As Prime Minister Mark Carney prepares to sit down with Canada’s premiers, interprovincial trade barriers are once again in the spotlight. The federal government has signalled urgency, but economists and business leaders caution that Ottawa’s influence is limited and that the real decisions lie with the provinces.
Over the past year, internal trade has moved higher on the political agenda, driven by economic pressures and renewed concern about Canada’s productivity. Yet those watching the file closely say expectations should be tempered.
“It’s clearly more urgent than it was before,” said Concordia University economist Moshe Lander. “But urgency doesn’t automatically translate into breakthroughs. There’s nothing to suggest we’re close to resolving this.”
In June of last year, the federal government expanded the Canadian Free Trade Agreement, removing several federal-level restrictions on trade between provinces. However, much of that effort focused on procurement rules, an area that accounts for only a small share of the barriers businesses face.
According to Ryan Greer, senior vice-president at Canadian Manufacturers and Exporters, most of the obstacles that still slow internal trade exist outside Ottawa’s control.
“The biggest barriers are provincial,” he said. “That’s where the hard work still needs to happen.”
One of the most notable developments came in November, when governments across the country signed the Canadian Mutual Recognition Agreement on the Sale of Goods. The agreement allows products legally sold in one province or territory to be sold elsewhere in Canada without additional regulatory hurdles.
The principle is simple: different rules can coexist, as long as governments agree they meet comparable standards.
“Every jurisdiction thinks it has the best rules,” said Corinne Pohlmann, executive vice-president of the Canadian Federation of Independent Business. “Mutual recognition is about agreeing to respect each other’s systems instead of forcing everyone into one model.”
The agreement covers a wide range of products, from vehicles and machinery to electronics, furniture and clothing. But it stops short of including some of the most sensitive sectors food, alcohol, tobacco, cannabis, plants and live animals.
Those exclusions matter. Industry groups argue they limit consumer choice and blunt the impact of the deal. Wine producers, for example, say Canada’s fragmented alcohol rules continue to undermine the idea of a single national market.
There is movement on that front. Most provinces and territories have signed a memorandum aimed at allowing direct-to-consumer alcohol sales across provincial borders starting in May. Under the plan, consumers would be able to order directly from wineries, breweries or distilleries in other provinces.
But the change won’t apply to restaurants or retailers, which must still buy through provincial liquor authorities. And even for consumers, economists warn the effects will take time.
“Supply chains don’t pivot instantly,” Lander said. “Contracts, distribution networks and relationships are built over years, not weeks.”
Transportation is another area where progress and frustration coexist. Ontario Premier Doug Ford recently pointed to a sharp increase in Ontario-made goods moving through Port Saint John, citing stronger east–west trade links.
Yet trucking the backbone of domestic freight remains governed by a patchwork of provincial rules. Weight limits, tire requirements and safety standards can vary from province to province, creating inefficiencies at borders.
For retailers, those differences come with a price tag.
“When rules don’t line up, trucks may have to stop, switch equipment or even reload,” said Matt Poirier of the Retail Council of Canada. “That might work locally, but nationally it quickly becomes inefficient.”
Provincial leaders agreed last summer to try to harmonize some of those standards. Still, full alignment is a distant goal. Climate differences complicate matters, with provinces like Quebec enforcing stricter winter requirements that may not make sense elsewhere.
Infrastructure adds another layer to the problem. Canada’s road network has long been designed for north–south trade with the United States, not for moving goods efficiently between provinces.
“In many cases, it’s easier to trade with the U.S. than with another province,” Poirier said.
Labour mobility is often cited as one of the most frustrating internal barriers. The federal government attempted to address this through the One Canadian Economy Act, which includes measures to reduce federal restrictions on where Canadians can live and work.
But the reach of that legislation is narrow. It applies mainly to federally regulated sectors such as banking, telecommunications and railways. Most trades and professions remain subject to provincial certification systems.
“That web of regulation is still there,” Pohlmann said. “If you move provinces, you often need new certification, and that can take months.”
Some provinces, including Ontario, have introduced faster pathways that allow workers to start sooner while paperwork is processed. Even so, businesses say the broader system remains slow and fragmented.
As premiers gather with the prime minister, there is broad agreement on the goal: a more unified Canadian market. But consensus on how to get there and how much compromise provinces are willing to accept remains elusive.
The federal government can set the tone, experts say, but without sustained provincial cooperation, Canada’s internal trade barriers are likely to remain a persistent drag on economic growth.
