Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue No. 3 - Evidence - March 24, 2016
OTTAWA, Thursday, March 24, 2016
The Standing Senate Committee on Banking, Trade and Commerce met this day at
10:31 a.m. to study the issues pertaining to internal barriers to trade; and for
the consideration of a draft budget.
Senator David Tkachuk (Chair) in the chair.
The Chair: My name is David Tkachuk, and I'm the chair of this
committee. Welcome to the Standing Senate Committee on Banking, Trade and
Commerce. Today is our fourth meeting on our study on issues pertaining to
internal trade barriers. It's my pleasure to welcome, from AdvantageBC
International Business Centre Vancouver, Colin Hansen, President and CEO; from
the Business Council of Canada, Brian Kingston, Vice President, Fiscal and
International Issues; from the Canadian Centre for Policy Alternatives, Scott
Sinclair, Director, Trade and Investment Research Project; and from the
Macdonald-Laurier Institute, Brian Lee Crowley, Managing Director; and Sean
Speer, Senior Fellow.
Was it Mr. Hansen who flew in yesterday?
Lynn Gordon, Clerk of the Committee: Yes.
The Chair: A special thank you for that, Mr. Hansen. As you know, we
cancelled our meeting because of the death of a member of Parliament. Mr. Hansen
had flown in for yesterday's meeting. Luckily, he planned to be here this
morning for a meeting, which he cancelled, and so is able to be part of the
panel today. That's why it looks a little crowded up there. I still think it
will be a very interesting session.
Senator L. Smith: Did you see the picture of Mr. Sinclair? You're a
casual person, but you look good with a tie on, sir.
The Chair: Why don't we start with the gentleman who was supposed to
be here yesterday, Mr. Hansen.
Colin Hansen, President and CEO, AdvantageBC International Business Centre
Vancouver: Thank you very much, senator, for accommodating me this morning.
By way of my own background as it pertains to this subject matter, I served
as a member of the B.C. legislature for 17 years, 10 of those as a member of
cabinet. Actually, 10 years ago next month will be the tenth anniversary of the
signing of the Trade, Investment and Labour Mobility Agreement, TILMA, between
B.C. and Alberta. I was the B.C. government signatory to the agreement at that
time. I was the Minister of Economic Development for the following two years
when we implemented that agreement, which later, of course, morphed into the New
West Partnership Trade Agreement, which also includes Saskatchewan.
In the spring of 2008, in my capacity as Minister of Economic Development, I
chaired the provincial-territorial meeting of ministers where all provinces came
to unanimous agreement to extend labour mobility arrangements across Canada for
certified professionals. The agreement still has its growing pains, but I think
it put us on a good track forward.
From 2008 to 2011, I was the Minister of Finance, where I stick-handled
B.C.'s support for what I will underscore as the concept of a national security
regulator, although many people at the time interpreted us to be endorsing 100
per cent the position that was taken by Ontario and Canada at the time. It was a
significant change towards a national security regulator for the province of
British Columbia. After not seeking re-election three years ago, I was about a
year catching up on 17 years of chores around my house, when I was asked if I
would consider taking on this current role as President of AdvantageBC.
AdvantageBC is an organization trying to build Canada's reputation when it
comes to financial services. Part of our mandate is to encourage international
companies to locate in Canada. I emphasize "Canada first,'' and we always fly
the Canadian flag. After we engage in the merits of Canada, we also talk about
the merits of them locating in British Columbia, needless to say. We're a
non-government body. In fact, we receive no government funding. We are entirely
funded by our private sector members.
I'll start with just a couple of general comments. I've got six of them that
I want to share as sort of high-level thoughts on interprovincial barriers to
trade. I don't like the word "barriers'' because people have preconceived
notions of what that is so I call them "complexities.'' I'd like to comment more
on how we develop such complex systems that really constitute barriers to doing
commerce across provincial borders.
First, in many cases, it's easier to do business across international
boundaries than it is across provincial boundaries. Second, interprovincial
complexities add costs that then get passed on to consumers and diminish
Canada's attractiveness as a place to do business. Third, with the prospect of
new free trade agreements with Europe and the 12 nations of the Pacific under
the TPP, which includes both trade in goods, which we're very familiar with and
on which there's been lots of public discourse, and trade in services, which is
something we need to wrap our heads around more, we need to accelerate the pace
of change in Canada in order to be ready for what I think is a new international
free trade environment for goods and services.
Fourth, the incremental approach to changes in the Agreement on Internal
Trade will not get us there fast enough. We need a negative list approach where
everything is included, unless specifically negotiated out of future agreements.
That is the approach we took in negotiating the TILMA with Alberta; and here we
are 10 years later after the signing of that document. It's not perfect. It's
has its hiccups. There are still sections that I don't believe have been
properly or fully implemented. In fact, I think it is a model that should be
adopted across Canada.
Fifth, the process needs to respect the provinces' constitutional rights.
Faster progress will be made if the federal government is the champion for a
process that leads to a national consensus, rather than the federal government
trying to extend the current interpretation of division of powers between the
provinces and Canada. That was actually one of the hiccups in the evolution of a
national security regulator. Sixth, reducing interprovincial barriers to
commerce does not mean diminishing the powers of the provinces. It's about
ensuring that the provinces do not discriminate against companies just because
they operate in other parts of Canada.
I want to talk specifically about the financial services sector. As we engage
in this conversation, it's essential that we put that as a priority for breaking
down some of these interprovincial complexities, which add to the cost of doing
business in Canada.
First, Canada is recognized as having the strongest banking system in the
world. The World Economic Forum for eight years in a row has classified Canada
as the top and most secure banking system in the entire world. We have a great
story to tell. When I'm out talking to companies internationally, primarily in
China and other parts of East Asia, I talk with passion about the fact that
Canada is a great place to do business because of the stability of our banking
system. Given that reputation, we should be seeing our financial services sector
in all parts of Canada growing faster than it is; but I think we have built in
some structural impediments to that growth. Basically, we're not seeing that
growth because our financial services sector needs to be more nimble and needs
to be more flexible.
One example I'll give is bank settlement hours. I'll start by giving you a
little vignette that helps to explain where the issue is. If you were a Canadian
exporter, say, exporting potash from Saskatchewan to China, your ship is being
loaded in Vancouver Port today, Thursday before a long weekend, and your payment
is FOB Vancouver, so you're looking for certification off the ship that the
goods have been loaded and only then will you get paid. If you cannot get that
certification by 2 p.m. Vancouver time today, you will not get paid until the
next business day because you'll have missed the 3 p.m. deadline for large-value
transfers in the Canadian payment system.
You ask why that is the case. It's because the settlement system for payments
in Canada under our banking system closes at 6 p.m. Eastern Time. You wind up
with half the afternoon cut off for Vancouver-based exporters and all
If Canadian financial institutions cannot meet the needs of customers by
being more flexible, then those customers will take their financial service
activities to other cities in other countries. Anecdotally I've heard some of
that is already happening, and we can see it increasingly in the future. This is
not about a Vancouver versus Central Canada kind of issue because the entire
system, the Canadian financial services sector could be diminished if they
cannot be more flexible in meeting the needs of their clients.
