Late last week, after nearly two years and 21 rounds of negotiations, the federal, provincial, and territorial governments announced the details of a new Canada Free Trade Agreement (CFTA). To finally see details and agreement on a new interprovincial trade deal for Canada is an important milestone. The last agreement was from 1995. The Ontario Chamber Network has been a strong advocate to the provincial and federal levels of government to ensure a deal was in place before the ratification of other trade deals, such as CETA.
“The new Canada Free Trade Agreement is a huge win for business. Eliminating interprovincial barriers to trade has long been a priority of the Canadian Chamber,” said the Hon. Perrin Beatty, President and CEO of the Canadian Chamber of Commerce. “As Canada pushes back against growing protectionist sentiment around the world it is crucial that we get our own house in order and the CFTA puts us on a path to do that.”
The Ontario Chamber of Commerce (OCC) reiterates the positive nature of the CFTA in that interprovincial trade makes up one-fifth of Canada’s GDP, a total of $385 billion. The Ontario government predicts the CFTA could raise Ontario’s GDP by up to one percent by 2025, or more than $9 billion.
What are some of the key details?
Comprehensive free trade rules of engagement
The CFTA replaces the existing Agreement on Internal Trade (AIT) and will employ a “negative-list” approach, covering nearly all sectors of the economy. CFTA’s rules will automatically apply to almost all areas of economic activity in Canada, with any exceptions being clearly identified; meaning the default status of intra-provincial trade is “free”.
Government procurement that is more open to Canadian business
The CFTA will implement a single electronic portal, which will make it easier for Canadian businesses, especially small and medium-sized companies, to find procurement opportunities across the country. The intent is to include provincial, territorial, and municipal contracts within five years.
Alignment with international obligations
The CFTA will better align with Canada’s commitments under international trade agreements such as the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), which will reduce compliance costs for Canadian firms.
Resolving regulatory barriers
The CFTA will establish a regulatory reconciliation process to address regulatory differences across jurisdictions that act as a barrier to trade. The CFTA will also introduce a mechanism to promote regulatory cooperation, which will equip governments with the ability to develop common regulatory approaches for emerging sectors.
However, there are still some areas that require more attention. The Ontario Chamber of Commerce says the new CFTA has several forward-looking processes and working groups to help strengthen Canada’s economic union into the future. This includes a commitment to establish a working group to evaluate options for liberalizing trade in alcohol, allows for future negotiations on the financial services sector, and includes a commitment to enhance the territorial food sector.
The Peterborough Chamber of Commerce has heard from many members that interprovincial trade is overly onerous because of varying regulations and restrictions that can leave small and medium-sized businesses on the outside looking in.
A new deal that covers most sectors of the Ontario economy and encourages more trade east to west and west to east is one to be celebrated.
Fittingly, the new Canada Free Trade Agreement will come into effect on July 1, 2017.