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To trade or not to trade: Legal scholar Ryan Manucha on Canada’s quest to let booze (and other things) cross provincial borders

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Podcast & Video

This episode of Hub Dialogues features Sean Speer in conversation with 2022 Donner Book Prize nominee and legal scholar Ryan Manucha about his nominated book, Booze, Cigarettes, and Constitutional Dust-Ups: Canada’s Quest for Interprovincial Free Trade.

You can listen to this episode of Hub Dialogues on Acast, Amazon, Apple, Google, Spotify, or YouTube. The episodes are generously supported by The Ira Gluskin And Maxine Granovsky Gluskin Charitable Foundation and The Linda Frum & Howard Sokolowski Charitable Foundation.

SEAN SPEER: Welcome to Hub Dialogues. I’m your host, Sean Speer, editor-at-large at The Hub. I’m honoured to be joined today by Ryan Manucha, a Harvard law graduate and public policy expert whose first book is entitled Booze, Cigarettes, and Constitutional Dust-Ups: Canada’s Quest for Interprovincial Free Trade. The book has been shortlisted for the prestigious Donner Prize for the best public policy book by a Canadian. The prize will be awarded on May 18th. Ryan, thanks for joining us at Hub Dialogues, and congratulations on the book and its success.

RYAN MANUCHA: Thank you, Sean. It’s an absolute honour to be here with you.

SEAN SPEER: I have to ask the question that I suspect a lot of our listeners are wondering: how were you first introduced to the wonky yet important subject of interprovincial trade barriers, and what drew you to it?

RYAN MANUCHA: Of course. Yeah, no, I first came at it laterally from an interest in international trade. I spent some time at the Canadian embassy in D.C., and my undergraduate and graduate studies were focused on policy and law when it comes to international trade. And then I took the lens when I examined, because I was in the U.S. a fair deal, about how the U.S. and the 50 states navigate internal trade there. And then, paired with that in my international lens, I introspected on Canada and came across an incredible landscape and incredible story, which I was just so eager to sink my teeth into. And so many people since even before Confederation have worked so hard at the economic union and bringing together the second largest land mass into one federated state, and the economics of it.

I was just so interested, and I found that there was so much on it, but it was, I would call it, scattered across think tank memoranda and government reports and legal jurisprudence and legal journal articles and specialist journal articles throughout academia. And a couple of great books have also been written on the subject too, but bringing it together in one coherent narrative that allowed us to trace from pre-Confederation to the present. What’s the continuum been like? Who have been the actors? What have been the forces at play? But to answer your original question, it was an international U.S. lens culminating in an introspection towards Canada which was supremely interesting.

SEAN SPEER: Let’s go back to the beginning. How important was an economic union as an impetus for the Confederation project? How, in other words, Ryan, did Macdonald, Cartier, and Brown think about the state of Canada’s fragmented national market?

RYAN MANUCHA: That’s a really good question. Scholars all over Canada would point to different reasons why Confederation took place. And if you look back at the transcripts of the introduction of what became the Constitution Act, 1867, when it was introduced to the House of Lords in Great Britain, the conversation in part had to deal—and I’m not saying this was the only reason for Confederation—but there were varying customs laws. There was literally an arrangement of tariff systems internally, intercolonially, that were chalking up trade. Sir John A. Macdonald, at the time of Confederation, pointed to the provincialism and fiefdoms that existed. And yes, there were other reasons for Confederation, perhaps to have an entity that could bear debt to create a national railroad, but one of the important factors was liberating commerce. Because what had happened at that point in time too was the U.S. had just abrogated from the Reciprocity Treaty, meaning that the free trade, in quotation marks, wasn’t completely free trade; there were conditions between the U.S. and Canada that evaporated around the time of the U.S. Civil War. And so it was looking at how can we build inroads within commercial exchange as a way to generate growth in a time where sudden barriers went up, and fishing trade on the East Coast was brought to a halt, and when lumber, as it does to the present day, faced its own issues getting across the border.

SEAN SPEER: Yeah. So as north-south trade was put at risk, the fathers of Confederation started to conceptualize an east-west national economy.

