Mr. Speaker, I am pleased to speak at third reading of Bill C-19, an act regarding the implementation of the agreement on internal trade.
In my address today I will describe to the House the impact of trade barriers on the economy and what effect these barriers have on real Canadians and their families. I will critique the agreement, its merits, its shortcomings, and I will conclude by pointing out how this agreement must be changed in order to be of real benefit to Canadians.
Interprovincial trade barriers cost Canadians jobs and money. Studies produced by the Canadian Manufacturers' Association, the Fraser Institute, the C.D. Howe Institute and others estimate interprovincial trade barriers cost Canadian businesses between $6 billion and $10 billion a year.
According to information published by the Fraser Institute in its book Provincial Trade Wars: Why the Blockade Must End , if Canadian firms were enabled to operate freely across the country, average Canadian household incomes would rise by as much $3,500 a year. While conservative estimates place this figure lower, the point still remains these barriers cost Canadians jobs and money.
Removing barriers to internal trade is an issue which is so important to me and the leader of the Reform Party that we have created a new critic area to address this important issue. We will fight for Canadians so they can have their jobs and we will fight for Canadian business so they can deduct their business with the least government and systemic interference possible. This issue is second only to debt reduction in terms of issues which must be
dealt with to get Canadians back to work and to stop the 20 years of fall in workers' take home pay.
What is the magnitude of the internal trade barriers in Canada? The Canadian Manufacturers' Association estimates there are at least 500 trade barriers currently between provinces. It is not known exactly how much larger our internal trade market would be if goods and services could flow freely back and forth across the country, but clearly Canadian business would regain a portion of those markets currently lost to foreign countries and foreign companies.
I have not found a serious estimate of the number of jobs for Canadians this would translate into, but it would be tens of thousands, most likely hundreds of thousands.
A comparison of Canadian international trade and interprovincial trade in goods and services shows international trade to be about $160 billion per year and interprovincial trade about $146 billion a year. This comparison illustrates our interprovincial trade is only about $14 billion less than our total international trade.
Why then does the Prime Minister and his government not put the time and effort into this trade problem they do into international trade? Travelling the world may see more glamorous but does it produce jobs? Removing barriers to internal trade certainly will. According to Stephen Van Houten, president of the Canadian Manufacturers' Association, provincial trade barriers have resulted in lost sales, lost investments and lost jobs.
How do these barriers stagnate growth and limit job creation? One might think these measures are intended to ensure growth and prosperity within a province. That is the intent, but the opposite is what happens. While these artificial perimeters protect the microcosm from outside competition, they are shifting the growth of domestic industry and establishing protective markets which lead to higher consumer costs. According to the Consumers Association of Canada, some provinces pay up to 10 per cent more for local products because of internal trade barriers.
Catherine Swift, president of the Canadian Federation of Independent Business, describes the current trade in goods and services: "A totally uncompetitive situation which means consumers pay more or pay through the nose. People are forced to pay what bloated utilities like Ontario Hydro choose to charge rather than what is the best price in the domestic market".
I believe I have established that interprovincial trade barriers are costing Canadians jobs and money. What do the Liberals have to say about this issue? The answer is quite a bit. The problem is that so far talk has led to little action. The Liberal government has repeatedly recognized that barriers to internal trade cost Canadians jobs and money, but it has not done anything substantial to rectify the problem.
The government made promises in the red book on this issue, promises in both throne speeches on the issue, and recognized the harm of internal trade barriers in the finance committee's prebudget consultation report, but to date little has been done.
I remind the Liberal government of some of its own words in relation to internal trade. Page 22 of the infamous red book, the book of broken promises, states: "A Liberal government will be committed to the elimination of interprovincial trade barriers within Canada and will address this issue urgently".
Neville Nankivell writes in his Financial Post article on February 18: ``The legislation on freer domestic trade was supposed to have high priority for the Liberal government's economic policy. It had cleared the committee stage and was backed with some amendments, but passage was sidetracked in December by the need to push through the Prime Minister's controversial unity package''.
It is obvious the government is more concerned with perpetuating Quebec appeasement than it is about improving economic conditions for all Canadians, including Quebecers, Quebecers who are looking for jobs.
In the throne speech of 1994 the Liberals promised to reduce overlap and duplication between provinces and the federal government and to work with the provinces to eliminate internal trade barriers.
