Some internal trade barriers help the N.W.T., premier says amid push to drop them

Political leaders in the N.W.T. say the territory supports efforts to remove trade barriers within Canada, though it may mean the territory has to "give up some things" when it comes to supporting local businesses.

Speaking on Monday, N.W.T. Premier R.J. Simpson said the territory is in a different position than other parts of Canada and support for local businesses through an internal trade barrier — the N.W.T.'s business incentive policy — is very important. 

That policy gives preference to N.W.T. businesses bidding on government contracts.

"We've seen companies come from the South, bring all their equipment, all of their groceries, their labour, come up here, perform a contract, and then head back south with all the money and leave nothing in the territory," said Simpson.

"But that said, there's a national push to really break down barriers and we need to be part of that. So we're going to have to likely give up some things." 

The U.S. government's tariff threats against Canada have brought the issue of streamlining internal trade to the forefront. 

At the end of January, Canada's Committee on Internal Trade (CIT) held an emergency meeting called by N.W.T. Minister Caitlin Cleveland, who is chairing the committee this year. 

In a statement to CBC News, Cleveland said she is actively working with provinces, territories, and the federal government. 

"Addressing these challenges is critical to improving economic opportunities, enhancing supply chain resilience, and reducing costs for businesses and consumers," said Cleveland. 

She said enhancing labour mobility and northern food security, identifying areas for improvement within the Canadian Free Trade Agreement (CFTA), and a trucking pilot project to improve movement of goods are key priorities for the territory.

She also said that for the N.W.T., infrastructure "remains the most significant barrier to internal trade." 

"Limited road, rail, and port access create logistical challenges that persist even within the framework of trade agreements," said Cleveland.

Matt Halliday, executive director for the Yellowknife Chamber of Commerce, said his organization is beginning to have discussions about this with its counterparts across Canada including with the Canadian Chamber of Commerce.

"We're at this time in Canada where we have brought to the forefront that we need to have better communication, better trade across Canada, taking a look at opportunities where they make sense and having that open discussion," said Halliday.

Procurement contracts

Business Council Of Alberta chief economist Mike Holden says that with any trade agreement there are wins and losses. For example, certain barriers may benefit people in some cases, such as when local companies have preferential access to bid on government procurement contracts within their own province or territory.

"If you open up bidding to people from across the provinces and territories, that might undercut some local business — but it would have a broader positive effect across the country," said Holden.

Holden said that getting provincial and territorial leaders at the same table agreeing on issues is what's proven difficult in the past, when it comes to trade barriers.

"There are so many of these little rules. So first of all, you need to find them all and get rid of them all. And then at the same time, you'd have to accept in most cases that you're implementing a new set of rules that existed in another province before," said Holden.

Some other barriers to trade include different regulations across provinces and territories, such as weight limits on freight trucks, or administrative work required for businesses operating in multiple jurisdictions.

The Canadian Free Trade Agreement (CFTA), signed in 2017 by every province, territory and the federal government, 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 — including 19 for the N.W.T., such as giving the territory the right to limit market access and the right of entry and exit in certain sectors. Currently Quebec has the most exceptions with 35, and Alberta the least, with six exceptions.

Trade barriers and GDP

Removal of trade barriers could result in rises for Canada's overall GDP and for individual provinces and territories, according to a 2019 report from the International Monetary Fund. 

The analysis found that N.W.T. and Nunavut combined could see a 7.5-per-cent rise in GDP and a $127-million increase in 2022 tax revenues. 

The focus on trade barriers comes at a time when the N.W.T.'s GDP has been dropping. It was one of two jurisdictions in Canada to see its GDP drop between 2022 and 2023 due to the state of goods-producing industries such as oil, mining and gas. 

Roughly half the territory's trade is done within Canada, and a majority of the territory's goods and services come from the provinces, according to 2023 data from Statistics Canada.

Data from 2021 shows that mining project services, fuels, food and non-alcoholic beverages represent the majority of imports to N.W.T., with most coming from Alberta and Ontario.

The 2021 numbers also show that the N.W.T. exported around twice as much in goods and services internationally than it did to other parts of Canada.