The other area I want to give some examples from is the insurance sector, and
I do so with some trepidation knowing Senator Black's background. Captive
insurance is one example of where it's easier for Canadian companies to do
business across our national boundaries than it is across provincial boundaries.
Captive insurance, for those not familiar, is essentially where larger companies
will set up a corporate entity to self-insure their risks in Canada or anywhere
in the world.
In B.C., we set up a legislative framework in 1987 for captive insurance
regulation and oversight. We are the only province in Canada that has such a
system in place. Canadian companies outside British Columbia are forced, if they
want to establish captive insurance, to go outside Canada to domicile their
captive insurance companies because of the inability of the British Columbia
captive insurance system to be recognized by other provinces in Canada. The most
recent statistics I have are from 2008, but I don't think they've changed much
since then. At that time, there were 151 captive insurance companies in Canada;
only 21 of them were domiciled in B.C., while there were 98 in Barbados, 19 in
Bermuda, 7 in the Caymans, and 6 elsewhere. It's one example of many where
financial services are impeded because of existing rules.
The other is in terms of insurance services generally. In Canada we have
probably one of the most complex systems of insurance oversight of any country
in the world because we have federal jurisdiction and provincial jurisdiction,
and, most importantly, we have the inability of provinces to recognize insurance
systems set up across provincial boundaries. An international company coming to
set up in every province and territory in Canada would have a formidable
challenge in setting up that kind of arrangement.
In closing, as I know my time is running out, it is these kinds of
complexities that ultimately result in costs that get passed on to consumers and
make Canada a less desirable place from which to do business. I congratulate the
committee for taking on the challenge of looking at interprovincial barriers.
It's a very important subject; but it needs to be much broader than just a focus
on trade and the movement of goods. It also needs to focus on the movement of
services across provincial boundaries.
The Chair: Mr. Hansen was recommended to the committee by Senator
Neufeld from British Columbia, who served in the government at the same time.
Brian Kingston, Vice President, Fiscal and International Issues, Business
Council of Canada: Mr. Chair, honourable senators, thank you for the
opportunity to appear this morning as part of your study on internal trade
barriers. The Business Council of Canada, previously known as the Canadian
Council of Chief Executives, represents the chief executives and entrepreneurs
of 150 leading Canadian companies from all sectors and regions of the economy.
Our 1.4 million citizens account for more than half the value of the Toronto
Stock Exchange, contribute the largest share of federal corporate taxes, and are
responsible for most of Canada's exports, corporate philanthropy and private
sector investments in research and development.
With one in five jobs linked to exports, Canada's long-term prosperity
depends on our ability to sell goods and services around the globe. An extensive
network of free trade agreements, including the recently concluded Canada-EU
Comprehensive Economic and Trade Agreement and potentially the Trans-Pacific
Partnership, ensures that our companies benefit from preferential access to the
world's largest and richest markets. However, we will be unable to benefit fully
from new trade opportunities if our companies are unable to attain the scale
needed to take advantage of them.
The larger the company, the greater the likelihood is that it sells outside
Canada. In 2010 only 1 per cent of the small businesses in Canada were
exporters. Among large firms, the proportion is 43 per cent. Companies with more
than 500 employees represent only 0.2 per cent of Canadian businesses, yet they
generate nearly two thirds of our country's total exports.
Large firms are not only more likely to export but are also responsible for a
disproportionate share of Canada's exports. Despite accounting for just 3 per
cent of Canadian goods exporting enterprises, large firms contributed almost
three quarters of the total value of goods exports in 2014. Moreover, the top 10
Canadian goods exporters accounted for 25 per cent of total export values, while
the top 50 firms generated 55 per cent of export values.
Establishing a common Canadian marketplace that is free of internal barriers
is one important way to help small and medium-sized enterprise, SMEs, to achieve
the scale they need to become successful exporters. Industry Canada research
shows that SMEs that trade across Canada rather than focusing their activities
on one province or region tend to employ more workers, are more innovative and
are more likely to export. Conversely, SMEs that don't do business across
provincial boundaries are less likely to grow.
Unfortunately, Canada's patchwork of domestic rules and regulations makes it
challenging for firms to expand. While progress has been made in recent years to
reduce internal trade barriers, much more ambition is needed. For example,
efforts to strengthen labour mobility provisions have not eliminated significant
differences in occupational standards and certification requirements. Proposals
such as Ontario's provincial pension plan will only make it more difficult for
Ontarians to move in and out of the province.
Another notable barrier, as mentioned by Mr. Hansen, is Canada's approach to
securities regulation. Despite multiple attempts to create a common securities
regulator, we still do not have a harmonized capital market. A pan- Canadian
regulator would boost competitiveness by eliminating duplication, reducing
unnecessary red tape and compliance costs and enhancing oversight.
Fortunately, free trade within Canada can be achieved through an ambitious
renewal of the Agreement on Internal Trade, AIT. Canada's business leaders are
encouraged by the commitment made by the provinces and territories in 2014 to
renew the AIT, and we've recommended that the agreement follow the following
First, the AIT must be as ambitious and comprehensive as any trade agreement
Canada has with a foreign country. One way to achieve this is to adopt the
negative list approach embedded in the Canada-European Union trade deal, CETA.
All sectors of the economy would be covered by the agreement unless explicitly
Second, the concept of mutual recognition should apply to the full scope of
the agreement. Under this concept, any product or service produced in one
province or territory should be admitted into the market of any other province
or territory unless there is a justified reason for the exemption.
Third, we should aim for the highest possible level of regulatory cooperation
among the provinces and territories. The align or explain approach to regulation
would accelerate work on achieving common standards. In addition, the AIT should
include a formal mechanism to facilitate regulatory cooperation that allows
businesses to participate.
Fourth, the agreement must include an effective and efficient dispute
settlement mechanism. This could be achieved by adopting a domestic equivalent
of the investor-state dispute settlement mechanism and subjecting compliance
panel and appellate panel reports and decisions to judicial review.
Fifth, an effective governance structure should be established to manage the
economic union and push forward with necessary reforms. Under the current
consensus-based decision-making model, any one province or territory can veto or
delay important amendments, which is a recipe for inaction. With that, I
conclude my remarks.
Scott Sinclair, Director, Trade and Investment Research Project, Canadian
Centre for Policy Alternatives: Thank you, Mr. Chair, honourable senators,
for the invitation. I'm Director of the Trade and Investment Research Project
for the Canadian Centre for Policy Alternatives, which is a non-partisan think
tank. I work for the Ottawa office, although I live on Prince Edward Island. We
have offices across the country, in British Columbia, Toronto, Atlantic Canada,
Saskatchewan and Winnipeg.