Before the federal government brought down the budget this year, the finance committee urged the government to take action on interprovincial trade barriers in its prebudget consultation report. The committee report described the current interprovincial trade situation in Canada as very much balkanized.
The report went on to state that in some cases it easier to do businesses in other provinces by going through a U.S. corporation that can use the provisions of the North American Free Trade Agreement than by doing business directly.
Within the same report the committee urged government to continue to seek further action with provinces on reducing interprovincial trade barriers: "Trade within Canada must be placed on an equal footing with Canada-U.S. trade in terms of the free flow of goods and services. We can no longer afford the extravagance of favouring foreign competition over trade among Canadians and discriminating against fellow Canadians".
It is shameful that our governments, both federal and provincial, have forced Canadian companies to fight an uphill battle against
their foreign counterparts. We should be ensuring more than just an equal footing with the United States and other countries.
If barriers to interprovincial trade were eliminated we would be doing more than placing Canadian companies on an equal footing internationally. We would be giving them the competitive advantage they want and deserve. Unfortunately neither the federal nor the provincial governments seem prepared to work with Canadians to reduce trade barriers.
The agreement on internal trade is the product of executive decision making. Twelve cabinet ministers from the respective provinces and territories along with the federal Minister of Industry hammered out a deal they could all live with, but what about business?
The Canada West Foundation released a paper in June, 1994 entitled "Internal Trade and Economic Co-operation: Down to the Wire on an Internal Trade Agreement". This paper addresses provincial interests and attitudes prior to the agreement negotiations.
Before the agreement was put in place, the Saskatchewan government stated: "Despite certain irritants, most interprovincial trade moves freely now. Canada's economic union works well for the most part. Our real economic problems in Canada do not come from the current structure of our internal market".
This statement clearly contradicts the concerns of independent Saskatchewan business which was surveyed by the Canadian Federation of Independent Business and published in its June 1994 paper entitled "Barriers to Growth".
In Saskatchewan, 93 per cent of respondents were in favour of the removal of trade barriers. Of the respondents who were affected by trade barriers, over 60 per cent were affected negatively, the key problem areas being provincial regulations and federal subsidies. Both resulted in higher costs and restricted growth. How can the business community feel assured that its interests are being addressed when there is such a lack of understanding by provincial governments?
What should the government do to bring down the barriers to trade and rectify the situation that Canadians currently face? It could start by acknowledging that previous Liberal and Conservative governments had an obligation to all Canadians under the British North America Act to ensure that trade barriers were never established in the first place.
The British North America Act, 1867 clearly states under section 121 that all articles of growth, produce or manufacture of any one of the provinces shall, from and after the union be admitted free into each of the provinces. Section 91(2) states that the legislative authority of Parliament extends to the regulation of trade and commerce. The people of Canada have paid a serious price for government inaction and the abdication of responsibility in this area.
I will take some time now to speak about certain parts of the internal agreement on trade that this bill implements. The agreement on internal trade is designed in principle to break down barriers in order to establish internal free trade. In an attempt to be all things to all provinces, impediments to this objective have been erected. One such impediment is article 404 regarding legitimate objectives.
A legitimate objective is an exemption from the agreement regarding (a) public security and safety; (b), public order; (c) protection of human, animal or plant life or health; (d) protection of the environment; (e) consumer protection; (f) protection of health, safety and well-being of workers; and (g) affirmative action programs for disadvantaged groups.
What does it mean? It means that any province can use the above stated criteria as a means of establishing the protection of its domestic sectors from competition where it can be demonstrated that (a) the purpose of the measure is to achieve a legitimate objective; (b) the measure does not operate to impair unduly access to persons, goods, services or investment of a party that meet the legitimate objectives; (c) the measure is not more trade restrictive than necessary to achieve that legitimate objective; and (d) the measure does not create a disguised reduction on trade.
When that is put together and one thinks about the legitimate objectives that are allowed, one can clearly see that provincial governments can protect pretty well whatever they want under this legislation. For all intents and purposes, these provisions can be used in nearly every sector involved in interprovincial trade. How is this going to break down barriers? The answer is that it will not.
It reminds me of the Ukrainian matrioska dolls. Every time one is opened, there is another one. It is a very frustrating process getting to the prize.
