Three Things that won't help us against Trump #1 Interprovincial Trade Reform UPDATED

So the Trump tariffs are on. And so is the Canadian resistance. Here are three things not to be too reliant on in the struggle: Ending interprovincial "trade barriers." The King. Europe.

1.  Interprovincial trade barriers.

I was heartened the other day to read the economist Mark Lee casting doubt on interprovincial trade-barrier reductions as a easy source of Canadian economic strength. 

In response to the threat of Trump tariffs, an old narrative about interprovincial trade barriers has risen from the dead. The idea that eliminating supposedly massive internal trade barriers would lead to thousands of dollars per year in gains for ordinary Canadians makes for great soundbites, but should we really believe that there is a free lunch to be had?

While politicians have claimed that Canada’s GDP could grow by up to $240 billion, those numbers simply don’t make sense based on what we know about interprovincial trade.

If anything, Mark Lee is too polite. A decade or so ago, for a research project I was associated with, I found myself reading background papers for "Tear Down These Walls," a Canadian Senate report on interprovincial trade barriers and the need to reduce them.  Some reliable economists, to be sure, argued there were gains to be made. But there were also claims that eliminating internal trade barriers could be worth "from $1 billion to $35 billion," which suggested the numbers were simply being pulled out of thin air -- much like today's $240 billion. 

Things that were being claimed as "trade barriers" back then included: provincial retirement funding programs, provincial pension regimes, provincial securities regulation, provincial minimum wage standards, provincial environmental and health regulations, and many more (virtually all?) aspects of provincial policy, even provincial subsidies to First Nations communities.

Province A required trucking companies to spend more on truck safety compliance than Province B did? Trade barrier! Province C required businesses to pay a more generous minimum wage than Province D? Trade barrier! Province X's climate change actions might cost a business more than Province Y's? Trade barrier.  

No doubt there are some provincial regulatory regimes that could be harmonized for greater mutual convenience. But it was pretty clear that the intention of many of those appearing before the Senate hearings was not to create national prosperity out of thin air so much to launch a full-frontal assault on the rights of provinces to use their legitimate authority to regulate business activities in the best interests of their citizens.  

There never have been tariffs on interprovincial trade in Canada, none since 1867. Indeed even our international free trade agreements in recent decades have been more about reducing regulation rather than reducing cross-border tariffs, which were vanishing by the 1960s. Trump's enthusiasm for tariffs is truly weird, and the American people need to give him a firm whack upside the head for inflicting them.

But the people who promise that granting your right to have your local beer supplier stock some obscure craft beer from the other side of the country will lead to national economic salvation? They have another agenda entirely. As a way of responding to the Trump tariffs, I suspect this interprovincial trade furor is a meaningless distraction. 

I'll get to 2) The King and 3) Europe in the next couple of days.

Update, March 5: CBC News recently offered an inept and cheerleaderish analysis of the interprovincial trade issue. One would think the CBC News might ponder why a unanimous ruling of the Supreme Court of Canada not long ago dismissed the outlandish claims that populate this piece. But no. (Sometimes I see the point of Pierre Poilievre's animus against the CBC. What a bushleague news operation it has become!)

Update, March 6:  Linda McQuaig takes up the interprovincial trade issue. 

Today, our business leaders seem, above all, determined to use the Trump crisis to win concessions they’ve long sought from Ottawa, like more tax breaks and deregulation.

Indeed, deregulation appears to be the main impetus for removing interprovincial trade barriers. 

And here's economist Marjorie Griffin Cohen interjecting a little common sense: 

The main reason businesses do not have more interprovincial trade is primarily because of the structure of the Canadian economy and its geography. ... Mostly those businesses that find significant barriers to trade cite issues related to geography – mainly the cost of transportation. 

In many cases, they [interprovincial "free trade" lobbyists] will focus on removal of crucial regulations that either protect people or allow provincial governments to promote their own economic and social policy objectives. Removing the policy tools of government undermines democratic control and makes it much harder to counteract the negative impacts of what Trump is now doing.