RYAN MANUCHA: And it had happened twice in the 25 years. Because 25 years before the U.S. abrogation of the Reciprocity Treaty, the British government had done away with the imperial preferences that Canada was benefiting from, that was getting our lumber and our goods into Great Britain. That had been severed. That was a reason for the shift to the U.S., and then 25 years after that shift, the impact of the Reciprocity Treaty abrogation. And so twice within the lifespans of most of those Fathers of Confederation, fickle foreign trading partners had really done severe damage with these external shocks at the hands of Parliaments, or seats of government outside of Canada had done some damage. So Canada was no stranger to the importance of looking to build those commercial relationships within. So that was certainly on the top of the minds of the drafters of Confederation.

SEAN SPEER: Let’s stay on some key context before we drill into recent developments and possible sources of progress when it comes to freeing up trade across the national market. As a matter of constitutional law, what is Section 121 of the Canadian Constitution? What did the Fathers of Confederation think about it? And in broad terms, how has it evolved over time?

RYAN MANUCHA: Section 121 is what many summarize as the free-trade clause found in the Constitution; it says, and I’m paraphrasing here, “All articles, goods, manufactured or otherwise, shall travel free across the provincial borders.” And from that text alone, a very super literal understanding of that text was that was interpreted as free trade amongst the provinces. What was happening at the time pre-Confederation, one huge source of revenue for the colonies was tariffs—even on goods coming from another Canadian colony. And so if you look at the structure of the Constitution, it’s found in a section in the Constitution Act, 1867, which is related to the fact that so much revenue was being generated at the governmental level by these tariffs. And it was saying, “No more will we have this. It’s no longer going to be a system of tariffs. We’re going to have free trade.”

But also, it should be understood that in this context in 1867, what we now call non-tariff barriers to trade, like these invisible technical regulations that governments and provinces might throw up that amount to a trade barrier, that wasn’t really in the vernacular. Really when people thought about free trade in 1867 it was truly circumscribed to customs, duties, and tariff rates that were imposed, because that’s really how it was conceptualized at that point in time. So that was free trade to them. And so the traditional interpretation of Section 121 has mapped onto an evolution of what does free trade really mean. So in the first case that went to Canada’s highest court back in the 1920s on the meaning of this free trade clause, and in several cases subsequent over the next 20, 30 years, the conversation really didn’t need to—it was really a confusion about what does free trade mean given that 50 years ago it was really in an environment of tariff focus.

SEAN SPEER: Yeah, it’s a tremendous insight there, Ryan, and I promise we’ll come to the subject of what I’ve sometimes described as “the narcissism of small differences” that build up over time in the form of different provincial policies that may be well intended, that may serve some policy purpose, but that cumulatively come to impede the exchange of goods, people, and capital across the national market. But before we get there, let’s go from statesmen and constitutional law to beer drinkers. The Comeau case from 2018 looms large in the book. What’s the crux of the case, and what role does it play in your story?

RYAN MANUCHA: The crux of that case was you had a gentleman, Gerard Comeau, who went from New Brunswick to go to buy beer because it was cheaper on the other side of the border, and he brought back his haul as he did a couple times a year. And when he crossed back this time—this happened in 2012, the case didn’t get to the Supreme Court and the decision didn’t happen for six years—but he got dinged by the RCMP for having breached what was a New Brunswick law about bringing back personal consumption alcohol. And he had exceeded the provincial limit. Because of that, his beer was confiscated, and he was also assigned a fine. So the question was coming down to: how do we square this New Brunswick prevention against bringing beer purchased in Quebec against Section 121, which says that goods should be able to travel freely across provincial borders?

And it really comes down to, if you want to get it to an even higher level, how do we weigh our respect for provincial sovereignty against this desire to have a single economic union? To what extent should New Brunswick be able to come in—and in this case, one could make, as they tangentially did, that this was about the public health interest in New Brunswick; they argued that they have the most effective way to sell alcohol and prevent minors from getting their hands on it, to prevent against excessive consumption, what have you. They think that they have the best regime in place from a public health perspective. Let’s say that’s true. Should we defer to New Brunswick and that intent and put to the back burner this idea of free interchange? And it’s one that’s really stumped everyone. It goes to the crux of our federalist state.

