Builder’s battle highlights barriers

Builder’s battle highlights barriers between provinces
The Montreal Gazette -Thursday, June-05 2003
Don Macdonald
Jocelyn Dumais has fought unsuccessfully for Ontario-Quebec worker mobility
2003-06Gazette
Jocelyn Dumais, president of the pressure group Association for the Right to Work, is fighting for an open border for construction workers between Quebec and Ontario. He calls the present situation ‘disgusting.’
The Ontario-Quebec construction fight is the highest-profile trade war in Canada. Builder Jocelyn Dumais says it’s hard to stay in business.
Fifth in a Series
MONTREAL – Don’t try to persuade Jocelyn Dumais there’s free trade among Canada’s provinces. For 11 years, Dumais has fought for an end to an Ontario-Quebec construction dispute that he says proves barriers between provinces can be just as nasty as anything dreamed up by international trading partners.

Dumais lives on the Quebec side of the border in Gatineau, but he runs a construction company in Ottawa. He says he’s tried everything to force an end to the long-festering conflict over construction-worker mobility between Quebec and Ontario that, he says, makes it all but impossible for his company to operate in his home province.

He’s taken to the courts, tirelessly lobbied politicians and even been arrested during protests against Quebec’s restrictions on construction workers and firms.

« The federal government signs free trade agreements with the United States, Mexico and Chile, but just outside Parliament we don’t have labour mobility. It’s disgusting, » said Dumais, president of a pressure group called the Association for the Right to Work.

The Ontario-Quebec construction fight may be the highest-profile internal trade war in Canada, but it’s far from the only one. Indeed, eight years after the country’s first ministers signed an interprovincial trade pact, there remain numerous barriers between provinces and critics complain governments aren’t showing the necessary commitment to make free trade work in Canada.
Interprovincial commerce often takes a back seat in the media to more glamourous international trade issues — and that’s understandable. Canadian trade with other countries has grown much faster than internal trade over the last decade and is worth more than twice as much.

But trade among provinces is nevertheless crucial for the Canadian economy, representing two million jobs and about 20 per cent of the country’s economic output.

Internal trade is especially important for growing small and mid-sized businesses that do not yet have the scale to export their products or services.
« For very large companies — the Nortels of the world — a lot of these so-called barriers are minor irritants that in the grand scheme of things don’t amount to much, » said Roman Staranczak, a senior policy analyst at Industry Canada. « But for small business … these are real barriers, not just in terms of dollar costs but also in terms of management time. »

Besides the direct impact of trade barriers on business, a perception outside Canada that the country’s internal market is balkanized among the provinces can hurt foreign investment, Staranczak said.

The Agreement on Internal Trade was signed by the provinces and Ottawa in 1994 and came into force the following year. Saved from the wreckage of the Charlottetown constitutional agreement, it was aimed at teasing out a tangle of regulations, barriers and discriminatory programs that at the time were estimated to cost Canadians about $6.5 billion annually, or about $1,000 a year for a family of four.

The pact has resulted in substantial progress in freeing internal trade across a wide range of economic sectors, said Andre Dimitrijevic, executive director of the Internal Trade Secretariat, the Winnipeg-based agency created to monitor implementation of the agreement.

For example, Dimitrijevic said bidding on provincial and municipal purchasing contracts has been opened to qualified suppliers from across the country. As well, the provinces have agreed to a code of conduct on incentives that prohibits poaching businesses from one another. And agreements allowing people to have their professional credentials recognized across the country have been developed in 42 of 51 professions, Dimitrijevic said.

He also noted that scores of interprovincial trade disputes have been settled thanks to the agreement. Of 172 disputes referred to the secretariat since 1995, only four have gone all the way to the final stage — a report by a panel of experts. The others have been addressed in one way or another, except for 10 that are still pending.
But critics of the Agreement on Internal Trade insist progress has been too slow. The provinces have proven apathetic about its implementation, missing numerous deadlines and leaving important work undone, they say.

Ottawa needs to take a stronger role in promoting internal free trade and the agreement needs to be beefed up with a stronger dispute-resolution machinery, critics contend.

« I’ve seen it up close and personal and it’s difficult for people to make complaints and get things resolved, » said Robert Knox, who oversaw the negotiation of the agreement as a federal official and was the first executive-director of the Internal Trade Secretariat.

« The issue seems to be the political commitment of some governments. They have to be committed to making it work or else it doesn’t. »

Knox, who now works as consultant for companies trying to resolve disputes, pointed to the Ontario-Quebec construction issue as an example of how governments can gum up the works.
The dispute, which dates back to the 1970s, stems from Quebec rules aimed at managing its construction labour market by strictly controlling workers and companies operating in the province. The rules have had the effect of keeping construction workers from neighbouring provinces out of Quebec’s market.

Ontario and Quebec have tried three times to resolve the dispute through bilateral negotiations and failed. Ontario, which says 5,000 Quebec construction workers stream into the Ottawa area each day under normal circumstances, lost patience and, rather than using the internal trade agreement, chose to impose retaliatory measures against Quebec construction workers and companies.

Quebec has responded with a complaint under the agreement on internal trade, but Ontario short-circuited that initiative by simply refusing to appoint a representative to sit on an internal-trade panel on the issue.

It’s been a similar story in the notorious Quebec margarine dispute. Quebec prohibits companies from colouring margarine to make it look like butter. Multinational food-processing giant Unilever is fighting the rule in the courts and Quebec has used that court battle as a pretext for refusing to name an expert to an internal-trade panel.

Even when panels have issued recommendations on disputes, provinces have been slow to act.
Peter McAuslan, owner of Montreal’s McAuslan Brewing Inc., has been both the beneficiary and the victim of Canadian internal trade barriers in recent years despite a marked improvement in beer trade in Canada since the days before 1992 when beer had to be brewed in the province where it was sold.

Trade restrictions between Quebec and New Brunswick led Moosehead Breweries Ltd. of Saint John to take a 45-per-cent stake in the smaller McAuslan operation in 2000 to get access to the Quebec market. Together the companies invested $10 million to build a 45,000-square-foot production facility in Montreal to accommodate Moosehead’s lager and McAuslan’s growth.

On the other side of the coin, McAuslan said Ontario makes it difficult for small breweries like his to set up their own distribution in the province. That means McAuslan beer ends up going through a massive Liquor Control Board of Ontario warehouse where it sometimes gets caught in bottlenecks.

« There are barriers and … you have to balance all these issues off before you proceed, » said McAuslan, who is also looking to export to British Columbia and Alberta.

McGill law professor Armand de Mestral argues the provinces have been far too slow in reducing trade restrictions and he called on Ottawa to use its constitutional powers to unilaterally strike down barriers through the courts.

« We’re all Canadians aren’t we? That’s the ultimate question, » de Mestral said. « Are we living in a Canadian market or are we living in 10 provincial markets? »
« I say the better way to go is to let the courts decide. »
The Montreal Gazette

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