Internal Trade in Canada: Case for Liberalization

IMF Working Papers, July 22, 2019

Source details

The paper assesses the costs of internal trade barriers in Canada and proposes policies to improve internal trade.
Estimates suggest that complete liberalization of internal trade in goods can increase GDP per capita by about 4 percent.
Employment is expected to be reallocated toward provinces that experience large productivity gains from trade.
The findings underscore the need for federal, provincial and territorial governments to work together to reduce internal trade barriers.
The paper notes significant scope to build on the new Canadian Free Trade Agreement to more explicitly identify key trade restrictions, resolve differences, and agree on cooperative solutions.

Complete liberalization of internal trade in goods → increase GDP per capita by about 4 percent.
Reallocation of employment toward provinces with large productivity gains from trade.

Federal, provincial, and territorial collaboration is necessary to reduce internal trade barriers.
Build on the Canadian Free Trade Agreement to:
- More explicitly identify key trade restrictions.
- Resolve differences among jurisdictions.
- Agree on cooperative solutions to lower internal trade costs.

Subject: Employment; International trade; Labor; Trade agreements; Trade balance; Trade barriers; Trade liberalization
Keywords: Canada; cost elasticity; costs of trade barriers; data description; elasticity of trade; Employment; free trade; free trade trade agreement; gains from trade; Global; government procurement rule; input-output linkages; Internal trade; migration model; real wage; Trade agreements; Trade balance; Trade barriers; trade cost; trade growth decomposition; trade in Canada; Trade liberalization; WP