Thank you, Madam Chair and members of the committee. On behalf of Canadian Manufacturers and Exporters, I appreciate the opportunity to participate in this study.
CME has been advocating since 1871 for policies that help manufacturers grow, compete and contribute to our communities. Free trade within Canada is certainly one of those issues.
Eighteen months ago, interprovincial trade surged to the forefront of the domestic policy agenda. While it was sparked by U.S. tariff actions, perhaps, rather than because of a principled vision for a unified Canadian economy, it was nonetheless welcomed by manufacturers, which have long advocated for the removal of these barriers.
There are many dimensions to the issue. I'm just going to focus my brief remarks on the most important factor, in our view, for unlocking interprovincial trade: mutual recognition.
Harmonization, where every province adopts or tries to align their standards, certainly looks tidy on paper, but it is slow, costly and almost impossible at scale. We've seen this demonstrated by the Regulatory Reconciliation and Cooperation Table, a body established in 2017 specifically to harmonize regulations. It has done some good work but has completed only a handful over that time.
Mutual recognition is much simpler. If an economic activity—whether it's producing, selling or providing a service—is legal in one province or territory, it ought to be accepted as legal everywhere in Canada. The principle allows differences to exist, but it stops them from becoming barriers. It respects provincial jurisdiction, and it's the only approach that can be scaled across the entire economy and made durable against political erosion.
We've seen some encouraging progress. The Canadian Mutual Recognition Agreement on the Sale of Goods, some federal enabling legislation and some provincial legislation to align rules are all steps in the right direction. It would be fair to say that Canada has certainly done more in the past 18 months to dismantle internal trade barriers than we've seen in substantive action over the previous few decades. This is genuinely remarkable and deserves acknowledgement.
We are now at a precarious moment in the reform cycle when governments may believe that they have done enough, when there is the potential for some tariff-driven urgency to fade—depending on how our negotiations with our neighbours to the south go—and when the structural incompleteness of what has been built gets buried under press releases. I'll share a few brief observations on the current state of mutual recognition.
First, we have some concerns that we are drifting towards a permanent patchwork rather than a clean, universal mutual recognition architecture. This is seen, for example, in how provincial approaches vary and how they recognize an inbound worker's qualifications.
The CMRA also covers goods sales but not the rules for how those goods are produced. A Canadian manufacturer expanding production capacity into a second province gets mutual recognition for the product under the CMRA, but its plant still faces entirely separate permitting processes, a different occupational health and safety regime, differing energy and emissions requirements, and differing building standards. The agreement as it exists, or as it is starting to exist, recognizes what crosses the border, but it says nothing about what it costs to build and operate on either side of it.
Similarly, the commitment to negotiate an expansion of the CMRA to include services by the end of 2026 is a welcome development. However, whether it will result in a genuine mutual recognition instrument or in more of a CFTA-style framework agreement with carve-outs and limited enforcement is still an open question.
As this committee has discussed, labour mobility provisions are still leaving gaps for trades and professions that require province-specific exams or provincial practical assessments. CME is worried that these gaps will keep large parts of our economy fenced off from the benefits of internal trade reform.
We have four recommendations on what the government could do to build on the momentum behind mutual recognition.
The first is to build and publish some sort of national mutual recognition scorecard and dashboard to help Canadians and businesses track transparently what each jurisdiction has implemented, what's outstanding and where carve-outs persist. We could potentially integrate some live business feedback with that.
We think that the mutual recognition process specifically should be a standing agenda item at first ministers' meetings to help keep leaders focused and accountable. That could certainly include reviewing the scorecard results in public.
We think it's time to explore a process to better align new regulations at birth and prevent divergence before it starts. There is no substantive mechanism in place to require provincial regulators to consult across provincial lines as part of the standard regulatory development process. This is when the design of the regulation is at its most malleable. We think that ought to be done.
Lastly, we would encourage the federal government to use its fiscal levers, both carrots and sticks, to help drive provincial alignment during this period. For example, labour market development agreement funding could be conditioned on provinces demonstrating adherence to defined credential and recognition timelines.
In conclusion, the risk of where we're at today is not necessarily failure. The risk is that Canada succeeds just enough to stop. A patchwork of mutual recognition is not mutual recognition. Every day that we settle for something less is a day Canadian manufacturers compete at a disadvantage, Canadians pay more and Canada builds less than it should. The momentum exists. We hope this committee study continues to help ensure that our governments use it.
Thanks. I look forward to your questions.
