On June 6, Prime Minister Mark Carney tabled his much-anticipated “one Canadian economy” legislation that purports to help the government build nation-making projects and tear down internal barriers to trade. He hopes the House of Commons will help him fast track the bill by June 20 or work overtime into the summer recess.
As a general rule, we should raise an eyebrow anytime a government uses the threat of an alleged national emergency to grant themselves sweeping new executive powers. On first reading, this is certainly the case with both parts of Bill C-5, whose full title is An Act to enact the Free Trade and Labour Mobility in Canada Act and the Building Canada Act.
The federal move echoes recent legislation in Ontario and British Columbia that similarly concentrates power in both premiers’ offices to advance major projects by bypassing the regular processes for environmental assessment and other consultations. These provincial power grabs have also been done in the name of responding to Donald Trump’s tariff war.
Federally, Ecojustice has outlined the worrying overreach and vagaries of the Building Canada Act, which provides a legislative framework for rapidly approving provincial projects with some nation-building potential. The bill, and probably a few of the projects it hopes to fast-track, are destined to end up in court.
For example, the “lack of required criteria and public process for deciding whether projects are in the national interest risks incentivizing backroom politicking and closed-door negotiating with power corporations, especially given the value of being listed,” writes Ecojustice.
Bill C-5 seems open to situations where a project that violates the Species at Risk Act is still approved. Other adverse impacts, like habit degradation or increased greenhouse gas emissions, may be subsumed to the “national interest” for fast-tracked projects. Just trust us, says the bill.
We have similar concerns about overreach in the first part of Bill C-5, regarding interprovincial trade and labour mobility. While not as haphazard or laissez-faire as similar provincial trade bills introduced this spring, the federal legislation centralizes more authority over business regulation while shirking responsibility for public and consumer safety.
Before getting to why that’s the case, we must emphasize that there are very few barriers to interprovincial trade in goods, services, investment or labour mobility. Estimates of the cost to business of minor regulatory differences between provinces are vastly overstated, as a recent CCPA report documents.
The widespread narrative about rampant provincial protectionism holding back the full potential of the Canadian economy is, largely, a fairy tale. Proponents of the story rarely provide any examples that would justify such gains. In reality, apart from booze, cannabis and supply-managed agriculture products, virtually all goods and services available in one province can be sold in any other.
The same can be said for labour mobility. With few exceptions, workers are free to practice their profession in any part of this vast country. Most provinces have passed labour mobility legislation bringing their policies in line with the 2017 Canadian Free Trade Agreement.
The federal government’s Free Trade and Labour Mobility in Canada Act, which is a component of Bill C-5 could hardly hope to better this situation, no matter how it was structured. Automatically, it promises more than it can deliver.
It is not at all clear exactly what problems these solutions are intended to solve, since no examples are provided. The danger lies in future decisions over the impacts of federal regulations on business.
The federal act is built like similar legislation in B.C., Ontario and Nova Scotia, which aim to increase interprovincial trade by mutually recognizing out-of-province rules and regulations covering goods, services and professionals as equivalent to (as good as) their own.
The challenge with mutual recognition approaches is that they can lead to a “race to the bottom,” a situation of harmful competition among provinces to lower their standards. Ontario, for example, has just passed a bill allowing the province to waive minimum labour standards and environmental rules within designated “special economic zones.”
Why any province or the federal government would agree to mutually recognize goods or services from such zones is a mystery. We would much rather see a federal approach that emphasized high standards applied equally across the country.
With respect to labour mobility, the bill is straightforward enough in its intent, but not in its possible coverage. Under C-5, federal regulatory bodies are obligated to recognize provincial authorizations to practice a profession that is also federally regulated.
Because only about six per cent of workers in Canada are in federally regulated professions, and given existing commitments to mutual recognition of provincial labour standards, it is difficult to see the federal reforms having a major or even a modest impact on the movement of people in Canada.