SEAN SPEER: That’s a great point. I’ve made something of a joke about this particular instance, which involved the transportation of beer across provincial borders, but it applies more broadly to issues like occupational licensing and regulation of transportation and energy projects that involve transmission lines that cross provincial boundaries, and on and on and on.

Which brings me to a question that follows your point, because I suspect a lot of our listeners, Ryan, would support in principle the idea of a national economic union, but they probably also support the principle of subsidiarity. Why don’t you just talk a bit more about the tension between the goal of facilitating the free exchange of capital, labour, and goods across the country with the role for provinces to define their own political priorities, even if one agrees or disagrees with them?

RYAN MANUCHA: Yeah. Canada’s a massive country, and the scholar Daniel Silva described this very well in one of his most recent books, where he said Canada had superimposed upon it a constitution that was from a unitary England state. And here we are with Canada that’s far larger than England. We’ve got the wet, mild temperate west coast; we’ve got the cold north; we’ve got the plains of the prairies; and we’ve got the Canadian Shield. It’s a land of diversity of people, topography, economics. You name it. Political ideology, political preferences. So how do you accommodate that? Well, at the same time, in some estimates, there’s a policy of mutual recognition of harmonization that promises an abundance of GDP growth, and we can get into the numbers and the estimates, but to what extent is this a question of growth at all costs versus the sacrifice?

So in the case of Comeau, do we accept that we should allow New Brunswick to have its own regime for protecting alcohol consumption and guarding against excesses and preventing the purchase by minors? And that’s okay. We’re okay with a very strict regime where they’re going to detain you at the border because that’s just a difference where we’re willing to accept, or are we going to be more accommodating? When it comes to truck weights and sizes, the roads of the prairies are not the same as the roads of Ontario; it’s different soil, it’s different climate than the freeze and thaw of the prairies. So different materials were used. So what does that mean now from an interprovincial trade perspective? Do we force the same truck and the same weight to be allowed to travel across those roadways, even though, say, Manitoba’s roads get hurt a little bit more for the same amount of drive time than, say, Ontario’s?

When it comes to building codes, there’s an abundance of resources and labour as skilled in a particular fashion in one jurisdiction—say there’s an abundance of lumber in the forest in British Columbia, and there’s an appetite for higher builds using timber, and there’s an acceptance, there’s just a general appetite for that kind of build, and should that be accommodated? Whereas in Ontario, where you’ve got a stronger steel and cement industry, where perhaps just over the time continuum there’s been a greater preference and an understanding of how to use steel and cement, so that’s what’s been chosen.

SEAN SPEER: You’re being unfailingly fair, which is one of the things that makes this book so strong in terms of understanding these different issues and how they’ve contributed to a national economy which faces various forms of trade barriers. But I think critics would say, Ryan, that these provincial governments are using these arguments about public safety or the unique particularities of the provincial economy or the provincial environment or whatever. But the truth is, what’s really motivating these policy choices is the protection of provincial companies or workers from competition stemming from other provinces.

As someone who’s thought deeply about these questions, does that resonate with you? Are a lot of these provincial trade barriers fundamentally about impeding competition in favour of provincial players?

RYAN MANUCHA: That’s a great question, Sean. I don’t know if you grew up in a household or currently live in a household that consumes margarine. I certainly did and do. And if you go back to the early debates over the legalization of margarine, or oleomargarine as it was in the late 1800s, it’s fascinating to show, or fascinating to see rather, the loud voices coming from southwestern Ontario pushing for not just the banning or the taxing, but literally the attempts to criminalize its existence because it was a threat. And they will come out in the early parts of the day and they will have arguments about, “Oh, we don’t know what’s in margarine. It’s harmful to the consumer. It’s got all these materials and ingredients.” Then, as I think I read it as the day wore on, the arguments that seem to sound right moved into, “I’ve got a lot of dairy farmers in my riding. I’ve got a lot of dairy processing in my riding. This margarine’s a true threat”.