At a recent round table discussion hosted by the Certified General Accountants of Canada, I asked senior government officials involved in this agreement if they could identify a trade barrier that could not be considered a legitimate objective. They were unable to identify a clear example of a trade barrier that could not be at least considered as a legitimate objective. This spells out to me that there are very few instances where establishing a legitimate objective exemption is not possible.
It is obvious from the ample access to exemptions that disputes between parties are bound to arise. Included in each sector is a series of procedures intended to resolve disputes between the parties, except in the following sectors: energy, agriculture and the "MASH" sector, which is made up of municipalities, academic
institutions, schools and hospitals. These areas of exclusion are another story for another time.
When a dispute arises, the parties are to enter into consultations in order to attempt to rectify the problem. If that is not successful, then the parties apply for a request for consultations between governments. At this level any party who has a vested interest in the outcome of the consultations is able to participate.
If that procedure is unsuccessful, then the issue is brought to the committee. That body is comprised of ministers from the 13 signing governments that were responsible for drawing up this agreement. If the procedure is unsuccessful, then the parties may submit a written request for a panel of experts to preside over their dispute. The panel is comprised of five individuals chosen from a roster of 65 experts: that is, five appointed panellists from each government body. From this roster each party shall select two panellists who shall, in turn, elect the chair.
Will this dispute settlement mechanism work? We do not know. According to Stephen Van Houten, president of the Canadian Manufacturers' Association, the agreement on internal trade is highly bureaucratic. There is no binding enforcement measure. There is little chance of a successful outcome for aggrieved businesses. There are no awards for damages. There is no right of action without the consent of the attorney general. Decisions to withhold consent need to be explained or reviewed. In short, there is no effective dispute settlement mechanism.
The dispute settlement mechanism consists of two avenues of recourse: a government to government resolution process and the individual to government process. The second process is a positive addition which needs to be enhanced in order to heighten the access of individuals to the panel.
Currently individuals are required to be represented by their respective party. This constitutes either a provincial government or the federal government, depending on the jurisdiction in question. The individual must be able to convince that government to take up the cause for them. It seems to me that most Canadians do not feel comfortable in relying on a government bureaucracy to go to bat for them.
To summarize the dispute settlement mechanism, the emphasis of this form of settlement is on consultation and mediation between governments. If this consultation fails, the disputing parties are to resort to an ad hoc panel of appointed experts. There is no binding enforcement of the process through the awarding of damages, an injunction or some other form of penalty. The mechanism does, however, provide for private parties to launch a complaint against governments and for public consumption of panel proceedings.
The decisions of these panels are not binding. They serve as recommendations. The only means of enforcement available under the agreement is through public humiliation and public pressure. If the party refuses to comply with the panel recommendation their non-compliance is made public by the internal trade secretariat. This remains on the committee agenda for the period of one year. If at the end of that year the party has yet to comply, retaliatory action may be pursued.
Will this dispute settlement mechanism process work? I say that we should give it a chance. We should give it a try. However, it seems highly unlikely because retaliation will often cost less than the actions in question.
For the reasons I have addressed today and for the many others which I do not have time to address, I cannot support Bill C-19. The bill implements the agreement on internal trade which is flawed and incomplete. The government says it will fix the legislation in the future. The lack of action is costing Canadians now. The government often preaches that it is interested in Canadians having jobs, yet it refuses to act quickly to fix a problem which can be fixed if the proper commitment is there.
This agreement does not fulfil the need. It serves as an ideal or a goal which may some day be attained. The energy, the MASH, and agriculture sectors of the agreement have yet to be dealt with at all. The list of provincial exemptions is growing by leaps and bounds. The 13 governments need to get together again to construct an agreement which eliminates unreasonable protections for each of the governments' special interests.
I have described to the House the important role internal trade plays in the lives of Canadians. I have described a few of the shortcomings of this agreement: its lack of enforceability, credibility and accessibility. I have explained how to bring about change to make the agreement effective and accountable.
The agreement falls short of its objective. We have been encouraged to support the bill as a step in the right direction. We have been promised that the best is yet to come. This may be true. For the sake of Canadian jobs and business, I hope that it is. Unfortunately, the Liberal government has fallen short on its promises before. The fact that it has missed numerous deadlines set out in this agreement speaks for itself.
I want internal trade barriers removed. Canadian business wants internal trade barriers removed. Canadians looking for jobs want these barriers removed. This government and provincial governments say that they want internal trade barriers removed. Therefore, I say to the Liberal government: Do it and do it now.