Broadcaster Terry David Mulligan recently conducted a publicity stunt to raise attention for what he considers an archaic federal law that is an obstacle to free trade between provinces.
The reality, however, is that there are plenty of legal obstacles to unbridled free trade.
The broadcaster and former Black Hills Estate Winery owner drove to Alberta May 13, media in tow, and had several photos taken of himself contravening the Importation of Intoxicating Liquors Act by carrying 11 bottles of wine across the B.C.-Alberta border.
Liberalized trade regulations between B.C., Alberta and Saskatchewan are contained in the New West Partnership agreement, but several protectionist laws and regulations keep British Columbia’s economy from enjoying the stimulus that economists tend to believe free trade provides.
The federal Agricultural Products Marketing Act, for example, restricts interprovincial trade in eggs and other supply-managed products.
Differences between federal and provincial meat-inspection programs mean that meat products cannot be shipped or transported from one province to another unless they’re prepared and stored in a federally accredited facility.
A provincially accredited slaughterhouse is therefore restricted to selling its products in its home province.
And despite the North American Free Trade Agreement (NAFTA), plenty of tariffs and duties remain to prop up businesses that would be harmed if consumers were free to shop at the same tax rate on both sides of the Canada-U.S. border.
One change that both free trade advocates and U.S. legislators, such as Senator Kirsten Gillibrand and Congressman Bill Owens, are urging is for Canada to raise the personal exemption for the value of goods that cross-border-shopping Canadians can bring back to Canada duty and tax free.
The issue is expected to be part of upcoming discussions that Prime Minister Stephen Harper has with U.S. President Barack Obama.
Legislation recently reintroduced in Congress calls for the U.S. to raise the value of goods that Americans can bring back duty-free from Canada after increasing the cost of a day trip to $1,000 from $200.
Canadians are not legally allowed to bring anything back from the U.S. duty free unless they are in that country for at least 24 hours. Then, the exemption is $50, not including tobacco and alcohol. The Canadian government’s exemption rises to $400 for a 48-hour stay and $750 for a week-long visit.
“Higher exemptions benefit consumers and, given that we have a strong dollar and will likely continue to have that for a while, it’s hard to see any downside for Canadian consumers,” said Simon Fraser University professor Alexander Moens, who specializes in American politics and U.S. foreign policy.
Moens co-authored a Fraser Institute report released May 10 that found U.S. congress representatives are skeptical of NAFTA and free trade in general.
Finance Minister Jim Flaherty shows no sign of budging on U.S. requests for Canada to change its exemption limits.
Last year, he responded to Gillibrand and Owens’ letter by writing that he continues to oppose hiking Canadians’ personal exemption for shopping in the U.S. because it would put Canadian retailers at a disadvantage because they must charge HST.
Raising the exemption would also cut into both federal and provincial revenue that comes from the HST.
While Moens supports hiking the personal exemption, he believes that a more important issue is for both Canada and the U.S. to co-operate and streamline regulatory regimes between the two countries.
Many products are more expensive in Canada than in the U.S. because of regulatory regimes that legally monitor safety standards on everything from orange juice to the bumpers that manufacturers put on cars, he explained.
Moens understands the need for Canada to have a regulatory regime that guarantees product safety when the products’ country of origin is a place, such as China, where safety standards are widely seen to be less rigorous than in Canada.
That’s not the case with the U.S., Moens stressed.
“Canada and the U.S. are such similar markets that we ought to be able to come up with a common regulatory regime where we reduce some of the costs,” he said.
“If you just raise the exemption limit, you’re giving an advantage to people in Abbotsford that people in Prince George can’t enjoy.”