It played out on both sides of the border, with these pushes to discolour margarine so that it looked unappetizing. It’s absolutely—if you look at just taking that margarine case study, it’s easy to run and find an argument and cloak it in a public health issue, but it’s truly protectionism under a different language. You see this all the time. Like at an international level, Canada’s been at the wrong end of this debate so many times. Like at the WTO where our B.C. salmon gets held back from Australia’s markets under these arguments about safety and quality. It’s just a face to protect the Australian fishing industry. There was the issue about access to beef in Korea and the crazy rules about literally two different stores to go to for domestic beef and for foreign beef, and Canada having to face it.

So time and time again, we’ve seen that it’s—and the arguments there were cloaked in the Korea instance, were cloaked in confusion of the consumer protection. “They don’t know what they’re buying; you’re muddying Korean and Canadian beef in the same vat,” or something. What I’m trying to get at is—and in the case of New Brunswick’s alcohol, if you look at the tax revenue that New Brunswick was receiving and continues to receive off of alcohol, it is absolutely in the provincial best interest to maintain autonomy over that. The Alcohol NB, which is their provincial body that administers the sale of alcohol, the revenue that produces, that supports important government programming in New Brunswick. If that’s a threat then that’s an argument for them—I mean, the most extreme version of this should be, “Can you use the argument of protecting provincial revenue as a justification for a provincial barrier?” But absolutely, there are certain surface-level arguments, but when you dig deep, they’re not quite so legitimate.

SEAN SPEER: We’re talking here about some of the inherent tensions in terms of thinking about the trade-offs between a free or national market and the implications for provincial policy-making. Another tension, Ryan, is between what’s sometimes called an “originalist” versus the “living tree” interpretation of the Constitution. How does that play out when it comes to interprovincial trade barriers? Would you characterize the Comeau decision as an activist judgment? And if so, why did the originalist argument fail to resonate with the Supreme Court?

RYAN MANUCHA: I think it goes two ways. I think it was activist in the sense that in the decision to unlock unfettered free trade across the provincial barriers, the Supreme Court was saying, “This is not for us to decide. Politicians, the legislative branch of the government, you need to wrestle with this, and you can’t attempt to backend into this conclusion. There’s been a state of the nation that’s existed since 1867. We’re not prepared to go so far as to really dramatically change the fabric. This has to be something built out of consensus.” It would truly require, if you want to get into the Constitution, a constitutional amendment.

And perhaps the Supreme Court also saw the failure of the Charlottetown Accord, in which it was attempting to do a lot of things, one of which was to also address the issue of the economic union and bolster it, and with its failure, perhaps it was an—I don’t know, I wasn’t there in the room with the Supreme Court justices, but the fact that the politicians couldn’t come to the table and agree on an economic union clause and get that out to the people, was the court saying, “Democratic legitimacy is at threat if we go ahead and push this ourselves”?

On the flip side, I would say that on the Comeau decision, it’s incredible if you look at the jurisprudence in Section 121. We actually have come quite far from the first decision, which was this—it was actually related to alcohol in 1921 or around the era of prohibition, to the Comeau decision, where we actually have somewhat of an intelligible framework. We have a legal framework that can handle non-tariff issues. It could go much farther. There’s room for it to go farther without the Supreme Court believing it’s being activist.

And I think one of the most persuasive frameworks is argued by Professor Malcolm Lavoie at the University of Alberta who proposed a pretty impressive framework there. I think that it’s important not to lose sight of the fact that the concept of free trade around the world, let alone in Canada, has progressed significantly over the last hundred years. But if we look at the Comeau decision, perhaps at the core of your question being is it was an activist, it could have gone the other way. It could have been interpreted as being activist had they actually given 121 all of its might. And some historians suggest that 121 might be cabined to tariffs. If you look at the truly originalist perspective on what does it mean, it could go a lot of ways because you have to go back to what does free trade mean in 1867.

SEAN SPEER: Let’s take up the argument that we ultimately need to pursue the goal of reducing provincial trade barriers through democratic politics rather than judicial means. What do you think of that argument, and what are the limits of solving for these issues via politics?