Even before the Agreement on Internal Trade came into effect, most empirical
studies found that the costs of internal trade barriers were fairly small,
ranging from 0.05 per cent to 0.10 per cent of GDP, which would be $1 billion to
$2 billion annually in today's dollars. The C.D. Howe Institute has noted that
even those internal trade barriers have been substantially reduced since that
time; so earlier economic research probably overstates their cost to the
economy. Despite this, some lobbyists and pundits continue to make exaggerated
claims about the costs of internal trade barriers. The fact is that there is no
crisis in internal trade relations, and it's inaccurate to propagate that myth.
Some economists have argued that even though the costs of internal trade
barriers are low, they should still be addressed. This is a reasonable position,
so long as the proposed policy solutions are commensurate with the seriousness
of the problem. For example, it would be a useful exercise to list and estimate
the cost of specific trade barriers between provinces. Provincial governments
could then cooperate to remove any costly barriers that do not serve any useful
Many measures that are frequently characterized as "internal trade barriers''
are, in fact, deliberate policy choices or simply differences in regulation that
should be expected in any federal system. While policy choices such as supply
management or alcohol monopolies may result in additional costs or lost
opportunities for some, they also bring significant benefits. I will get to more
examples in a moment. The point is that if done badly, overhauling the AIT could
pose risks to legitimate regulation, including non-discriminatory public
The AIT has already been substantially reformed since 1995. The pressure now,
from business groups in particular, is for the agreement to be overhauled to
make it more enforceable both by governments and by business directly, and to
apply a so-called negative list approach to its obligations. Presumably, this
would mean that the AIT's general rules, which are found in Part 3, Chapter 4,
would automatically apply to all measures and sectors, unless governments
explicitly exclude these through reservations.
Those rules, I should add, go much further than simply barring discriminatory
measures. They preclude all AIT parties, including the federal government, from
adopting or maintaining even non-discriminatory measures that restrict or
prevent the movement of persons, goods, services or investment across provincial
boundaries. Another requirement is that any government measure cannot operate to
create an obstacle to internal trade, again defined quite broadly.
Obviously, many regulatory measures, such as new restrictions on the use of
neonicotinoids, municipal bans on cosmetic pesticides, or restrictions on trans
fats or sugary drinks, have repercussions for businesses and commerce that could
be construed as restrictions to free movement or obstacles to internal trade.
Under the AIT's general rules, such regulations must then be justified as not
unduly impairing the access of persons, goods, services or investments and not
more trade restrictive than necessary to achieve a legitimate objective.
Such rules of interpretation are drawn from international trade treatment
agreements, where they have been interpreted quite restrictively. In fact, the
first AIT dispute panel ruled that the federal government's attempt to restrict
the interprovincial trade and use of MMT, a neurotoxic gasoline additive, ruled
against it on the grounds that the matter could have been handled in a less
trade-restrictive way. That cleared the way, I would say, for quite a disastrous
settlement for ethyl under the NAFTA, which is our first loss in investor-state
Differing regulations that have outlived their usefulness or can be easily
harmonized of course should be removed or modified. Regulations being considered
for possible reduction or elimination should be available publicly, and any
reconciliation process must be fully transparent and open. Citizens or
interested parties must be able to respond and intervene in evaluating the
social, economic and environmental purposes of these regulations.
At its best, federalism encourages policy leadership and innovation, whether
it's California's policies on clean air and auto safety, Ontario's moves to curb
bee-killing pesticides, or British Columbia's carbon tax. However, provinces
adopting or maintaining higher standards can be challenged and compelled to
justify them under the top-down application of the AIT's general rules.
Meanwhile, the agreement provides no corresponding or equivalent means to compel
jurisdictions with lower or deficient standards to raise them. In my view, this
is a recipe for harmonization to the lowest common denominator.
There are sound reasons why governments sought to restrict the application of
the general rules in the original AIT. By giving other jurisdictions and
individuals, including corporations, wide latitude to sue provincial or federal
governments over differences in public interest regulations, a revamped AIT
would place more downward pressure on standards. Even non-discriminatory
regulations, including at the federal level, would not be immune.
Instead, Canada needs more instances of positive cooperation and upward
harmonization. Higher standards, such as stronger building codes and energy
efficiency regulations, can drive innovation and productivity gains. More
cooperative efforts along the lines of the Cost of Credit Disclosure rules,
adopted in the late 1990s through the AIT's committee on consumer-related
measures and standards; joint crackdowns on payday lenders; common GHG emission
targets; or facilitating the creation of a national securities regulator would
enhance the relevance and value of the internal trade agenda for ordinary
Canada would be better served by a more transparent, incremental approach
focused on specific problems. If provinces and local governments are obstructed
in exercising their regulatory authority or innovating with different or
distinctive approaches and the federal government does not step in to fill that
gap, then consumer, health and environmental protection can be expected to
Brian Lee Crowley, Managing Director, Macdonald-Laurier Institute:
Honourable senators, thank you for inviting us to appear before the committee
I congratulate you for taking up this issue. As the committee noted in the
study's order of reference, interprovincial trade barriers can have far-reaching
economic consequences for the country. We at the Macdonald-Laurier Institute, a
public policy think tank based here in Ottawa, are passionate about this issue.
As a think tank dedicated to the ideas underpinning Canada's founding in 1867, I
suppose our enthusiasm for this issue should not be a surprise. Consider, for
example, what the great Liberal parliamentarian George Brown said more than 150
years ago just on the eve of Confederation about the proposal of confederation:
The proposal now before us is to throw down all barriers between the
provinces — to make a citizen of one, citizen of the whole.
That was how George Brown characterized the Confederation project. It was to
remove barriers between the provinces. I would suggest that the committee's
mission in carrying out this study should be to see George Brown's vision
through, that is, to eliminate interprovincial barriers and extend economic
freedom. That is the necessary consequence. If you throw down the barriers, you
extend the economic freedom of Canadians across the country.
What can be done? What is the best path for asserting a one-country economic
vision rather than the beggar-thy- neighbour protection that too often stands in
the way of economic freedom?
I note in his testimony last month that Minister Bains expressed optimism
about the most recent round of negotiations with the provinces and territories
on a renewed AIT. The minister said at the time, "I'm optimistic as I think we
are headed in the right direction in making meaningful progress.'' Well, with
all due respect to the minister, the fact that a month has passed and the March
deadline has come and gone is in itself a powerful sign of the folly of leaving
reform to the provinces. Waiting on the provinces to deliver "meaningful
progress,'' as the minister put it, means we could be waiting another 150 years
because that's how long we've been waiting already. Canada was created because
this doesn't work.
