Mr. Speaker, I believe I was in the process of saying that the procedure by which this bill comes before us and by which the internal trade agreement that gave rise to it was reached was a demonstration of how federalism can work for all partners. It was a totally co-operative process, involving the provinces, the territories, the federal government, and the private sector, which had the unanimous agreement of all parties.
On behalf of the Minister of Industry, I appreciate this opportunity speak on Bill C-88. This is one more step in a process that has been under way in Canada for the better part of a decade to create a new internal trade regime. Our objective is to reduce barriers to interprovincial trade and remove restrictions on the movement of people and capital within the domestic marketplace.
Passage by Parliament of Bill C-88 will be a necessary step to implement the agreement on internal trade that was signed last year by every province, the territories, and the federal government.
At the invitation of the Prime Minister, first ministers met in Ottawa last July to formally accept and sign the agreement that the committee of ministers of internal trade had finalized at the end of June. With this accord we were committed to have the appropriate legislative and regulatory changes in place so that the agreement could be legally implemented. In this sense, putting this legislation before the House is meeting an obligation to provincial and territorial governments that we incurred when we signed the agreement in June 1994.
This was an important step in the quest to create an integrated domestic market in Canada. This seems to have been a pattern in the development of our nation. As we go back through history to the voyageur and the Hudson's Bay Company, we see that trade is what has opened up the vast expanse of this northern half of the North American continent. As we thought to link ourselves together with the national railway and later with the national highway and national airline, trade has been one of the driving forces both for the development of the links among us as a people and for the development of the prosperity the country has enjoyed.
However, in the 128 years since Confederation, we have also seen a hodge-podge of protectionist measures and trade conventions develop which have inhibited interprovincial trade and restricted the flow of goods, capital and talent between and among provinces. These measures range from outright restrictions to bidding on government contracts to a patchwork of regulations and incompatible standards.
The government has felt strong and repeated pressure from the private sector to deal with the problems associated with internal barriers to trade and conflicting regulations on cross border flows of people and of capital.
We have received representations from the Canadian Manufacturers' Association, the Canadian Chamber of Commerce, the Business Council on National Issues, the Canadian Federation of Independent Business, the Canadian Bankers Association and the Canadian Construction Association. The list is long and the problems are deeply felt and broadly experienced.
Such barriers put Canadian businesses at a competitive disadvantage by restricting the size of their available marketplace by shrinking the domestic market for Canadian businesses in a time of increasing global competition and more open markets in other parts of the world. This can have the negative result of putting Canadian businesses at a disadvantage to international competitors even in our own market.
In addition, there is an economic cost related to marketplace inefficiency. The Canadian Manufacturers' Association has estimated that barriers to trade cost Canadians about $7 billion annually in direct job and income loss. However, let us consider the other side of the story which is equally telling.
A Canadian Chamber of Commerce report released on May 17 highlighted the importance of international trade and investment as powerful generators of economic growth and job creation throughout Canada. The study indicates that Canadian interprovincial trade was worth $147 billion; almost 21 per cent of GDP in 1993. It estimates that 1.9 million jobs are directly or indirectly dependent on internal trade within Canada. The report shows that the provinces and territories constitute one of the most economically interdependent regions of the world and that interestingly, Quebec is the province most dependent on internal trade, the province that benefits most from internal trade and has the most to gain from improvements in internal trade.
The study attributes 470,000 Quebec jobs, 20 per cent of the province's GDP directly and indirectly to internal trade and values the province's trade with the rest of Canada at $64 billion. With a trade surplus of $1.1 billion with the rest of Canada, Quebec exported more to Ontario than it did to the United States, more to Nova Scotia and New Brunswick than to any European country.
The report confirms that businesses across Canada have been able to take advantage of the political and economic links created by the federal structure to forge a large national market that has worked to the benefit of all Canadians.
In years past when external trade barriers protected economies like ours from international competition, the economic cost of internal trade barriers were tolerated and maybe tolerable. When Canadian industry was sheltered from international competition by tariff barriers of 10 per cent or even 20 per cent, the economic cost of internal barriers were not so obvious. However, a marketplace sheltered from international competition is no longer the reality. Barriers and tariffs are down. The market is global and the competition is fierce. We will not, we cannot be successful in an open global market if we operate in a closed market at home. We need to adapt to the realities of trade in today's global economy.
Bill C-88 and the agreements it implements is an important aspect of the process. It is part of the more fundamental process of economic renewal that the government is following toward its strategic objectives for economic growth and job creation.
Last December the Minister of Industry introduced in the House the government's plan for building a more innovative economy. We outlined our intentions for improving the economic climate of Canada in four ways: to build a positive entrepreneurial climate and to help small businesses grow; to expand markets for jobs and growth through trade; to create an efficient and modern infrastructure; and to make technology work for Canada.
