AGREEMENT ON INTERNAL TRADE (1999)

 

Internal trade barriers and other impediments to the efficient functioning of the Canadian market harm Canadians in several ways.  In an era of increasing globalisation, they keep firms from evolving to a shape and size large enough to compete in foreign markets.  In a world where capital is instantly mobile, they cause investors to locate their business in other countries. Trade barriers exacerbate the inefficiencies and cost excesses that have plagued government and militate against the efficient provision of services demanded by the public.  In a nation faced with increasing competitiveness and productivity challenges, trade barriers make it difficult for Canadians to work across the country.  It is actually easier to do business between Athens and London than it is to do business between Halifax and Vancouver.

 

More fundamentally, internal trade barriers diminish our sense of nationhood by undermining the benefits Canadians may legitimately expect from belonging to the economic union.  This is why in July 1994 the federal, provincial and territorial governments affirmed the importance of liberating internal trade by signing the “Agreement on Internal Trade” (AIT).  This began the process of formally enhancing the movement of people, goods and services and investments within Canada.  While the AIT is a start in dismantling some of the barriers to internal trade it still falls short of the mark.  This is in part because of limitations inherent to the Agreement itself. 

 

The negotiation process under which the Committee on Internal Trade (CIT) operates is such that the agreement of 13 governments is needed to make any decisions.  A process of negotiation where each party holds a veto results, at best, in lowest common denominator outcomes and at worst in produces deadlock. Eliminating the requirement for unanimity and replacing it with some form of majority rule would ensure that the process to liberalise internal trade not be held hostage to local or regional interests.

 

The dispute settlement system is accessible only on a limited basis by private parties.  Moreover, rulings made by the AIT’s dispute resolution bodies are not binding.  Consequently the system is unable to provide redress for inconsistent measures taken by governments.

 

The basic architecture of the agreement undermines its fundamental process (i.e., to provide ground rules by which governments conduct their affairs and which afford Canadian businesses and individuals a practical means of recourse against discrimination in matters relating to internal trade and mobility).  This is because the general rules are only applicable through the sectoral chapters of the agreement.  The general rules should be the basis on which the agreement is built and on which all can count as applying.  This would ensure that any trade measure or issue that is not addressed by a sectoral agreement or specifically excluded would be dealt with by those general rules.

 

At the present time, most of the AIT’s sectoral chapters incorporate exceptions designed mainly to protect local business, commercial or economic interests that government considered important during the original negotiations.  The AIT should apply to all of its parties and be as simple as possible to ensure coverage is clear.  Therefore, all exceptions should be subject to regular review and timelined for elimination.

 

Beyond these problems inherent to the current AIT there is also a lack of commitment to expanding the agreement.  The CIT has not met timelines, obligations and commitments it undertook when the AIT was signed, let alone taking the necessary steps to negotiate trade liberalisation agreements for new economic sectors.  Indeed, the CIT seems to rarely meet and is more than two years behind in the issuance of its annual reports on the functioning of the AIT.

 

Currently there is no energy chapter, no chapter covering procurement to Crown corporations, delays on commitments to strengthen the agriculture chapter and to completely deregulate the trucking sector.  There has been little movement on labour mobility or reconciling occupational standards.  These were all to be phased into the current AIT.

 

Furthermore governments have not undertaken consultations with the business community, or with other interested parties to discuss the workings of the AIT, or trade liberalisation agreements for other economic sectors.  When combined with the delays in annual reports this makes for an opaque process with little input from or information to stakeholders.

 

THE CHAMBER RECOMMENDS

 

That the federal, provincial and territorial governments:

 

1. reform the decision-making process of the CIT so that all decisions are made by some form of majority rule;

 

2. reform the existing dispute-settlement process to allow effective access by private parties and ensure that the decisions or recommendation of dispute settlement panels are binding on parties;

 

3. incorporate a more proactive blanket rule extending the coverage to all goods, services, investments, capital movements and economic activity where this is not otherwise dealt with specifically elsewhere in the agreement;

 

4. create a mechanism to review regularly the various exceptions of the sector chapters and recommend reductions for approval and elimination by the CIT;

 

5. work diligently to fulfil the obligations and commitments they undertook when they signed the AIT within the prescribed timeframes;

 

6. actively support the creation of bilateral or multilateral agreements to liberalise internal trade, independently from the CIT if necessary;

 

7. undertake extensive, regularly scheduled consultations with the business community and other interested parties on new sectors which could benefit liberalised internal trade; and

 

8. ensure that meetings of the CIT be convened at least annually with adequate notice, and a substantive, detailed agenda.