Trading observations

FROM THE CEO'S DESK

Barry Senft, CEO, Grain Farmers of Ontario

WHILE I’M NOT a trade expert, trade decisions are interesting to me because we rely so much on trade for our living. I’m sure many of you take an interest for the same reason.

About 20 years ago, when I was working out of Regina, I was in Ottawa and ran into an old school friend who was working for the Saskatchewan government. While we were chatting, he mentioned he was in Ottawa working on reducing interprovincial trade barriers.

A lot has changed over the past two decades — but clearly some issues take a while to resolve.

I’m sure most of you heard about the Supreme Court case which upheld the right of provinces and territories to restrict the importation of goods across their borders — as long as the primary goal is not to impede trade. So tariffs are not allowed, but a limit on quantity is. The case originated from a New Brunswick man who in 2012 had been fined for bringing too much beer and alcohol back from Quebec.

Most provinces restrict the amount of alcohol that you can bring across boundaries. Officials say it’s how they control consumption under the guise of public health. But I believe it really comes down to a taxation issue and the government’s need for more money. A limit on the amount of alcohol you can import is really just a tariff of another kind.

Given the disparity in prices from province to province, it’s not surprising that people who live close to provincial boundaries will try to opt for the better deal. It’s even more common for people in Ontario to take advantage of an extended two-day road trip to the U.S. to bring back a bottle of liquor or a case of beer without duty. At least in that instance, most of us are aware of what we are allowed to get away with.

Interprovincial trade rules have always been a bit obscure. Until you run into a problem yourself, or something like this New Brunswick case makes the news headlines, you might not even realize what is on the books. For example, during my ‘early years’ in Saskatchewan in the 1960s bread couldn’t pass provincial borders — whatever was sold in Saskatchewan had to be baked in Saskatchewan.

The Canadian Free Trade Agreement (CFTA), which came into effect nearly a year ago, sought to “reduce and eliminate, to the extent possible, barriers to the free movement of persons, goods, services, and investments within Canada and to establish an open efficient, and stable domestic market”. However, provinces negotiated exemptions which protect their specific interests and other details are still being worked on. An Alcoholic Beverages Working Group is expected to issue their report by July 1 with recommendations on how to enhance trade of alcohol within Canada.

There are those who were relieved that the Supreme Court made its decision the way they did. Those within the supply management sector want to retain their production controls. Several groups were concerned about how it could impact the production and distribution of cannabis and the regulations each province has developed. And there have also been concerns over the impacts of provincial environmental controls.

I’m not taking sides on this trade issue or passing judgment on those that have taken a position. I’m just making an observation — it is interesting that we are having this national debate about free trade and protecting provincial interests at the same that we are negotiating and signing trade deals with the United States, Europe, and Asia and pursuing a deal with China. I’ve stated many times, international agreements which ensure freer access to key markets are important to the future growth of the agricultural industry. It seems a bit hypocritical to me that we support protectionism within our own country, and yet demand openness from others.

Change is often difficult to implement and even harder to accept when long-standing practices are involved. But we need to challenge the way we do business in Canada if we truly want to establish free trade within our borders and beyond. •

About Barry Senft 70 Articles
CEO, Grain Farmers of Ontario