RYAN MANUCHA: That’s a good question. And actually, the C.D. Howe Institute has very much been at the forefront of a lot of this discussion about where can we take the topic of interprovincial trade to the next step. And obviously, looking at is there a constitutional route, is there a political compact? And the constitutional route I think for the time being is so thorny that I think it’s probably not going to come through that for the time being. I think we will see on the margins—I think over the next 50 years, I wouldn’t be surprised to see a few more test cases before the Supreme Court really pushing the edges, and not even the Supreme Court, but lower courts really building out what is the judicial framework for tackling a trade barrier and how much farther can we strengthen the judicial apparatus but still remain within our understanding of what 121 should mean.

But it’s really going to be driven by political agreements. In the last 25 years, Canada is supremely unique in having arrived at this domestic ecosystem of free trade agreements. You don’t see this, I mean, Australia’s one data point we have where they have this internal trade arrangement, but nothing as sophisticated as what Canada has, which is effectively not only a WTO—which our secretariat sits in Winnipeg, unlike the WTO that sits in Geneva—but we have bilateral agreements. There’s one between Ontario and Quebec on the specific topic of construction, labour, mobility. And you also have a regional trade agreement. It’s the newest partnership trade agreement amongst the western provinces. And just like on the world stage, we have the WTO and then subsidiary arrangements like NAFTA or now the USMCA.

And you have the European Economic Union. It’s bringing that framework home, and it’s at these venues that I think that a lot of progress will be made on very technocratic issues. Like when it comes down to construction building codes, that is a supremely technocratic exercise where you have specialists coming into a room and understanding the tensions on changing rules. Your question being, “Is this the way forward?” I think for the time being, it is, I think it’s fraught with the fact that it all hinges on consensus and that any point, any province could step up and say, “You know what? I’m tired of this arrangement. We’re going to do our own thing. Thank you very much.” But I think that the data proves out the economic self-interest of every province of being party to a liberalizing arrangement like the CFTA or the newest partnership trade agreement.

It’s incredible too, that in the past 25 years it got renegotiated twice. It’s been strengthened time and time again. There are even trade disputes under the internal trade agreement that we have, like an apparatus to resolve disputes. There have been cases—you can suspect the usual suspects about dairy. And there was quite a few about labour mobility when it comes to accountants, and one interesting case in 2011 about a crane operator who was duly practising in Quebec and trying to bring their credentials to Ontario and getting stonewalled. And that being a venue rather than having a scenario like in the ’70s and late ’60s with the chicken and egg wars, where millions of eggs were rotting in fields because every province was erecting trade barriers. It was like a true trade battle, like the one that we saw between U.S. and China under President Trump.

SEAN SPEER: Let’s stay on the subject of a political resolution to these issues. Under that scenario, Ryan, what, if any, role is there for the federal government? Is it merely to use moral suasion, or can it utilize its spending power, or should it even be more assertive in terms of its role with respect to the national economy?

RYAN MANUCHA: If you look to the history of the negotiation of Canada’s trade agreements, the CFTA and what preceded it was the agreement on internal trade, and there’s some great books written about the negotiation process. It’s quite interesting in looking at the stakeholders. And the federal government and, actually, the province of Alberta have routinely been some of the strongest proponents of internal free trade. Those are the two camps that are really in favour. But it also comes to this issue of how does a federal government or any government allocate its political capital. It’s very difficult because the issues of free trade span across ministries, and you’ll have one issue, be it agriculture—and even within the ministry, if you’re trying to liberalize international trade or meat inspection—it could hit on a number of people’s jurisdictions within government, and they may not be in favour of the same solution.

It takes a lot of mustering, a lot, and I think I’ve been a proponent of the idea that we need to be thinking about a pan-Canadian trade summit in 2025 or 2026, where, quite frankly, and to be so blunt, you can have a bit of horse-trading around people’s interests and it becomes a multi-party, multi-stakeholder, and multi-issue negotiation, which is more likely to resolve in furthering the liberalization agenda rather than, if you think about it from a negotiation theory perspective, if it’s one issue and one person stands to lose and one person stands to gain, it’s difficult. You need to have many issues thrown in the pot. But the federal government has the power of the purse. It has the power of creating regional development agencies. It has an incredible abundance of ability to work in other jurisdictions that say Ontario or Nova Scotia couldn’t. And because of this role, it has one could say the duty to convene and to bring 13 leaders and 13 governments to the table; they’re uniquely positioned to help overcome collective action issues.