In fact, not only have the provinces failed to produce meaningful reform of
internal trade barriers, as was noted by the former Executive Director of the
Internal Trade Secretariat, Anna Maria Magnifico, in an article for us, but also
they're presently publicly in the process of creating massive new ones. Think,
for example, of the obstacles to pipeline development that have sprung up in
British Columbia and Quebec. These are new interprovincial barriers to trade, at
the precise moment that these same provinces are claiming to be eliminating
My view, which I think is shared by my colleagues at the Macdonald-Laurier
Institute, is that real reform can come only from Ottawa, as was intended and
envisaged in the Constitution we created in 1867. It is the only way to assert a
true national economy unshackled from parochial and narrow interests to the
absurdity that leads a 62-year-old retired steelworker to be arrested in New
Brunswick for buying beer in Quebec. The Government of New Brunswick showed up
before the court and said its justification was that it really needed the money.
I hope bank robbers were listening, because it's a perfect defence for them. As
the former Executive Director of the Internal Trade Secretariat said in an
article for the Institute, "The time for baby steps is over.'' Let's finish the
vision that George Brown had for Canada.
I'm sensitive about budgeting my time, so let's focus on a big idea to bring
an end to interprovincial barriers to trade. The current round of negotiations
has shown once again that attempts to cajole the provinces to give up their
barriers voluntarily are an exercise in futility. I mention, in parentheses,
that they tried exactly this approach in Australia, and the states finally threw
up their hands and said, "We can't do it,'' and handed over the job to the
Commonwealth government in Canberra. At least they had the honesty to admit they
couldn't get the job done. The federal government should, as has been
recommended by Peter Hogg, one of the leading constitutional scholars in the
country — and our worker on this issue has been much inspired by his work —
instead introduce a sweeping statute to ensure that no government rules or
policies unnecessarily restrict the free movement of goods, of services, of
labour and of capital and to give individual citizens clear legal remedies
against such restrictions. The federal government can pass an act of Parliament
to create an economic charter of rights for Canadians that would be faithful to
the vision of 1867, while respecting the constitutional division of powers and
responsibilities between the provinces and Ottawa.
Everyone is always so solicitous of provincial jurisdiction. What about
federal jurisdiction? That is what we in Ottawa are here to defend and uphold.
We too often hand it over to the provinces and say, "Gee, this is a tough
problem. Please fix it for us.'' It's not their job. They existed before 1867;
but what we created in 1867 was you, with a job to tear down the barriers
Now, the statute would reflect the federal prerogative in interprovincial
trade and commerce. It would be rooted in the principle that a Canadian has the
right to seek employment, to earn a living and to sell his or her goods and
services anywhere in Canada without exception. I mentioned that such a law would
give citizens legal recourse against provincial infringement on their economic
rights. This is key. Real enforceability is the only way to ensure that a new
set of barriers and obstacles doesn't soon build up. To this point, we recommend
the creation of an economic freedom commission with the power to investigate
breaches of the economic charter of rights on its own initiative as well as in
response to complaints. This would ensure that the system works as intended.
No doubt, there would be those who argue against such a big idea. Well, there
were those who argued against the big idea we now call Canada. I think we should
stare them down. We cannot let special interests and small thinking stand in the
way of the Canadian economic union and the rights of those who find themselves
on the outside looking in. I'm talking about the hairdresser who can't find work
in Ontario because he or she got their training in Saskatchewan; and I'm
referring to the nurse who finds it virtually impossible to move to another
province because, to borrow an expression from Freud, of the professional
bodies' narcissism of small differences. I'm talking about provincial and local
barriers to developing Canada's natural resources, such as the pipeline issue
that I referred to a few moments ago.
An economic charter of rights is a big idea; there's no doubt about it. It
seeks to complete Canada's nation-building project. It seeks to unshackle
Canada's economy. It seeks to help the so-called little guy who is shut out by
restrictions and barriers. Most importantly, it seeks to set the conditions for
long-term economic prosperity.
It is also, in addition to being a big idea, an idea whose time has come. I
hope the committee will consider it as part of its eventual recommendations. I
thank you for the opportunity to speak to you today.
The Chair: Thanks very much, Mr. Crowley. Do you have anything to add,
We will go to questions. Witnesses, senators may ask all of you or one of
you, but that doesn't prevent someone else from commenting.
Senator Tannas: I know that with this group there will be a lot of
great questions. I have an interest in the insurance industry so I want to ask
Mr. Hansen about captives in British Columbia that you spoke of and the lack of
captives in other provinces.
My understanding of captives is that they're more driven by tax than by
genuine interest in self-insurance. I was surprised by the numbers. I expected
you to say there were zero captives in British Columbia. Do you have any sense
of why you have even such a modest market share of captives in British Columbia?
Mr. Hansen: Well, the tax implications of captives have been changing
over the last couple of years. In fact, in the 2014 federal budget, new
provisions put in place prevent Canadian companies from using offshore captives
as a way to avoid taxation. That has been a changing landscape over the last
number of years.
In British Columbia, under what is known as the International Business
Activity program, the province's international service activities includes
captive insurance, where there is foreign risk being insured that can be
exempted from provincial corporate income tax. In Canada today, we have a number
of companies that would be very interested in having their captive insurance
domiciled in Canada to cover Canadian risk. They would like to use the B.C.
program. They know that there may be some marginal tax advantages to going to
the Caribbean, but they also recognize that those advantages have been
diminishing significantly over the last number of years. In part they feel more
comfortable having a captive insurance operation set up under Canadian law
rather than under foreign legal structures.
Senator Ringuette: Of course, all of you understand that the first
responsibility of senators is to review proposed legislation with sober second
thought, including the respect of jurisdiction under the Constitution.
Therefore, my question will be mainly about that. Mr. Hansen, you have
hands-on experience. How did the provinces of B.C. and Alberta deal with that in
respect of their jurisdiction?
I agree with Mr. Sinclair that we cannot venture into forcing the policy or
regulation of a province to go to its lowest common denominator, because then we
would have a non-progressive society in Canada. How did you deal with that, in
Mr. Hansen: First of all, I think when the TILMA was negotiated, one
of the clear objectives was not to diminish the powers either of the two
provincial governments or of municipalities, for example, but saying that as
those governments brought in regulations and rules, they had to be
For example, if a municipality brought in certain height restrictions on
buildings, for example, they couldn't say that if it's a B.C.-based construction
firm they would be treated differently than if they were an Alberta-based
construction firm operating in British Columbia. That principle of
non-discrimination was really the fundamental driver of the wording in those
negotiations, so it wasn't about going to the lowest common denominator.
We have harmonized between B.C. and Alberta several pieces of legislation. In
fact, one of them is the Insurance Act. Alberta was the first, and B.C.
basically modelled our legislation on Alberta's so that we could have an
increasing degree of harmonization, but I think breaking down interprovincial
trade barriers and harmonization are not necessarily the same thing.
Senator Ringuette: The provinces are responsible for regulating
professionally recognized bodies, such as lawyers, doctors and so forth. In
order to establish that, there has to be recognition of credentials and training
from the institution certifying the professional. How did you deal with that?
Whether it's within this economic study, we've been hearing for quite a number
of years that efforts were made to establish a standard in regard to
qualifications. How did you specifically deal with that issue, or did you?
