On trade-offs

For all the effort by Jim Flaherty, Gordon Campbell and others to paint a cross-country expansion of the TILMA as the only acceptable outcome to deal with the grave threat to Canada's future prosperity posed by hay-stacking regulations, Ian Urquhart writes that Canadian premiers have agreed instead to add an enforcement mechanism to the Agreement on Internal Trade. And while that outcome may not be ideal, it's worth pointing out a couple of the key differences that make the AIT significantly less toxic than the TILMA.

First, unlike the TILMA, the AIT doesn't presumptively apply its blanket rules to every action by every level of government. Instead, its general requirements (which on their face are relatively similar to those contained in the TILMA) by default apply only to the issues specifically listed in the agreement. From Article 400 of the AIT:

The general rules established under this Chapter apply only to matters covered by Part IV, except as otherwise provided in this Agreement.

In turn, the Chapters in Part IV (dealing with procurement, investment, labour mobility, consumer standards, issues related to specific industries, and environmental matters) set additional reasonable limits on the application of the AIT's general rules. For example, under Article 600, the "no obstacles" rule does not apply to investment - meaning that while provincial governments are required to work together to harmonize investment standards and notify other provinces of changes which may affect investment, they aren't required to favour investors' interests over those of their own province in formulating policy.

And that leads into nicely into an even more important difference. Unlike the TILMA, the AIT explictly recognizes that other public policy concerns need to be balanced alongside trade and investment, and indeed favours effective government action where appropriate. Here's Annex 405.1, which governs the application of the AIT's "legitimate objective" exemption to regulatory standards:

For greater certainty, with respect to the application of Article 404(c), each Party shall, in ensuring that any standard or standards-related measure that it adopts or maintains is not more trade restrictive than necessary to achieve a legitimate objective, take into account the risks that non-fulfilment of that legitimate objective would create and ensure proportionality between the trade restrictiveness of the standard or standards-related measure and those risks.

For other examples, see Article 807 (under which consumer protection standards are to be reconciled to a "high and effective" level of protection), and Article 1505.4 (under which each province "shall ensure that its measures provide for high levels of environmental protection and shall continue to endeavour to improve those levels of protection").

In contrast, the TILMA as drafted goes out of its way to avoid recognizing that "risks" may develop as a result of a province's failure to act for the benefit of its citizens. The TILMA includes only one statement (Article 5.4) which hints at any recognition that other priorities also need to be taken into account. And even that statement utterly fails to suggest that the goals of facilitating trade and investment may validly be considered less important than those other priorities.

In sum, a comparison of the AIT and the TILMA suggests that there was always a readily-available device which could be used to reconcile regulatory differences and promote internal trade. What the TILMA added to the picture was simply a complete lack of balance between trade and other priorities - and it's for the best if that problem will be confined to B.C. and Alberta rather than spreading any further.

Again, the above shouldn't be taken to suggest that the AIT is without its flaws, or that the premiers' agreement is apparently pointed in the best possible direction. Indeed, the decision to tack the TILMA's remedy process onto the AIT will likely result in some unintended consequences. And it's far from clear that the provinces wouldn't have made better use of their time actually identifying and working with regulations which can be reconciled without much dispute, rather than again operating from the premise that they need umbrella agreements to get the process going.

But at the very least, the premiers' agreement (combined with TILMA's sudden halt at the Saskatchewan/Alberta border) makes it likely that any further talk about internal trade will be based on the AIT's much less dangerous framework, rather than the TILMA's skewed priorities. And that's undoubtedly a far better outcome than the one which the Cons and others seem eager to impose.