History of higher education, and federalism

Ontario colleges -- students from India provide more $$$ than Ontario

HESA higher education blog, back from summer break, documents how Ontario's college now base their budgets on operating as immigration facilitators instead of being, you know, a public education system educating the public.,

It turns out that Indian students not only contribute twice the amount of money to the college system, on aggregate, that Canadian students do, they also contribute slightly more than does the Government of Ontario.

Education, healthcare, seniorcare, housing, urban government -- is there any area of jurisdiction where the provincial governments are taking seriously the matters that are their basic constitutional responsibilities?  

Book Notes: Janigan on equalization and federalism

Several years ago, the journalist Mary Janigan began to take an interest in the historical background to some big questions about how the Canadian federation actually functions.  In Canada's History, back in 2013, I profiled her and a book of hers with the provocative title Let the Eastern Bastards Freeze in the Dark. It's about regional alienation and federal-provincial power struggles, and her analysis goes way back before the recent decades of conflict over Alberta's oil. It emphasizes early twentieth-century attempts to accommodate the rise of western Canada to a full(er) share in Confederation. It was a daunting topic -- she joked that her agent and publisher said, more or less, "a book about whaaat?..." -- handled in bold, vigorous and confident fashion.

Janigan, now with a Ph.D. in hand, is back with a second book, The Art of Sharing. This one is on another potentially daunting subject: the history of  financial tensions within the Canadian confederation. She goes back to the 1920s again, but the book highlights the history of equalization payments since their beginnings under John Diefenbaker in 1957. I still have not read it, but it gets a very positive review in the current Canadian Historical Review (requires subscription) from Douglas Brown.  Equalization, Brown notes:

was to proceed with a relatively generous program of funding by the federal government alone, drawn from tax revenues collected by the federal government in all of Canada, made to those provinces with a below average fiscal capacity. It did not require any formal agreement by any province, and the funds would be without condition. These principles continue to be applied today, despite the misinterpretations of political leaders such as Alberta Premier Jason Kenney. As Janigan so nicely puts it at the end of her book, in 1957, it amounted to an “unnoticed revolution”; providing no-strings cash to the poorer provinces enabled all provinces to afford national social programs, including health care.

If I understand Brown's summary correctly, Janigan demonstrates that Australia (and the United States), faced with regional disparities of their own, opted for centralization, placing health care and other fundamental social programs under federal jurisdiction. Equalization (and other joint-spending programs) enabled Canada to retain broad provincial jurisdictions, through federal funding rather than full federal control. 

History of Federalism

The litigation over Insite, the Vancouver safe drug injection site that operated under license from the BC Ministry of Health and that the federal government wished to deny its exemption from criminal prosecution, seemed like an old-fashioned federalism struggle.  Which took precedence, the privincial power over health and hospitals, or the federal power over criminal prosecution?

Wel, the Supreme Court said Insite can stay open despite the feds' urgent desire to shut it down.  That looks like a victory for provincial rights, no?  Paul Wells argues no, no really.  He argues the ruling does allow Insite to survive on the specific facts of its situation, but does not establish a freedom for any province to establish any safe drug injection site whenever it wishes and regardless of federal opposition. And he cannot resist linking to the journalists and commentators he thinks are dead wrong on this point.

Being wicked: it's not just for witches and musicals any more

It's Christmas in September. Or it feels that way.

Last Friday another new book delivered right to my doorstep.

This one even has a boffo title, which will make lawyers smile, and, it's to be hoped, pique the interest of other Canadians.

Viscount Haldane: 'The Wicked Step-father of the the Canadian Constitution' by University of Guelph professor emeritus Frederick Vaughan is one of this year's publications of the Osgoode Society for Canadian Legal History, once again in conjunction with the U of T Press.

Who was Lord Haldane? This is what the U of T press has to say:

Viscount Richard Burdon Haldane was a philosopher, lawyer, British MP, and member of the British Cabinet during the First World War. He is best known to Canadians as a judge of the Judicial Committee of the Privy Council (Canada's highest court of appeal until 1949), in which role he was extremely influential in altering the constitutional relations between the federal parliament and the provincial legislatures.

The latter is the wicked part. How so? Well, you could ask a constitutional historian or you could read the book. I recommend the latter. It's important history and a good story, made better by the depth of analysis and biographic context Vaughan provides.