SEAN SPEER: Let me put one theory I have to you. Many interprovincial trade barriers are instances of policy or regulatory divergence that have built up over time and may be less of a case of hardened political disagreement and more about the “narcissism of small differences.” If so, is there a role for mutual recognition or something else to tidy up for these small and stupid, but sometimes highly costly policy differences?

RYAN MANUCHA: Mm-hmm. I mean, one example is if you get your car inspected in B.C. and say, “Ah, I’m going to move to Alberta, relocate. I’m going to get an Alberta driver’s license and Alberta plates.” You have to go get the car reinspected, even though if it was within the window, and we’d like to believe in Canada that there may be some issues of disagreement, but if you’re getting an inspection from B.C., it is an inspection from a Canadian government agency or body. Why duplicate out that problem? And part of that being or inertia, like, “Let’s come to the table.” There are obviously some stakeholders who would stand to lose from eliminating barriers. One could think about in that whole, in that salient car issue, like, the duplicate of inspecting, there’s still a fee to be earned in this. Someone’s gaining from the fact that you have to double up on this inspection, and it’s about government taking the initiative and really recognizing it’s got a role to play in overcoming misaligned incentives among economic stakeholders. 

Then you come to the issue about why is it that across Canada we have different limits on how high we can build with wood? Where it’s higher in B.C. and lower in Ontario. And there’s this great transcript from the Senate of Canada hearing on this issue where you have stakeholders from the cement and steel industry and stakeholders from the forestry industry. And essentially, it comes down to if you raise the limits for wood, that hits cement and steel. And it’s being able to—for no good reason other than—yeah, I mean, there might be some technical issues that could get resolved by changing some parts of the code elsewhere. And I don’t mean to oversimplify it that way, but a lot of it it’s vested interest. 

And it’s just maintained, and the political capital takes for a government of the day for—in a conversation with former premier Jason Kenney of Alberta, hearing about the difficulty with having—if you just want to get your slices of or your meat in a—unless it’s federally inspected and it maintained, but an abattoir in Alberta trying to get that meat over to a sandwich shop across the border in Saskatchewan. There’re being all these roadblocks, and this is where the CFDA comes to play in the regulatory roundtable. To what extent are we dealing with a legitimate technical issue? And to what extent is this—because, quite frankly, coming back to the beginning of this conversation, is a judge of Canadian Supreme Court of Ontario Court of Appeal lower court, are they well positioned to know, “Oh, these are the finer points in how you do meat inspection. These are the finer points on what should be in a first aid kit in these various provinces.” For a while, we had an issue. First aid kits weren’t harmonized across the country, and one would think that could be low-hanging fruit to bring some continuity across the country.

SEAN SPEER: I’ve often wondered, Ryan, if there’s not a role for the federal government to establish a process whereby we could effectively standardize provincial policies in a way that enabled us to compare them apples to apples to identify where there are these policy differences, and figure out if, as you say, they have underlying policy legitimacy. And if not to just work to some common model.

Let me just give you a couple of examples. You mentioned Alberta and Saskatchewan. A few years ago I looked, and a restaurateur had to renew his or her license every three years in Saskatchewan, I think, and it was every five years in Alberta, or vice versa. The rationale for those pretty small differences seems pretty weak as a matter of public policy. And you just think, “Just pick a number, pick three or pick five, or compromise on four.” But why is the restaurateur in Lloydminster, Alberta and Saskatchewan having to manage different timeframes to renew his restaurant license?

Or another example, and this one’s really interesting because it resided in different statute or regulations and used different language, so it made it difficult even to discern it. But under the labour codes of Albert and Saskatchewan, someone working in the province who left his or her job to go train as a reservist had job protection if he or she had worked for 14 weeks in one province and 18 weeks and the other province. And you just think the policy rationale for those minor differences just seems, again, so weak. Just pick a number.

Those two small examples, if you aggregate them up across a wide number of policy areas, could be significant. It’s made me think about how many of these small differences exist not so much because policymakers are deeply committed to them, but that it’s just difficult to even identify them because, as I say, they find themselves in different statutes across provinces, different regulations, they use different language.