While limited in application, the overall approach of mutual recognition poses future risks. Manitoba nurses, for example, warn that since the pandemic, provinces have been competing for nursing talent by lowering occupational standards. Automatic recognition of out-of-province credentials in the medical and other sectors involving public safety could easily result in a dangerous watering down of standards.
Again, while this caution would apply to federally regulated professions covered by the labour mobility provisions in the bill (e.g., uranium mining, air transportation, railways, road transportation, etc.), it is not clear how many workers will be affected. Bill C-5 shifts any discussion of public safety exceptions to automatic mutual recognition down the road, to the regulation stage.
With respect to trade, under Bill C-5, goods and services that can be put up for sale in any province (i.e., have met provincial standards) are determined to have met comparable federal standards, with caveats attached to what would be deemed “comparable.” This mutual recognition is not automatic but “subject to regulations” that are to be determined.
We are aware of no examples where overlapping federal and provincial regulations impede the flow of goods across provincial boundaries. Where trade-impacting provincial differences are identified, many have been successfully reconciled through existing institutions under the CFTA.
Provincially licensed meat products must be sold in-province, but the vast majority of meat in Canada comes out of federally licensed slaughterhouses for Canada-wide and international consumption. It is not clear why the federal government would prefer to mutually recognize provincial certifications for slaughterhouses rather than inspecting and certifying the same facilities to a common national standard.
The final decision on whether a provincial standard applying to a good or service is “comparable” to an overlapping federal standard will be made by federal regulators under Section 10 of the new trade bill. This is, on the surface, a step up from BC’s trade legislation, for example, in which a minister may order a regulator to change or eliminate a regulation or standard that conflicts with the new mutual recognition obligation.
However, Section 11 of the federal legislation grants the government (read: the Prime Minister’s Office) the power to make regulations “imposing obligations, prohibitions, conditions and restrictions” for the purposes of any aspect of the sections on goods, services and labour mobility, including with respect to the authority of federal regulatory bodies.
Coming back to food inspection, for example, we can imagine a case where a federal regulator takes issue with a provincial food safety or inspection regime and decides that the regime is not comparable to federal standards. The final authority rests with a federal minister who could conceivably override the regulator’s concerns in the interest of “freeing” trade, putting consumers at unnecessary risk.
This is admittedly speculative at this point. Section 11 should be read as giving the federal government leeway to limit the scope and automaticity of the bill’s mutual recognition obligations. Still, the legislation is vague about where the buck stops on this question, or on whether the public can have any say on federal determinations of comparability of regulations.
The federal government is also no regulatory superhero. Public protections related to food safety, environmental protection, or species at risk are frequently watered down by corporate lobbying. A deeply entrenched neoliberal regulatory mentality also ensures that business and trade concerns trump stronger public protections in too many cases.
This in itself is a strong argument for regulatory variation in Canada, so that provinces can stick their neck out in the public interest when so moved.
Ontario’s stricter rules on neonicotinoid pesticides, BC’s rethink on open net pen fish farms and Quebec’s strong environmental assessment process for major projects are good examples of precautionary legislation whose marginal trade impacts we can easily live with. Mutual recognition moves us in the other direction—toward a race to the bottom.
The twin free trade and “Building Canada” acts raise a number of critical concerns with respect to accountability, corporate bias, and overkill. The good news is a wide range of political observers have been raising the alarm about the political overreach inherent in this bill, and there is still time to fix it or nix it.
The Assembly of First Nations warns that if the national interest “is focused exclusively on accessing natural resources, First Ministers need to rethink and broaden their perspective.” According to AFN National Chief Cindy Woodhouse Nepinak, “Canada needs to start with fast-tracking the basics like clean water, quality housing, modern schools, all-season roads and community infrastructure.”
The trade and labour mobility reforms are unlikely to increase interprovincial trade, investment or labour mobility, given how few barriers to these things really exist—especially at the federal level. In combination with similar provincial legislation, however, these mutual recognition reforms could lead to regular buck-passing on regulatory quality and accountability, to the detriment of public and consumer safety.