Mr. Hansen: Absolutely. The Province of British Columbia and the
Province of Alberta basically put in place rules that said to all of the
licensing bodies that if an individual was certified and credentialed in one
jurisdiction, then that credential had to be recognized in the other
One example is a case I'm aware of where a licensed practical nurse moved
from one province to the other in early July. It was prior to the TILMA being
established. She had all of the credentials to be a licensed practical nurse in
the other province at a time when there was a severe shortage of nurses, yet she
found she could not meet to put in an application for certification because
there were summer holidays by the college in the other province. Then when she
finally had a chance to put in her application, which took two months, she was
then told that because of the backlog, they were unable to meet with her and
transfer her credentials for three months. At a time when we have nursing
shortages, that makes absolutely no sense.
Another example I will give is another profession where the executive
director of the association came to see me and started out by saying, "Minister
Hansen, we totally support the TILMA and labour mobility, but in our particular
profession, Alberta doesn't quite have the same level of standards that we have,
and we think that this is an area where there's a safety issue, as to whether or
not somebody with the training in Alberta can practise in British Columbia. We
accept everything, but we need to sign off on this particular measure of
My response to him was that as a Canadian I travel frequently to Alberta, and
I would like to know that all of the individuals practising that profession in
the province of Alberta are as competent as the professionals practising in the
province of British Colombia. Therefore, if it's a safety issue, you have an
obligation to talk to your counterpart in Alberta and make sure the standards
are increased to a level that meets public safety.
The Chair: Did you wish to comment, Mr. Crowley?
Mr. Crowley: If I could, since the honourable senator raised the issue
of jurisdiction, again my experience is that everybody spends a lot of time
being very solicitous about provincial jurisdiction. Let me say what the
Constitution says about federal jurisdiction.
There are four places in the Constitution that I think give clear
jurisdiction to Ottawa over matters of interprovincial trade and commerce. The
first is the general power to make laws for the peace, order and good government
of Canada. The second is the regulation of trade and commerce. In fact, it's the
second power listed for the federal government.
The third is at section 121 of the Constitution Act, 1867:
All Articles of the Growth, Produce, or Manufacture of any one of the
Provinces shall, from and after the Union, be admitted free into each of the
And, of course, there are mobility rights within the Charter; I won't read
that through, but those mobility rights are granted to all Canadians, regardless
of where they live, as opposed to the jurisdiction of the provinces, which is
characterized by the Constitution as generally all matters of a merely local or
private nature in the province.
My view is that as soon as an economic relation goes across provincial
boundaries, it is no longer a provincial jurisdiction; it is a federal
jurisdiction. It is no longer moving from one province to another; it is moving
within Canada and falls under the jurisdiction of Canada.
Senator Black: Thank you very much. I have two specific questions for
Mr. Sinclair, and then I have a question for the panel, if that is acceptable to
The Chair: Absolutely.
Senator Black: Very well. Thank you. Mr. Sinclair, I have a couple of
specific questions for you, if I may, to help me understand your evidence in
counterbalance to other evidence that we have heard before this panel.
Sir, you indicated that your understanding would be that the economic upside
for interprovincial trade is limited. We heard from Professor Mintz on March 10.
While acknowledging there are many studies that indicate gains for the Canadian
economy are relatively minor, he concludes his evidence by saying, "However, by
incorporating more complex features . . . estimates of economic gains rose as
high as 6.5 per cent of GDP.'' And he gives two or three of the more complex
Would you care to comment on that?
Mr. Sinclair: Sure. I've reviewed Mr. Mintz's testimony before this
committee. I recall that he said his own research was in line with the empirical
studies that I cited in my testimony, which showed gains from one-twentieth of 1
per cent to one-tenth of 1 per cent. Most of these studies were done in the
1980s and 1990s. His own personal research is in line with that.
He referred to a study by some University of Calgary colleagues. There have
been other studies. One has been done for the federal government in their review
of the AIT. I would say these studies are not empirical studies. They don't try
to identify the cause of specific barriers. What they do is attempt to measure
the gap between, say, economic output or productivity and what they calculate as
the potential for economic output or productivity.
They're interesting academic studies. I don't think they're very useful from
a public policy perspective because there's no explanation of what specific
barriers or complexities — where the friction is. So for a public policy-maker,
it doesn't point you to any particular policy. I think the empirical approach is
a much more helpful approach.
Senator Black: I wanted to give you an opportunity to comment on that
difference. Do I take from your testimony here today that your view is that the
existing federal agreement pretty much has been overhauled and is working
Mr. Sinclair: I actually have some criticisms of how it has worked,
but I will point out that, yes, it has been reformed, I think, 14 times.
Senator Black: So I read.
Mr. Sinclair: For example, we've heard several examples today — and
Mr. Hansen, the examples that you gave on labour mobility have been largely
addressed, you would agree, in the TILMA. In 2009, the Agreement on Internal
Trade was reformed to provide pretty much for automatic recognition of
credentials and licensing, both professional and trades, across the country.
Ontario has actually enacted that through legislation. In Ontario, it's the law
of the land. You can't require additional training of Canadians entering into
Senator Black: Before we drill down too deeply, your view would be
that the 14 amendments to the existing agreement pretty much have us in a good
Mr. Sinclair: I don't see any need for a substantial overhaul of the
Senator Black: In fairness, documentation put forward when the
minister was here referred to documentation from the Honourable James Moore, who
was the former minister. In the foreword to a document called One Canada, One
National Economy: Modernizing Internal Trade in Canada, the former minister
Persistent barriers to internal trade, including regulatory differences,
inconsistent standards, and restrictions on the free movement of people,
goods and services, fragment our economy and put Canadian firms at a
disadvantage. The result is a weaker Canadian economy, lost jobs, and a less
For full disclosure, a different point of view is clearly being espoused in
the information we've seen.
Mr. Sinclair: There's a very powerful myth that internal trade
barriers are one of the most serious problems facing the Canadian economy. I
think that's untrue.
Senator Black: First, I'd like your view on the consequences of
maintaining the existing federal regime. Second, what do you view to be the
specific role for Ottawa, if you were of the view that some change needs to be
Mr. Crowley: First of all, senator, I would not characterize the
current regime as federal. It is precisely not federal. It is an agreement
between the provinces. That doesn't make it federal.
What you decide is federal. That's what Ottawa is for. Ottawa did not design,
legislate, create or modify the Agreement on Internal Trade. It is an agreement
amongst the provinces. It is a political agreement. It is not a legislative
agreement. You cannot take it before the courts. In fact, the provinces have
been very careful to make it clear that, as a political agreement, while they
are interested in the outcomes of appeals before the appeal mechanisms that
they've created, there are many instances in which provinces have lost such
appeals and simply carried on with the existing policy regardless.
So there's clearly a lack of desire or drive on the part of the provinces to
make this agreement one that is legally binding on them, that is significantly
enforceable by people whose interests are actually damaged by it. That's what I
would say about the existing agreement.
