Manitoba business hopes for interprovincial barrier reduction amid 'Buy Canadian' campaign

As Canada waits to see if the U.S. threat of 25 per cent tariffs on all imports comes to pass, Canadian officials encourage citizens to purchase domestic goods as a way to blunt the potential economic hit.

But Brock Coutts, an owner of the artisanal distillery Patent 5 in Winnipeg, isn't expecting the "buy local" campaign to have a significant impact on his business. 

"There will be some new customers that will find us," Coutts said, but the change "would be minimal." 

He hopes instead that the trade war might be the catalyst for change on another front — the reduction of interprovincial barriers for the sale and trade of goods, including alcohol.

The idea gained steam among Canada's premiers and federal officials last week, with Internal Trade Minister Anita Anand telling CBC that the removal could inject $200 billion into the domestic economy.

Coutts says a level playing field province to province could position Manitoba's distillers and brewers at the same selling opportunity as other Canadian small crafters. 

Small alcohol producers in other provinces like Saskatchewan, Alberta or B.C. can sell their products in Manitoba at the same markup rate as local distilleries and brewers, but that isn't reciprocal. 

"We're completely uncompetitive outside of Manitoba.… I do not get the same reduced markup in those provinces," Coutts said. 

"We're treated as a essentially the same as a multinational if we go into other provinces," said Coutts.

The rules on what liquor vendors can sell local craft products and commercial alcohol products for vary from province to province. In Manitoba, craft products have a 40 per cent markup, while the markup for commercial products is 153 per cent, Coutts says.

There are over 200 distilleries in west of Manitoba, but only two in the province, Coutts says, and that's because other provinces support local liquor businesses over fair interprovincial trade, making Manitoba products uncompetitive nationally.

"So we really don't have an opportunity to grow beyond Manitoba.... The economics definitely would favour selling into the U.S. versus Canada."

Coutts doesn't have high hopes that changes will happen anytime soon, and neither does Ryan Cardwell, professor of agribusiness and agricultural economics at the University of Manitoba. 

"These provincial trade barriers are kept in place by some very strong vested interests in each province," Cardwell said.

Canada took steps forward on the issue in 2017 when every province, territory and the federal government signed the Canadian Free Trade Agreement (CFTA), which created a formal and binding process to cut down existing trade barriers.

The deal applies to all interprovincial trade, but a detailed list of exemptions was negotiated for each province and territory — many of which still exist today.

"The federal government doesn't really have control over those … so all the provinces would have to get together and agree to reduce fees. And that's almost certainly not going to happen," said Cardwell.

Internal trade could drive economic growth and "partially offset" some of the damage done by trade barriers put in place by the U.S. government, Cardwell said, but interprovincial restrictions increase that province's profit on their goods.

"The political pressure on interprovincial trade barriers is very much in favour of keeping them," said Cardwell.

In terms of "buy Canadian," Cardwell says that's not an actual solution to the very real problem.

"The 'buying local' thing is really just politicians talking," he said.

"That won't do anything to change the [U.S. tariffs] threat."