These are areas in which the government can have the greatest impact on job creation. While Bill C-88 will support all of these objectives, it has special relevance for the objective of expanding trade. To grow and prosper business needs an efficient and open marketplace, an environment which encourages innovation and expansion free of unnecessary barriers.
With the agreement on internal trade and now with this bill we have the elements to establish a new internal trade regime, one which will allow us to make the most of our interprovincial
domestic market by encouraging innovation and expansion and by removing unnecessary barriers.
The Canadian economy is in a period of transition. Fundamental changes are taking place because of the globalization of trade and the rapid pace of technological change. The competitive advantage in today's world depends less on location and natural resources and more on innovation, the ability to respond to changing market conditions and to achieve economies of scale.
As we continue the transition from a resource based economy to one where innovation, knowledge and flexibility are the underpinnings of competitive advantage, we need to ensure that the domestic trading environment will accommodate and expedite the necessary changes. Bill C-88 will provide a supportive environment for the economic transition process that we are now experiencing.
The legislation before the House is the result of a long process of negotiation and consultation which has involved many Canadians; Canadians with many different perspectives: ministers of the federal government, ministers of all the provincial and territorial governments, officials of all of these governments and representatives of the private sector.
It is interesting to note that political parties of all stripes have co-operated in the negotiations leading to this agreement. They have different perspectives and different priorities, but a shared belief that a more open trading environment will be good for Canada and good for Canadians.
A striking feature of the process leading to the bill has been the high degree of co-operation and good will that has been demonstrated on all sides. Those Canadians who have been involved in the process understand the compelling need to open up our internal markets and to ensure that the Canadian marketplace works to the advantage of all Canadians.
Over the last two years the negotiations and background work were under the guiding hand of Mr. Arthur Morrow, a well known Canadian businessperson, who acted as chair of the committee of chief negotiators and worked tirelessly to keep the process moving toward its objective and in producing the agreement that ministers signed last year. The work leading up to the bill was exhaustive and thorough, and it will be ongoing. It is our duty to keep the process moving.
The process began in June 1988 when federal and provincial agriculture ministers compiled a list of barriers to internal trade in agriculture and food products. While the focus of this group was relatively narrow, the process had begun. Governments were now dealing with the problems of internal trade barriers in an organized way. Federal-provincial discussions continued and the focus widened. Ministers began to consider the need for a dispute resolution mechanism as part of more comprehensive trading arrangements between provinces and territories.
In December 1989 a memorandum of understanding on internal trade in agricultural products was signed by seven of the provinces. The process was beginning to move. Negotiators continued to meet. Agreement was reached and memoranda of understanding were signed on a number of individual issues such as transportation and government procurement, a major economic factor in our economy.
By December 1992 the committee of ministers of internal trade at the time recommended the process be accelerated and that all parties commit to the goal of reaching a broad and comprehensive internal trade agreement by June 1994.
Agreement was reached on three specific principles: that governments treat people, goods, services and capital equally regardless of where they originate in Canada; that governments reconcile standards and regulations to provide for the free movement of people, goods, services and capital within Canada and that governments ensure their administrative policies operate to provide for that free movement of people, goods, services and capital within Canada.
An intensive series of meetings was held during the period of January to June last year. These culminated in ministers agreeing to the text of the internal trade agreement at the end of June. Finally, in July 1994 the Prime Minister and all other first ministers affirmed their acceptance of the agreement with a formal signing on July 18.
Last year's agreement on internal trade was a major step in a long process. It has demonstrated that all governments can work together to achieve a common objective that will benefit all Canadians.
The agreement on internal trade sets out general rules that prohibit any new barriers to trade and eliminate old ones in 10 specific sectors or issue areas. Unfortunately there is no time left to read them all. However, it is fair to say that while this bill does not solve all the interprovincial trade problems that have built up since Confederation it has moved us a considerable way along that track. It is an ongoing process. For instance, in the energy sector a separate set of negotiations is under way toward a similar deadline this year.
With this legislation we are ensuring the framework is in place and we are confirming our belief that the fundamental principles of free trade will work within Canada. Trade agreements deepen and broaden with use and experience and this one will too. Bill C-88 will provide the foundation of moving toward a domestic trading environment that will allow for the free flow finally of goods, services, people and capital within Canada.
The Prime Minister and other ministers, including first ministers, have been actively involved in broadening the marketplace for Canadian goods and services in export markets and the Team Canada approach has been highly successful in doing that. We must bring the same spirit to improving the domestic market for our businesses and workers. Bill C-88 is an important step in that direction, which is why we brought it to Parliament and support it.