With respect to the role that Ottawa could play, in my talk I laid out the
idea of an economic charter of rights. I got this idea originally from Peter
Hogg, one of the leading constitutionalists in the country. We can quote chapter
and verse about the constitutional justification and underpinning of such an
idea. In my view, Canada is the country that trade created. One of the reasons
Canada was created in 1867 was because of all the other major trade conduits we
had. We had free trade with the United States. The Americans abrogated it. We
had preferential trade within the empire. The British got rid of it in favour of
The express justification for Confederation in 1867 was that we were in a
hard place and we even have barriers amongst ourselves. Let's start by getting
rid of those barriers. If you read the constitutional debates, Ottawa was
expressly created and its powers designed to give Ottawa the power to get rid of
barriers between the provinces. It was the very justification for the country.
Mr. Kingston: Regarding the consequences of not moving ahead or
reforming or addressing internal trade barriers, I want to underline what is
probably the most damaging consequence of this. You've heard this before having
read the evidence, but it's really important.
Once CETA is in place, Canada will be offering foreign companies better
access to Canada than Canadian companies, and not only better access, but they
will actually have recourse to more effective dispute settlement mechanisms.
That has potential to be extremely damaging. We have to, at a very minimum,
bring our internal trade agreement in line with what we offer foreign countries.
Secondly, in terms of a role for the federal government, it's relatively
minor, but it can have a big impact. That is, making the federal government a
permanent co-chair of the Internal Trade Secretariat. Right now we have rotating
chairs, so each province will hold the chair for a year. We witnessed this
recently when Manitoba was the chair. The minister was very motivated and had a
very active plan to renew the agreement. Then due to political reasons, and the
fact that 12 months is a relatively short period of time to actually move on
this, we then switched chairs again. All of that work that's being advanced
suddenly gets lost. Then you have this transition period, a new minister. If you
had the federal government as a permanent co-chair, that would move this
agreement along with more continuity. That's one action that could be taken.
Mr. Hansen: Thank you. In the role that I've had over these last two
years, I look at this issue somewhat from the perspective of an international
company looking to do business in Canada. When they start looking at the
complexity of rules from province to province, they find Canada a very confusing
place to do business. If we want to attract the kind of foreign investment that
we need to drive the Canadian economy in the future, breaking down some of these
barriers is vitally important.
For example, at one point I tried to explain the Canadian passport system for
securities to the third-largest Chinese securities firm. It was looking to
establish an operation here in Canada. I'm as well versed in the passport system
as many people are, but it was tough to explain it to somebody from outside. If
we want to make the Canadian economy an attractive place, we have to address
some of these issues going forward. We need to differentiate between a national
regime and a federal regime.
The national securities regulator is a case in point. I had a very good
working relationship with the late Jim Flaherty. I respected him in so many
areas and was more than willing to support a push for a national securities
One area where we disagreed on was the reference to the Supreme Court to
determine whether or not federal jurisdiction could be interpreted to extend to
this area. We lost two years of progress on that particular file because the
provinces got their backs up. British Columbia actually went into that Supreme
Court decision not supporting the federal government's position. We felt we had
an obligation to our citizens to do that.
However, there's far more to be gained by these collaborations. I know it's
not as efficient. It's very Canadian that we have to sit down and come to a
consensus among provinces in terms of how we move forward on some of these
things. It would be nice to have a bit more of a direct approach.
The building of national consensus does work. We certainly saw it with regard
to the national labour mobility agreement that was negotiated in 2008 and
implemented, as Mr. Sinclair mentioned, in 2009. So progress can be made, but I
also think the role the federal government can play is to raise the stakes on
this subject and to create the environment in which it is imperative that the
provinces get to that national consensus much faster than we've been able to
achieve up until now.
Mr. Sinclair: Well, as somebody who was involved in AIT negotiations
early on, the federal government is a party to the AIT. From my experience, they
were a driving force in the creation of the AIT.
Also, I think people need to acknowledge everything that has happened within
the framework of the AIT, not all of it positive, from my point of view. I think
there are issues around labour mobility and lowest common denominator
harmonization, but the enforcement mechanisms of the agreement have been
strengthened. There is now enforcement by fines; businesses can bring claims
To me, I think the existing regime needs a lot more transparency, a lot more
public involvement. I think that people need to update their talking points and
actually look at what has happened at that table.
Now, as for the role of Ottawa, it should be more persuasion and consensus
building than some kind of legal hammer, certainly. I agree with Mr. Crowley to
a point that I think the courts are actually a good place to find balance on a
lot of these issues. Many cases have gone before the courts, such as local fish
processing in Newfoundland and Labrador, which was found to be intra vires, or
the municipal ban on cosmetic pesticides, which went right to the Supreme Court
of Canada and was upheld.
So when you get into these regulatory issues that affect commerce and
mobility and internal trade to a certain extent, the court tends to take a more
balanced view, that of public interest on one hand and commercial rights on the
other. So I'd be more comfortable with them playing a greater role.
Senator Bellemare: One of my questions is for Mr. Sinclair and one is
for Mr. Crowley, but everyone is welcome to answer. My questions pick up on what
you just said.
Mr. Sinclair, you ended by saying that a cooperative approach to internal
trade was ideal, something Mr. Hansen agreed with as well. I'd like to hear your
thoughts on labour mobility from a more practical standpoint. We talked about
nurses and the existence of certain agreements, but having worked on labour
issues, myself, I know how challenging they can be when it comes to certain
sectors. I'd like to know how a cooperative approach could produce results
quickly in a context where we have ten provinces and one federal government. Do
you have any tangible examples in that regard?
Mr. Crowley, you spoke passionately about the importance of removing all the
barriers to trade. My question for you also has a practical component. What do
we do about the external costs that can stem from unregulated mobility? For
those who favour that approach, because that is certainly a possibility — and
you mentioned pipelines — what can be done to offset or, at the very least,
absorb external costs arising from trade without restrictions? I'd like to hear
your thoughts on that. Thank you.
Mr. Sinclair: I'll begin. Of course, Canadians have Charter rights to
move freely and work anywhere in the country. As you said, in some cases it can
be a complex matter for an individual. In other cases it's very simple, but it
can be complex to have your licensing or certification or professional
accreditation recognized. I think those issues have largely been addressed.
There are still a few remaining frictions. If you go to the Internal Trade
Secretariat website, you'll see a list of labour mobility challenges. In B.C.,
there's a nurse practitioner's case. I have no idea of the details of that
because no details are provided on the website, which is problematic.
These cases are being dealt with. As I said, Ontario has brought that into
law; you cannot require additional training of anyone. You must recognize the
certification of another jurisdiction.
My concern is that that can lead to issues. We have had regulatory failures
like Walkerton and Westray that were related to poor training. Perhaps that's a
role for the federal government or for further interprovincial negotiation, to
ensure that we have a floor for all those regulated trades and professions. You
need both. You need mobility, but you need to be absolutely assured that the
consumer and citizens are being protected.
