2 weeks Ago By [email protected] (Martin Regg Cohn)
As Canada-U.S. free trade took root, the premier of the day made a pledge to hedge our bets: Ontario must foster free trade within Canada as a counterweight, he argued.
That was 35 years ago. The premier at the time, David Peterson, ran out of time. Today’s premier, Doug Ford, says its time has come.
Today, all those decades after the dawn of continental free trade, it seems doomed. Now, in the aftermath, Ford promises that Ontario will lead the way in dismantling the interprovincial trade barriers that endured within Canada while free trade flourished across the border. This week, his Progressive Conservative government unveiled a blueprint to “Protect Ontario” against American protectionism by dismantling it on the home front.
Flanked by two premiers from the Maritimes, Ford boasted he was “making history” to secure Canada’s future. In truth, history is repeating itself. For we have seen this movie before, mostly in slow motion.
Now it’s in reruns. Every description of the problem, every prescription of a remedy and every prediction for prosperity is an echo of what previous premiers have said since 1980. To be sure, Ontario is doing the right thing by trying to remove interprovincial trade barriers.
For they hurt efficiency and harm the economy. Ontario claims these internal trade barriers cost the economy as much as $200 billion a year, reduce economic growth by nearly eight per cent, and raise living costs by more than 14 per cent — equivalent to a hidden tariff on production and consumption. But most of Ford’s proposals are contingent on reciprocity from other provinces, and the bigger players — Quebec, Alberta and B.
C. — are biding their time. What took so long? Why still so slow? Inertia is a powerful force and entrenched interests are hard to dislodge.
The payoff, by contrast, is a hard sell that seems far off in the future — and in the long run we are all dead, as economist John Maynard Keynes famously mused. In fact, many of the early advocates for internal free trade are long dead — former Ontario premiers Bill Davis, Frank Miller and Quebec’s René Lévesque show up in my old newspaper clippings as clamouring for concessions. They couldn’t get a deal done because, as politicians, they were balancing competing interests.
Why do politicians perpetuate such protectionism? What might seem, at the national level, obviously self-defeating can be self-serving at the local level. Smaller provinces are always wary of being big-footed by the big province with the biggest economy, namely Ontario. Queen’s Park, for its part, long wanted to protect its own infant industries, namely wineries — and buses.
“When Bombardier can get one bloody bus into Toronto when they have the best price — that’ll be the day,” Lévesque lashed out at Ontario’s premier during a first ministers’ conference 40 years ago. “I’d love to get a gallon of paint into Quebec,” Miller shot back — referring to the barriers that prevented contractors from using Ontario materials across provincial boundaries. With Canada then immersed in free trade negotiations with the U.
S., Miller argued, “Perhaps we should clean our own house first.” The cleanup never happened, despite years of boning up: In 1980, the federal government produced a 50-page paper calling for an entrenched “economic union” in the Constitution; in 1981, Ontario produced a 58-page proposal for a “Canadian Common Market,” distributing 5,000 copies across the country to influencers in a pre-internet era.
The Macdonald royal commission on the economy, whose landmark report set the stage for Canada-U.S. free trade, noted in 1984 that New Brunswick’s Moosehead beer could be bought all over New England but not in the rest of Canada: “For a producer to find it easier to sell in another country than in another province offends our sense of Canadianism.
” But Canadianism can only go so far. Until anti-Americanism infuses it. When I looked up the articles I’d written on this issue back then, I found an old quote from one of the authors of those reports calling for an end to internal trade barriers: “It also needs the assistance of a non-Ontario politician.
” Donald Trump is today playing that role. By goading and tariffing Canada, he ignited the animus that gave us an impetus for internal free trade at long last. But the U.
S. president isn’t doing it alone. Credit also goes to Nova Scotia Premier Tim Houston and New Brunswick’s Susan Holt, who joined Ford at Queen’s Park this week.
Why are the smaller provinces now teaming up with big Ontario? After decades of Canada-U.S. free trade, they understand the attraction and traction of larger markets; now that America is closing itself off, the Canadian domestic market of 40 million has its own appeal for their goods and services, people and pizzas — not least the frozen pizza produced in massive quantities by McCain in the Maritimes.
After all these years of Canada-U.S. free trade along north-south lines, the deep freeze in east-west trade flows may finally be thawing.
Thanks to the chill wind blowing across the American border. Error! Sorry, there was an error processing your request. There was a problem with the recaptcha.
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