Manitoba among provinces that stand to gain the most from gutting trade barriers, experts say

As calls grow for removing Canada's interprovincial trade barriers to help counter the effects of a potential trade war with the United States, some experts say Manitoba is among the provinces that stand to gain the most from any regulatory cuts.

That idea was borne out by a recent index from the Montreal Economic Institute, which in 2021 suggested that if those barriers had been completely eliminated in 2020, Manitoba's gross domestic product per capita would be nearly $5,000 higher in 2030 compared to a status quo scenario. Only Prince Edward Island and Newfoundland and Labrador would have seen greater gains, the institute said, with GDP boosts of $10,000 and $9,000, respectively.

"Each person in Manitoba could expect to be about $5,000 richer," Krystle Wittevrongel, the institute's director of research and one of the authors of the 2021 index, said in an interview this week.

"That's based on GDP. But more on a practical level, we would see people gaining from having better access to goods and services, and having greater access and more products available to them."

The idea of reducing barriers to trade between the provinces and territories isn't new, but has gained renewed attention in recent weeks, with federal Internal Trade Minister Anita Anand saying this week those barriers could all crumble within a month.

That statement followed an emergency meeting last week between Prime Minister Justin Trudeau and the premiers, with the ongoing threat of punishing new tariffs being imposed on Canadian imports by Donald Trump's U.S. administration bringing the issue a new sense of urgency.

According to a 2019 report from the International Monetary Fund, there are four categories of trade barriers in Canada: natural barriers like geography, prohibitive barriers such as restrictions on the sale of alcohol, technical barriers like vehicle weight standards and regulatory barriers such as licensing and paperwork requirements.

Anand has previously said removing existing barriers could lower prices by up to 15 per cent, boost productivity by up to seven per cent and add up to $200 billion to the domestic economy.

Canada took steps forward on the issue in 2017 when the provinces and territories, along with 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.

While all provinces and territories stand to gain from reducing trade barriers, Manitoba is among those that could benefit the most in part because it's so reliant on trade with other regions, Wittevrongel said — while larger provinces like Ontario and Quebec have big enough workforces to generate more of what they need within their own borders.

Liquor, ag — and parkas

Sectors like alcohol distilling could be among those that benefit in Manitoba from loosened regulations, with markets across Canada potentially opening up for Manitoba producers to have better access to sell outside the province, Wittevrongel said.

Another is agriculture, which could benefit from fewer hurdles in that industry, as well as from changes in the trucking and transportation sector, which plays a huge role in agribusiness, she said.

Dan Shin, an assistant professor in the University of Manitoba's supply chain management department at the Asper School of Business, said Manitoba could also benefit if manufactured goods — from auto parts to minerals to Canada Goose parkas — could move across provinces more readily.

While it's likely true Manitoba's agricultural industry would see some of the greatest benefits of reduced trade barriers, one expert said that may be easier said than done.

Barry Prentice, director of the Transport Institute at the Asper School of Business and a professor in supply chain management, said agriculture is one of the areas where change will be most difficult, in part because there's "so much entrenched resistance" to breaking down barriers that in theory exist to protect farmers.

"There's a lot of people [who] don't want these things to change. They're doing very well, thank you very much, from having the protection," Prentice said.

But the people who end up losing out because of unnecessary trade barriers are often the consumers, he said, who shoulder the end result: higher costs.

Assistant professor Shin said he thinks where Manitoba may have the most to gain is with people, by removing barriers to what's called labour mobility — the ability for people to work the same job anywhere in Canada, which can be made more difficult by differing regulations between provinces and territories. 

While Manitoba generally has low wages compared to other provinces, it also has a low cost of living — and Shin said he thinks increased competition from removing trade barriers could help drive wages up, making the province even more attractive to outside workers.

Shin also believes removing trade barriers would mean a net increase in jobs in Manitoba, in part because it could be cheaper to manufacture goods in Manitoba compared to in other provinces where wages are currently higher. That might lead to more manufacturing facilities setting up shop in Manitoba once eased barriers make that easier, he said.

"The reason the economy is going to grow is not because the products are going to get cheaper. I think it's because we're going to get more flood of these highly skilled workers that are going to be coming into our province," Shin said.

"I think it's going to bring our province to a similar level playing ground as other provinces as well."