Senator Bellemare: In some countries, they have a system of
qualification recognition, such as the NVQ, National Vocational Qualification,
in the U.K. and something in Australia that has enabled people to move around.
Once they are certified by this broad system, their competencies are recognized
no matter how they have been acquired.
If we want to go that route in Canada, how can we do so?
Mr. Sinclair: I don't have an answer to that question. Again, that is
the complexity of our federal system, but I would insist on the fact that you
can't just look at one side of the mobility equation. You have to also look at
the consumer and public health protection side of the equation, whether that's
done through federal-provincial cooperation or through some type of national
The Chair: Was the Walkerton issue because of the training, or was it
because the people were incompetent, which could be anybody getting training
anywhere? It doesn't necessarily make them competent.
Mr. Sinclair: No, but after that incident or similar incidents, it
would be reasonable for a province to ensure that that never happened again by
requiring additional training. That is now no longer possible for
out-of-province engineers or technicians. That's the concern.
The Chair: I'm not sure what you mean. Are you saying that —
Mr. Sinclair: You're not permitted to require additional training if a
sanitation engineer or somebody is coming from another jurisdiction. If they are
certified, then they are qualified to practise within your jurisdiction.
The Chair: Is that what happened in —
Mr. Sinclair: No, that's not what happened in Walkerton.
The Chair: That's what I thought. Thank you.
Mr. Hansen: If I can just add to Mr. Sinclair's comments, in that
case, it would not be the lowest common denominator that would prevail. What it
would require is a consensus across the professional representatives in, say,
the engineering professions, to increase the training standards required in all
parts of Canada. Those mechanisms are in place today as a result of the labour
mobility agreement of 2009, wherein they can respond on a national basis so that
we continue to have Canadian standards. But that doesn't mean that the standards
cannot be increased.
Mr. Crowley: Thank you for your question, Senator. Actually, you had
several questions. Let's start with your first question about a cooperative
approach to the labour mobility issue. I'm not sure whether you would agree, but
it seems to me that infinite rounds of meetings on construction worker mobility
have been held over the years between the premiers of Ontario and Quebec. That's
one example of a cooperative approach.
Senator Bellemare: Between two partners.
Mr. Crowley: Yes, between two partners, but multiple partners could
also be involved. In this case, it's between two partners. Senator, you may know
that more workers from Ontario work across the river today than vice versa. If
that's the outcome of a cooperative approach, then, in my opinion, many
Canadians' right to work anywhere in Canada is being violated. As I see it, it's
a right of citizenship. Fundamentally, it's a matter of Canadians' rights, not a
matter of economic efficiency and so forth. It's the right of Canadians to work,
to sell their wares, anywhere in the country.
Now, your second question was about the possibility of a nationwide open
trade regime giving rise to uncontrolled open trade. I'm not trying to put words
in your mouth, but that was basically how I interpreted your question. As I
understand the Constitution, there is no activity, area of expertise or type of
trade that does not fall under the jurisdiction of some level of government. We
are not talking about creating a legal or constitutional vacuum in Canada, where
internal trade would somehow fall outside the domain of the various levels of
governments. On the contrary, we are trying to create a foundation so that
Canadians' rights take precedence over all other considerations when it comes to
the policies that are implemented, both provincially and federally, to promote
internal trade. Does that answer your question?
Senator Bellemare: Yes. In your pipeline example, you explained that
the federal government should have jurisdiction. But some provinces, like
Quebec, would like a say in environmental assessments. In those cases, if we
were to adopt a wholesale approach — you answered my question about legal
frameworks — you would agree to legal regimes at the provincial level?
Mr. Crowley: Let's consider the real-life example you just gave.
Senator Bellemare: It was the example you gave.
Mr. Crowley: I know, but you reused it.
In that case, the issue is who has jurisdiction over pipeline environmental
assessments, constitutionally speaking. Just because Quebec wants jurisdiction
over that area does not make it so; it's an issue for the courts to decide. If
the courts decide that Quebec has the right to be involved in the environmental
assessment of pipelines running through its territory, then the province will
have the constitutional right to sit at the table.
Senator Massicotte: That's your view?
Mr. Crowley: I'm no lawyer. In other parts of Canada, the issue was
dealt with by way of an intergovernmental process, where the province and the
federal government adopted a joint process to consider environmental factors.
Both governments accepted the findings of a study — multiple studies weren't
conducted, only one — that was conducted jointly on behalf of both governments.
There are ways to resolve these kinds of issues in a cooperative manner, but
I don't think this issue, strictly speaking, has been raised in relation to
internal trade. It was a jurisdictional issue involving environmental protection
in the case of projects that crossed provincial boundaries.
The Chair: Senator Enverga is my last questioner. Does anybody else
want to be included on the list? Going once, going twice . . . Senator Enverga.
Senator Enverga: Thank you for your presentations. It was such a
fascinating presentation, and well done on answering all the questions.
Mr. Crowley, you mentioned earlier that Minister Bains passed the March
deadline. The last time he was here, he said that so far about 20 per cent of
the barriers have been eliminated since the past minister's term ended. He said
that his goal is to have 60 per cent fewer barriers.
The question is for everybody here: Where are we right now? Are we far off
from eliminating these barriers?
Mr. Crowley: If I could clarify for a moment, Mr. Chair, if I left the
honourable senator with the impression that I was saying the deadline was
Minister Bains', I do apologize because that's not what I meant to say. I
believe I'm correct in saying that the provinces had a self-imposed deadline.
They were going to report on progress and have a renewed agreement ready for the
middle of March. That deadline has come and gone. And not only has the deadline
come and gone, we haven't heard anything from the provinces. They didn't say,
"We're just a week late, hold on.'' We haven't heard anything from the
The argument that I made in my presentation was not that provinces can never
make any progress on this, or that the AIT is not better than what went before.
Of course, that's not the point.
The point is, I think, that the current system asks the people who created
the barriers to agree to remove them. Now, it seems to me that they don't create
the barriers for no reason. On the contrary, they think they had very good
reason to create the barriers. So you're asking them voluntarily to remove the
barriers for what they thought were good reasons — for what? I don't understand
what we're asking the provinces to do because I think it's completely
contradictory. We're asking the people who created the barriers to give them up.
What are they going to get in return? There's going to be national improvement
in growth rates, but we know what happened when somebody went across the border
from New Brunswick to Quebec to buy a case of beer: The New Brunswick government
said, "No, we need that money.''
I think the whole process is based on a misconception about where barriers
come from and who has an interest in eliminating them. I would be willing to bet
quite a lot that when the provinces finally do come forward — whenever that is —
with a new Agreement on Internal Trade, it will mark some small progress, and we
will all call it a disappointment and go back to the drawing board yet again
asking the provinces to do what they have no incentive to do correctly.
