Interprovincial Trade Negotiations &
Agreements
Contents:
On July 18, 1994, the 13 First Ministers of the federal,
provincial and territorial governments in Canada signed the
Agreement on Internal Trade which came into effect on
July 1, 1995.
The Agreement aims to reduce barriers to the movement of
persons, goods, services and investments within Canada. It
is supervised by a Committee on Internal Trade (CIT) made up
of Ministers responsible for internal trade of the signatory
governments.
The
Agreement consists of general rules – set out in a Chapter 4
– followed by sectoral or area Chapters specifying how the
general rules apply.
The general rules are:
- Non-discrimination - Establishing equal
treatment for all Canadian persons, goods, services and
investments.
- Right of entry and exit - Prohibiting
measures that restrict the movement of persons, goods,
services or investments across provincial or territorial
boundaries.
- No obstacles - Ensuring each government’s
policies and practices do not create obstacles to trade.
- Reconciliation - Providing the basis for
eliminating trade barriers caused by differences in
standards and regulations across Canada by
harmonization, mutual recognition or other means.
- Transparency - Ensuring information on each
government’s measures is accessible to interested
businesses, individuals and other governments.
The general rules are subject to a general exception for
“legitimate objectives”. “Legitimate objectives” include
human, animal and plant health and safety, and consumer and
environmental protection.
Chapter 9 of the Agreement on Internal Trade covers trade
in “Agriculture and Food Goods”.
The
current scope and coverage of Chapter 9 is limited. It
clearly covers five technical measures that have now been
largely addressed (game farmed/ranched animals, blueberry
maggot control measures, UHT/sterilized milk standards,
semen licensing and livestock bonding and licensing) and
five so-called “technical
barriers with policy implications” that were
subsequently added in 1997.
These latter measures include federal Ministerial
Exemptions for bulk shipments of horticulture products and
the absence of a federal Canada No. 1 small potato grade;
standards for dairy blends and imitation dairy products;
coloured margarine restrictions and other margarine
standards; and fluid milk standards and distribution.
Also of significance for the agriculture and food sector
is Chapter 10 which sets out rules and commitments on
measures related to trade in alcoholic beverages. The
agriculture, aquaculture and food sector is also impacted by
a number of so-called "horizontal" Chapters that apply to
all sectors, including Chapters on government procurement
(Chapter 5); investment measures (Chapter 6); and dispute
settlement (Chapter 17).
Because of
its limited coverage, and other ongoing policy reviews at
the time, the Agreement on Internal Trade’s agriculture and
food goods Chapter included an obligation for agriculture
ministers to complete a review, to achieve “broadest
possible coverage and further liberalizing of internal
trade”, by September 1997.
Completion
of this review remains outstanding a decade later.
In
February 2004, at a Council of the Federation meeting hosted
by British Columbia in Vancouver, provincial Premiers agreed
on a
Workplan to revitalize the AIT and reduce barriers to
trade and investment across Canada. The federal Prime
Minister and the federal Minister of Industry subsequently
also supported and endorsed this Workplan on behalf of the
federal government.
As part of
that Workplan, it was agreed that Ministers of Agriculture
should complete the outstanding review to enhance the scope
and coverage of the agriculture and food Chapter no later
than July 2005.
At their November 2005 meeting, following national and
provincial industry consultations, Ministers agreed to
expand the coverage of Chapter 9 to capture all technical
measures. This revision to the Chapter would significantly
clarify and broaden its scope by extending the general rules
of the AIT to all:
-
sanitary
and phytosanitary measures;
-
technical
regulations and standards; and
-
conformity
assessment procedures related to these measures.
Unfortunately, consensus could not be reached on
recommendations on a final text. One party also proposed
the exclusion of measures already covered by the Chapter.
Officials were directed to undertake further work and report
back to Ministers.
At the next, March 2006 meeting of Ministers of Agriculture,
consensus was still not able to be reached on a final text
or the exclusion of items already covered.
Some Ministers, led off by British Columbia, expressed
concern with the continuing delays in completing the review
to broaden the coverage of the Chapter. These Ministers
indicated their intention to proceed with a trade
enhancement arrangement (TEA), as
provided under article 1800 of the AIT, as an
alternative way forward to ensure concrete progress.
British Columbia’s Minister of Agriculture and Land has
taken the
lead on agriculture and food trade in order to move
forward the review of the Agreement on Internal Trade’s
Chapter on agriculture and food goods (Chapter 9) and
promote consensus on enhancing internal agri-food trade.
An ‘Interim Agreement on Internal Trade in Agriculture and
Food Goods’ has now come into effect between British
Columbia, Alberta, Saskatchewan, Manitoba, Prince Edward
Island and the Yukon. It is posted on the Internal Trade
Secretariat website under
Trade Enhancement Arrangements.
