observers argue that the often-cited potential gains of 4 to 7% of GDP lack solid empirical support and are based on optimistic modeling.

Others suggest that interprovincial trade already works fairly well for most companies, especially in the manufacturing and technology sectors, thanks to existing bilateral or sectoral agreements (e.g., the Canadian Free Trade Agreement – CFTA).

Critics say the accelerated timeline prevents meaningful consultation with provinces, Indigenous peoples, unions, and professional bodies—and could threaten Canada’s relative social peace (especially compared to the U.S.).

Voices in Quebec, British Columbia, and Nova Scotia denounce a disguised centralization of power under the guise of market harmonization.

Bill C‑5 stipulates that any good or service compliant in one province must be accepted in all others—without allowance for local adaptations.

Legal scholars warn that this disrupts the balance of powers defined by the Constitution Act of 1867 and could lead to legal disputes between Ottawa and the provinces.

Is the urgency argument masking an ideological agenda? I dare to ask.

Some political analysts argue that the rhetoric of urgency mainly serves a deregulation agenda and a “growth at all costs” mindset, consistent with a more neoliberal vision of a single Canadian market—but one that puts culturally significant products and sectors like agriculture at risk.

The project may appear economically sensible, but it conceals a push for standardization that weakens long-standing regional protections.

A few examples:

Opening up provincial public markets could force provinces or municipalities to accept outside bidders or justify social/environmental criteria considered protectionist.
Provinces like Quebec have strict standards for production, labeling, or marketing (e.g., controlled appellations, production thresholds, organic certification). These may be eroded or standardized, undercutting local practices.
The bill’s provision for automatic recognition of professional credentials could create tension around training standards, hours of practice, or language requirements—notably for electricians, engineers, mechanics, but even more so for teachers and nurses. Risks include lower training quality, wage disparities, and conflicts over professional roles.
Competition in publishing and arts production may increase from provinces with looser standards or less francophone cultural protection.
Small manufacturers of furniture, ecological materials, and artisanal goods may face new competition from larger, more heavily subsidized industrial suppliers in other provinces—potentially leading to local market losses, price undercutting, and weaker regional economic resilience.

Opponents or skeptics of Bill C‑5 do not all oppose improving interprovincial trade. But they question the urgency, calling for more time, dialogue, and evidence. They cite risks to federalism, social protections, and local governance—and advocate for a collaborative, gradual approach rather than rushed legislation.

Especially since the current Uncle Sam keeps shifting his threats, and the risk of an armed invasion on our territory is virtually nonexistent.