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July 7, 2020 – Reforms to the Canadian Free Trade Agreement (CFTA) could ease access to justice for small businesses and individuals and bolster internal trade, says a new report from the C.D. Howe Institute.

In “Internal Trade in Focus: Ten Ways to Improve the Canadian Free Trade Agreement,” author Ryan Manucha calls for key reforms to the CFTA’s dispute settlement rules to lessen barriers to interprovincial trade in Canada.

The recent pandemic has highlighted just how economically interdependent Canadians are with one another, and the extent of the nation’s intertwined domestic supply chains. As the economy re-opens, and with global protectionism looming, interprovincial trade barriers take on heightened significance.

Economic estimates suggest that Canada’s GDP would grow 4 percent by eliminating internal trade barriers, and that the patchwork nature of the Canadian regulatory landscape imposes the equivalent of a near 7 percent tariff on goods crossing provincial boundaries.

“Internal trade barriers divert economic resources away from their most efficient uses,” writes Manucha. “Restrictions imposed on the movement of goods, services, people and investments across domestic borders curtail the enterprise of individual Canadians and Canadian businesses.”

Reforming the CFTA’s dispute resolution mechanism enhances the machinery that is used to tear down barriers, and further entrenches a domestic rules-based trading system. The report argues adversarial litigation plays an important role in domestic trade liberalization efforts, even if the heavy lifting is done chiefly through extensive and exhaustive inter-governmental reconciliation.  

To further enhance the CFTA’s effectiveness in promoting internal trade, the author also argues for reforms that expand the role of the CFTA Secretariat and identifies best practices for the CFTA’s novel Regulatory Reconciliation and Cooperation process.   

Manucha also points to the New West Partnership Trade Agreement, to which British Columbia, Alberta, Saskatchewan and Manitoba currently belong, for insights on possible further reforms for the CFTA’s dispute resolution mechanism.

Read Full Report 

For more information contact: Ryan Manucha, Frederick Sheldon Fellow, Harvard University; or Nancy Schlömer, Communications Officer, C.D. Howe Institute, phone 416-865-1904 ext. 0247, email: nschlomer@cdhowe.org.

The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.