Senator Enverga: We're going from coast to coast to coast to meet
different people around the country. Is there any one particular question you
want us to ask that would really make this happen? This question is for
Mr. Hansen: I don't have that question, but perhaps I can reinterpret
it in terms of an opportunity for a closing comment. I think B.C. and Alberta
proved, with the TILMA and subsequently the expansion of that agreement to the
New West Partnership Trade Agreement that included Saskatchewan, that there is a
willingness on the part of provinces to address this. I think we have seen the
benefits that have flowed as a result of that.
I guess at the time when we were putting the TILMA in place, our sense was
that we would try to lead by example rather than trying to fight for a national
consensus involving all provinces at the time. If we make progress on a regional
basis, then we can demonstrate that there's merit that should be duplicated by
other provinces. I think we have succeeded in doing that in the three western
Mr. Crowley: In response to your question, I invite you to think back
to the decades-long effort that we went through in Canada to patriate the
Constitution. As long as we treated the Constitution as something that was the
property of the provinces and the federal government, we never succeeded. We
succeeded when the Prime Minister, Pierre Trudeau, said we are going to bring in
the people's package. This is going to be addressed to Canadians. This is going
to be a package that includes a charter of rights for Canadians. This is not
about provinces and Ottawa. This is about Canadians. This is about you and your
rights. The public outpouring of support for that was such that the provinces
didn't dare, when push came to shove, stop that reform from going through.
I think the fundamental question is, do you think that internal commerce is a
matter between the provinces and Ottawa, or do you think it's a matter of the
rights of Canadians? I think you will get a resoundingly clear answer.
The Chair: Does anyone else have anything to say?
Mr. Sinclair: I reviewed some of the testimony before this committee,
and I have to say there is something about the internal trade issue that brings
out kind of fuzzy statements, like from the minister. I believe he said — and
maybe it was just an off-the-cuff illustration that wasn't actually meant to
refer to any data or problems in particular — that 20 per cent of internal trade
is free and we want to get it up to 60 per cent. I have no idea what that refers
to, but I'm sure that it would give the wrong impression about the strength of
Canada's economic union.
I will say emphatically that it is easier, despite the frustrations, to do
business and commerce within Canada than it is within, for example, the European
Union. We have a common currency. We have two languages, but there are no
tariffs or border checkpoints or anything. The national home bias in Europe is
much stronger than it is in Canada. By the way, that's probably something that
will never be eradicated through any agreement in any country.
I do think Canadians should stop talking down to other countries the strength
of the internal economic union. I also think we need much more emphasis on
positive integration rather than on negative integration. Negative integration
is the tearing down of barriers to mobility, movement of goods, services and
investment. Positive integration refers to the creation of common standards and
common institutions. It's where we can take a page from the European experience.
They didn't just stress the internal market; they also created common
institutions to protect the environment, to protect consumers, to transfer funds
to underdeveloped regions. That is the type of vision for internal trade that I
think can inspire Canadians.
The Chair: I wouldn't be looking forward to adopting a European Union
solution as part of the Canadian solution. I suppose we could have our Greece,
Go ahead, Mr. Kingston.
Mr. Kingston: I wanted to add to Mr. Sinclair's comment around the
minister's 60-20 comment that he made here.
One of the difficult parts of internal trade is that it's difficult to
estimate what the costs are. We had that discussion earlier around the various
studies and ranges that have come out.
An important study that will be released, which hopefully will help your
work, will be the Ernst & Young study that the previous government commissioned
to create an internal trade barriers index. I think when we have that it will
help create a baseline for how many barriers there are in Canada, and then we
can measure going forward how we can address them. When that is available, I
think it will be a very powerful tool moving forward on that.
Mr. Crowley: Quickly on that point, the problem with looking at
existing barriers is that it neglects the dynamic costs included in the
uncertainty about whether or not new barriers will be created. As soon as
interprovincial trade creates economic imbalance between one province and
another, the province that feels they're on the wrong end of that imbalance will
introduce new barriers. This is part of the problem. There is a dynamic process
here. This is not a fixed quantity. You have to take account of the risk when
new barriers will be created. There was no barrier to moving electricity between
British Columbia and Alberta until British Columbia threatened to obstruct the
pipeline, and Alberta said, "Well, then, we'll obstruct your hydroelectric
lines.'' This is a dynamic process. When you say you're not allowed to do that,
the incentive is for provinces to continue to do it. They will find new ways to
do it unless we stop it.
The Chair: Thank you very much. Witnesses, you were terrific today. I
think all senators here appreciated the testimony and the dialogue that we had.
Senators, we've got a budget matter to discuss, which is public, and then
we're going to go in camera to go over our travel schedule.
This is a small budget item to cover the cost of our email subscription to
the Canadian Financial Monitor, which we've had for quite some time. The
French service is provided free through the Library of Parliament, but we have
to pay for the English service.
Senator Campbell: Can you explain that to me?
The Chair: I wish I could, but I can't.
Senator Campbell: I think we should send a note to them and say we
would like an explanation of this. Why is one language free and the other is
not? I'm serious. I think that's crazy.
The Chair: Because the Library of Parliament obviously subscribes to
the French version and not the English version.
Senator Campbell: I think we should question them on that, chair. I'm
serious. This is crazy.
The Chair: It's nice to see the Anglos getting militant. That hasn't
happened for a long time. The French get everything, eh?
Senator Ringuette: Chair, further to Senator Campbell's comment, to my
knowledge as a francophone, I have not been receiving any reading in French from
the Library of Parliament relating to our committee. It may cost nothing, but it
may be just because we get nothing right now.
The Chair: You just go to the Library of Parliament and subscribe, and
it comes to you. That's all you have to do. In English you can't, but in French
you can, unless you don't want to monitor. That's fine, too. Whatever you want.
We've had it before. If you want it again —
Senator Day: Who looks at it?
Senator Campbell: My life wouldn't end if I didn't get it. I've never
seen it anyway.
The Chair: Do we have consensus?
Senator Greene: I look at it every now and then, but it's not a
regular part of my day, for sure.
The Chair: Okay, no problem. Done. We have consensus. If we miss it —
if you're starting to get the shakes — we can come back and deal with it.
There's no budget item to worry about. We will now go in camera. Is this an
in camera question?
Senator Ringuette: Yes, because I don't know to what extent the
Library of Parliament can supply international information with regard to what
is happening in the banking sector, with the subscription that we have now,
because our information requirement, as far as I'm concerned, is bigger only
than what is national in scope. Before we take any recommendations to cancel the
subscription, I would like to have more information about what exactly the
Library of Parliament can supply us with, with regard to news events and banking
around the world.
The Chair: I was going to take up Senator Campbell's suggestion. We're
going to find out from the Library of Parliament, number one, why we have to pay
for this while the French version is free, but also if there is anything else
that we could get from them that would take the place of Quorum — or
something like it — that we would receive on the financial service industry. Is
that good? We'll get a letter off.
(The committee continued in camera.)