Rapid Policy Update
Canadian Free Trade AgreementApril 7, 2017
Today the federal, provincial and territorial governments formally released the details surrounding the Canadian Free Trade Agreement (CFTA). The announcement aligns with the Ontario Chamber of Commerce’s (OCC) continued advocacy for the removal of inter-provincial trade barriers to further enhance Ontario’s competitiveness. Inter-provincial trade makes up one-fifth of Canada’s GDP, a total of $385 billion.
Background on CFTA
In December 2014 a comprehensive renewal of the 1995 Agreement on Internal Trade (AIT) was launched with the aim of modernizing and strengthening Canada’s internal regulatory trade framework. In the summer of 2016, under the direction of Canada’s premiers and the federal government, an agreement in principle was reached on the Canadian Free Trade Agreement (CFTA). Today the details of that agreement were released with the CFTA to enter effect July 1, 2017 replacing the previous AIT.
Ontario’s ability to trade with other provinces has historically been hindered by complex regulatory obstacles. The Ontario Chamber of Commerce (OCC) has long advocated to ensure greater policy harmonization and cooperation in all areas of intergovernmental relations, specifically identifying the need for the removal of interprovincial trade barriers. In advance of the 2015 federal election, the OCC further championed the need to eliminate restrictions on internal trade and labour mobility within Canada. Today’s announcement of the Canadian Free Trade Agreement (CFTA) demonstrates significant progress towards the goal of removing restrictive barriers, and will serve to strengthen Ontario’s competitiveness while better enabling all Canadian businesses to grow.
Key Detail of the CFTA Announcement
Comprehensive free trade rules
The CFTA replaces the existing AIT and will employ a “negative-list” approach, covering nearly all sectors of the economy. CFTA’s rules will automatically apply to almost all areas of economic activity in Canada, with any exceptions being clearly identified, meaning the default status of intra-provincial trade is “free”.
Government procurement that is more open to Canadian business
The CFTA will implement a single electronic portal, which will make it easier for Canadian businesses, especially small and medium-sized companies, to find procurement opportunities across the country.
Alignment with international obligations
The CFTA will better align with Canada’s commitments under international trade agreements such as the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) which will reduce compliance costs for Canadian firms.
Resolving regulatory barriers
The CFTA will establish a regulatory reconciliation process to address regulatory differences across jurisdictions that act as a barrier to trade. The CFTA will also introduce a mechanism to promote regulatory cooperation, which will equip governments with the ability to develop common regulatory approaches for emerging sectors.
Next Steps: Enhancing interprovincial trade in the future
The CFTA creates several forward-looking processes and working groups to help strengthen Canada’s economic union into the future. This includes a commitment to establish a working group to evaluate options for liberalizing trade in alcohol, allows for future negotiations on the financial services sector, and includes a commitment to enhance the territorial food sector.
Read the full copy of the CFTA.