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Adopting BC-Alberta trade agreement on national basis would provide costless economic stimulus

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Release Date: February 12, 2009

VANCOUVER, BC-Faced with a slowing economy, a new Fraser Institute study shows that Canada could boost economic growth by following Alberta and British Columbia's lead and adopting the Trade, Investment and Labour Mobility Agreement (TILMA).

The report, Myths and Realities of TILMA, indicates how the TILMA approach to eliminating interprovincial trade and investment barriers could easily be adapted to include the rest of Canada, and could also be used as a model for trade agreements in other countries.

"It makes no sense to leave barriers and impediments to domestic trade, investment and mobility unresolved while we spend billions and go into debt in an attempt to stimulate the economy;" said Robert Knox, former executive director of the Internal Trade Secretariat and co-author of Myths and Realities of TILMA.

TILMA recognizes that skilled Canadians certified to work in one province will automatically be deemed qualified to work in the other without having to go through additional tests and assessments. On January 16 of this year, Canada's first ministers took a first crucial step in this direction. They reached a comparable deal on labour mobility, allowing workers certified in one province to be recognized as qualified for that occupation by all other provinces and territories.

"This is a refreshing and important development but it shouldn't stop there. Given the current economic woes, joining TILMA is a costless way to stimulate Canada's economic growth," Knox said.

The report calls TILMA a promising model for a national trade agreement because of its sweeping coverage and scope which, in addition to improving labour mobility, will:

  • Eliminate artificial trade barriers and impediments which waste resources and time for those doing business in other provinces;
  • Provide open and non-discriminatory access to government procurement; and
  • Create a clear, comprehensive, and enforceable dispute resolution mechanism.

The report points out that although Canada enacted the Agreement on Internal Trade (AIT) in 1995 with the objective of establishing an open and efficient domestic market, the agreement has failed to eliminate barriers and impediments to trade and job mobility.

"Canada cannot expect to compete and prosper in a global economy with the uncertainty and costs of arbitrary, unresolved barriers and impediments to trade, commerce, and mobility," said Amela Karabegović, Fraser Institute associate director of globalization studies and co-author of the report.

"TILMA proposes real, enforceable solutions to the problems spawning from the AIT."

The report charges that the AIT has failed because:

  • It is complex, bureaucratic, and difficult to interpret;
  • Its rules and principles apply only to those issues named in the agreement, not to all trade issues;
  • Its dispute resolution procedure is overlapping, slow, and expensive to apply; and
  • There are no consequences if governments choose to ignore their obligations.  

Unlike the AIT, TILMA rests on the general principle of liberalizing trade across all areas.

"TILMA has one set of rules and principles that apply to all government measures relating to trade, investment, or labour mobility, except those specifically identified as exclusions or exceptions," Karabegović said. "This makes it easier to apply than the AIT, which was limited to a list of specific sectors that the parties agreed to liberalize."

Another key improvement over the AIT is that TILMA has a clear, enforceable dispute-resolution mechanism, including consequences for parties who do not comply with a dispute resolution panel's findings. Under the AIT, there are no consequences if governments ignore their obligations.

Overall, the authors advocate that extending TILMA to include the rest of the country is a big step towards a stronger, more dynamic and entrepreneurial Canada.

"The larger market and increased labour opportunities established by TILMA will allow the combined economy to attract more workers from across Canada," Knox said

"It will lower the costs associated with licensing and occupational certification, which will bring both worker-specific and broad-based benefits to the economy."