A new HEC Montréal report argues that removing interprovincial trade barriers may not deliver the massive economic benefits Canada expects.
Importance: Why This Matters for Interprovincial Trade
Interprovincial trade barriers have long been framed as economic roadblocks, but not everyone agrees on their impact.
➡️ While Canadian leaders push for a unified domestic market to buffer against foreign shocks (like U.S. tariffs), the latest data casts doubt on the size of the reward.
➡️ Understanding the true costs and benefits of removing these barriers affects policymaking, regulatory reform, and business strategy across provinces.
By the Numbers: Interprovincial Trade Barrier Doubts
- $110B to $200B: Estimated annual gains from barrier removal — but HEC calls these figures “utopian” (source).
- 36: Number of CFTA exceptions in Quebec; only a few directly restrict economic activity.
- 70%: U.S. manufacturing productivity lead over Canada, creating a core barrier to competitiveness.
- 88.2% / 89.5%: Businesses not trading across provinces cited “no need or interest”, not regulation, as the main reason.
- 27.4% / 23.2%: Transportation costs were the top concern in interprovincial trade — not legal barriers.
The Big Picture: What It Means for Canada’s Economic Integration
The HEC report reframes interprovincial trade challenges:
✅ Productivity, not policy, may be the root issue. If Canadian businesses can’t match global efficiency, removing internal trade limits won’t make them more competitive.
✅ Structural factors like geography and market fragmentation pose more friction than CFTA red tape.
✅ The business community isn’t clamoring for deregulation — many don’t see interprovincial trade as necessary to begin with.
This complicates the narrative that harmonizing provincial rules alone will unlock massive growth.
Suggestions: Smarter Approaches to Interprovincial Trade Reform
1. Prioritize productivity reform
Rather than focusing solely on deregulation, governments should support innovation and workforce efficiency — key to boosting competitiveness across provinces.
2. Address transportation bottlenecks
Investing in infrastructure could remove one of the most cited barriers in interprovincial trade — distance.
3. Calibrate mutual recognition policies
Build flexible frameworks that allow provinces to retain safety-critical or context-specific rules — especially in sectors like trucking and agriculture.
🔗 Related Read: See how Nova Scotia is leading reforms — but with realistic expectations.