I’ve thought that something similar to the Canadian Institute for Health Information could help to standardize our understanding of these policy differences and, in so doing, enable the horse trading that you rightly argue is probably going to be necessary for some resolution.

RYAN MANUCHA: Yeah, absolutely. And I mean, I think data aggregation on this—I think the Canada West Foundation had a piece that came out not too long ago where they were encouraging this idea exactly what you say of this central repository, central data. And I think the most recent federal budget, there is this idea of some place where you can essentially report trade barriers to. And I think that’s important, but I think, and this is something that the C.D. Howe Institute has been working on with them as not only should we be able to identify these barriers and bring attention to them so you can get some horse trading—or it may not even be known like, a government agency in a province and preference may not even realize they’re disharmonious. It’s just like, “Oh, that’s interesting; that’s a quick fix.” 

But it’s also, especially for the things that are a little bit more difficult, and especially when it’s about someone in Alberta who’s not a voter in Saskatchewan, the political theory being like, “I can’t vote for that person. I can’t vote for that change.” You have this dispute resolution mechanism in CFTA where you can take that province to court and say, “Hey, that’s a trade barrier. That’s discriminating against me on the basis of the fact that I’m not from that province. This is violating those principles of free trade.” The problem with the way the CFTA is set up is that it’s very costly to engage with that apparatus, and at the first instance anyways, even if you’re right, there’s no possibility of damages.

So there has to be an aggregation of cost to justify engaging a lawyer to take this case before the CFTA, and that’s why, when you see it used it’s usually used by, like, accountancy organizations where they have financial means to engage in a multi-year fight under the CFTA and they often come out winning. It’s crazy the win rate at the CFTA is not what you think it should be. In a sense, it’s almost always in favour of the complainant. It’s almost never in favour of the disputant, meaning that these are almost always trade barriers that get resolved or that get attacked; legitimate trade barriers. But absolutely, at the first, if nothing else, what you just described as a trade agency.

SEAN SPEER: A penultimate question about what you alluded to earlier: why don’t you unpack it a bit? What is the economic upside of a freer national market? What would be the benefits to Canada’s economy?

RYAN MANUCHA: So in a recent paper I co-authored with Professor Trevor Tombe at the University of Calgary, we looked at what about this concept of mutual recognition, which Sean you’ve been describing, and to describe it, it’s essentially recognizing the rules and the regulations of another province. So if a product gets certified or a person gets a license or a credential in province A, then that should be recognized by province B. And the upside, the calculus is on the order of $200 billion per year, up to 7.9 percent boosts the GDP per year. And mind you, those are big numbers, and one would say, “Oh, this mutual recognition, this seems in a post-pandemic era, where we’re all scrambling for growth, where inflation is rampant and where we’re trying to friendshore, like this is a perfect alignment. This is the perfect time.” And then we come back to the questions we started with at the beginning of this conversation, which is provincial autonomy, sovereignty, subsidiarity, and how much are we willing to give up to achieve that up to 8 percent boost GDP?

SEAN SPEER: Final question. Good segue. Are you optimistic about progress?

RYAN MANUCHA: I am. I think the stars are aligning. I think that Chrystia Freeland’s doctrine of friendshoring is pressing, and I think it’s timely, and I think it’s appropriate, just like we experienced with the abrogation of the Reciprocity Treaty, just like we experienced when we lost imperial preferences. If we look into the history of Canada, this is an opportunity for us. Where you see global isolationism in ascendancy, the U.S. is pulling back, to think about our domestic markets as an avenue for untapped growth that we have complete control over, where we’re not subject to the whims of a foreign power. And we all march behind the same flag in the Olympics and fight with the same uniform in times of war. Maybe there’s something to be said about what our citizenship should mean about unlocking that source of growth.

SEAN SPEER: Well, if listeners want to understand how those locks came into place and some of the benefits of unlocking them, I’d encourage you to read Booze, Cigarettes, and Constitutional Dust Ups: Canada’s Quest for Interprovincial Free Trade. Ryan Manucha, thank you so much for joining us at Hub Dialogues.

RYAN MANUCHA: Thank you so much, Sean, this was a real pleasure.

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