THE STANDING SENATE COMMITTEE ON BANKING, TRADE AND COMMERCE
OTTAWA, Thursday, March 24, 2016
The Standing Senate Committee on Banking, Trade
and Commerce met this day at 10:30 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
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
Senator L. Smith: Did you see the picture
of Mr. Sinclair? You're a casual person, but you look good with a tie on,
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
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 large-value transactions.
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
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 principles.
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 excluded.
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
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 interest
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
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 dispute
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 Canadians.
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 suffer.
Brian Lee Crowley, Managing Director,
Macdonald-Laurier Institute: Honourable senators, thank you for inviting
us to appear before the committee today.
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
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 them.
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 between Canadians.
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
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
The Chair: Thanks very much, Mr. Crowley.
Do you have anything to add, Mr. Speer?
We will go to questions. Witnesses, senators
may ask all of you or one of you, but that doesn't prevent someone else from
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
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 your experience?
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 non-discriminatory.
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 jurisdiction.
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 training."
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.
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
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
The third is at section 121 of the Constitution
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 other Provinces.
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 you.
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 features.
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
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 effectively today?
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 your province.
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 place
Mr. Sinclair: I don't see any need for a
substantial overhaul of the agreement, no.
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 says:
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 united
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 effected?
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
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 free trade.
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
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 regulator.
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
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 directly.
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
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
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
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
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 standard.
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
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
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
The Chair: That's what I thought. Thank
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
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
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
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
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
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 provinces.
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 everybody.
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 provinces.
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
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
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
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
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, too.
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
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
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
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
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
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
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
(The committee continued in camera.)