Between the signatory jurisdictions, the agreement has the
effect of expanding the scope and coverage of Chapter 9 of
the AIT to include all technical measures. The agreement is
open to signature by other federal, provincial and
territorial governments at any time. At such time as all
Ministers sign, the Agreement on Internal Trade itself could
be amended.
The elimination of interprovincial barriers to trade,
investment and labour mobility across Canada that are
hampering growth, investment and job creation is a priority
of the government of British Columbia.
The Province has taken a leading role in the Council of
the Federation to promote the strengthening of the Agreement
on Internal Trade in all areas.
The Province is also working with like-minded governments
to reach agreements to reduce barriers to trade and
investment that go further than the current AIT. A key
initiative in this respect is the comprehensive
British Columbia – Alberta
Trade, Investment, and Labour Mobility Agreement (TILMA)
signed in April 2006. It comes into effect on April 1,
2007.
The TILMA is a single, comprehensive agreement on a general
set of rules between Alberta and British Columbia. There
are no specialized sectoral Chapters, such as for
Agriculture, Energy, Investment, etc. (as there are, for
example, in the national Agreement on Internal Trade).
There is also a general exemption for measures that serve a
wide-range of defined “legitimate objectives” including
health and safety related measures. For further certainty
or for some other measures that may be inconsistent with the
TILMA rules, there is a listing of exceptions to the
Agreement, as well as a listing of “transitional” measures
to be addressed and resolved over the next two years.
The Ministry strongly supported the province’s negotiation
of this trade and investment facilitation agreement with
Alberta based on our consultations with, and comments
received from, the agriculture and food sector on
interprovincial trade issues over the years.
The sector has consistently raised two main concerns
respecting interprovincial trade in Canada:
-
About technical barriers to trade and investment
-
About the lack of a level playing field.
TILMA represents the strongest response to date to these
longstanding concerns of the agriculture and food sector.
TILMA is important both in its own right between Alberta and
BC, and as a model for the rest of Canada.
The province has removed the last vestiges of provincial
legislation that once restricted the production and sale of
vegetable-based processed foods that are similar to or
contain ingredients or products made from cow’s or goat’s
milk.
Dairy analogues and blends, or "imitation dairy
products", are made from soy or canola oil, with or without
dairy ingredients, to make a processed food. An example is
soy loaf, which can be used in place of cheese made entirely
from cow’s or goat’s milk. Such products may be sought by
some consumers for a variety of personal dietary reasons.
Historically, the province’s Milk
Industry Act prohibited the production and sale of
imitation dairy products, except with permission of the
Minister of Agriculture. The requirements have not been
enforced since about 1995. Legislation providing for the
repeal of provisions relating to imitation dairy products
was enacted in 1997 (Milk Industry Amendment Act, 1997),
but was never brought into force by the previous government.
The present government is committed to eliminating
unnecessary red tape and redundant regulations. Because
federal regulations require food products to be safe and
clearly labeled, there is no
need to retain these provincial dairy regulations. Having
them on the books, even if they were not enforced, was
simply creating uncertainty for industry, retailers and
consumers alike.
The repeal of the imitation dairy product legislation is
one of a number of reforms to dairy market regulations since
2001. These include:
-
The Food Safety Act, under the responsibility of
the Minister of Health Services. Passed in 2002, it
repeals the Milk Industry Act and the Milk Industry
Amendment Act, 1997 and provides the dairy industry and
consumers with new, up-to-date outcome based regulations
equivalent to the National Dairy Code.
-
An
On-Farm Food Safety Fund to promote on-farm food safety
in conjunction with the new regulations.
-
A
Dairy Industry Development Council to promote dairy
research and education.
Formal
consultations with British Columbia dairy industry and other
stakeholders on these reforms were held in January 2003, and
informal consultations continue.
B.C. and Alberta have also worked through the
federal-provincial Committee on Internal Trade to try to get
Ontario to drop its restrictions on dairy analogues and
blends, which restrict sales of products
made or packaged outside Ontario, and violate the Agreement
on Internal Trade.
In 2001 Ontario introduced legislation that would have
ended its restrictions. However, it repeatedly amended that
legislation to delay implementation. In response to the
postponement announced on April 2004, Alberta and British
Columbia’s ministers responsible for internal trade
requested establishment of a Dispute Resolution Panel under
the Agreement on Internal Trade to address the issue.
Manitoba and Saskatchewan subsequently joined in as
interveners in support of the complaint.
In
November 2004, the Dispute Resolution Panel
ruled in favour of BC's and Alberta's complaint. The
Panel recommended that Ontario follow through on the repeal
of its challenged legislation.
Ontario
repealed the offending legislation in January 2005. However
concerns remain given Ontario’s unexpected introduction of
new regulations which specify dairy product content under
the Ontario Milk Act.
