Food In Canada

Canadian governments finalize the Canadian Free Trade Agreement

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Canadian federal, provincial and territorial governments have concluded negotiations on a new Canadian Free Trade Agreement they say will help expand businesses and increase economic growth across the country.

Two Businessmen Shaking Hands With Canadian Flag As A Background

Toronto – Canadian federal, provincial and territorial governments have concluded negotiations on a new Canadian Free Trade Agreement (CFTA) that they say will help to expand Canadian businesses and increase economic growth across the country.

The move to strengthen and modernize internal trade was launched in December 2014.

“The CFTA will bring real benefits to Canadians,” says Navdeep Bains, minister of Innovation, Science and Economic Development, Government of Canada.

“Companies will find it easier and less costly to sell their goods and services across the country, which means Canadians can expect more choice and pay less for what they buy. More open markets and less red tape mean Canadian businesses can grow and compete globally. And as these companies grow, they will create more middle-class jobs for Canadians.”

The CFTA will take effect July 1, 2017, and will reduce barriers to trade, investment, and worker mobility. It will increase choice for consumers, expand access to government contracts, and create more jobs for Canadians.

It includes rules that open trade in goods and services, processes that reduce differences in regulations and standards, and provisions that increase access to billions of dollars in government procurement opportunities for Canadian businesses. The agreement also establishes new processes to liberalize domestic trade in areas such as alcoholic beverages and financial services.

These improvements to the Canadian market will create new opportunities for businesses to innovate and grow at home, while helping to strengthen their competitive position internationally.

Some reaction

The Canadian Federation of Agriculture (CFA) says it welcomes the news and adds that while changes under the CFTA may take time to implement, the agreement’s conclusion represents a commitment to reducing barriers to interprovincial trade. The CFA says it has advocated on the need to modernize the country’s internal trade systems before.

The says CFTA is a huge win for Nova Scotia, adding that Brad Duguid, Ontario ‘s Economic Development minister, who was also chair of the negotiations, said the deal is expected to add $25 billion a year to Canada’s economy.

Journalist Andrew Coyne in the called CFTA a “failure.” He writes that it is an improvement over the 1995 Agreement on Internal Trade. For one thing, he says CFTA will impose important limits on the ability of governments in Canada to discriminate against each other’s companies and workers, whether by regulation, subsidy (here called “incentives”), or in procurement. Beyond the basic principle of non-discrimination, moreover, there are pledges to harmonize provincial regulations with one another, where the differences between them needlessly impede trade.

But there are “almost as many exceptions to the rules as there are rules.” Even the chapters devoted to freeing trade are riddled with limitations, caveats and exemptions, some perfectly sensible — regulation of safety, for example — some simply contradictions in terms, he writes.

Quick facts

  • The CFTA establishes free trade rules that will apply across the Canadian economy. Rules will apply automatically to all economic activity unless something is specifically excluded.
  • Internal trade represents about one-fifth of Canada’s annual GDP, or $385 billion. It also accounts for almost 40 per cent of provincial and territorial exports.
  • According to the Bank of Canada, removing interprovincial trade barriers could add up to two-tenths of a percentage point to Canada’s potential output annually. This is roughly comparable to the projected economic benefit from the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
  • The CFTA will replace the existing Agreement on Internal Trade (AIT), which has been in place since 1995.

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