The BC/Alberta Trade, Investment and Labour Mobility Agreement

Topic Box from the 2006 Sixth Annual Benchmark Report

On April 28, 2006 British Columbia and Alberta signed a Trade, Investment and Labour Mobility Agreement (TILMA), aiming to eliminate all barriers to trade, investment, and labour mobility between the two provinces. The agreement will dismantle persistent inter-provincial barriers to trade, including overlapping regulations and policy misalignment, and further integrating two increasingly interrelated economies. It will commence April 2007 with a transition period to April 2009.

While the Canadian Constitution expressly prohibits tariffs on inter-provincial trade in Canada, non-tariff barriers (NTBs) constrain the integration of the Canadian market by increasing the cost of doing business across provinces. Aiming to address these NTBs, the federal and provincial governments in 1995 implemented the Agreement on Internal Trade (AIT). Although AIT has since been successful in reducing some hurdles to commerce and in preventing the establishment of new barriers, several characteristics of the program – the necessity of consensus to make decisions, scope-limiting exceptions and exemptions, limited legal power of the agreement, and a flawed settlement procedure – have constrained its success overall. While little research has been done to quantify the cost of persistent internal barriers in Canada, a recent report describes the current list of NTBs in Canada as "daunting" and the negotiating process under AIT "a serious challenge". TILMA aims to overcome AIT's limitations by not requiring complete harmonization of standards and regulations, and by making the agreement legally binding.

The agreement creates a single economy of 7.7 million people, the second largest in Canada (Ontario is the largest with 12.7 million). One estimate notes that the agreement could add up to $4.8 billion to combined real GDP and create 78,000 jobs in BC. The key terms of TILMA include:

• Identification and reconciliation of differences in standards and regulations;


• Streamlining of business registration, commercial vehicle registration, and worker certification such that those registered or certified in one province are similarly registered or certified in the other;


• Open and non-discriminatory tender processes to procurement in governments in both provinces;


• Improvement of existing inter-jurisdictional trade arrangements in Energy and ensuring standards are compatible within the region and North America; and,


• Binding dispute resolution, involving an arbitration panel that reviews disputes and issues a binding report with non-compliance resulting in a penalty of up to $5 million.

At the end of the implementation process in April 2009, further negotiations are planned to extend the scope of TILMA to cover municipalities, school boards, publicly-funded academic, health, and social entities, financial institutions, financial services, and Crown corporations. Expanding TILMA to other provinces is also part of future plans, and Saskatchewan has already expressed interest in joining. As well, the Committee of Federal-Provincial-Territorial Ministers responsible for Internal Trade is currently considering TILMA as a guide for changing AIT, and recently committed to full cross-country labour mobility by April 2009, mirroring a key tenet of TILMA.

Sources: Government of British Columbia and Government of Alberta (2006) The British Columbia-Alberta Trade, Investment and Labour Mobility Agreement: Fact Sheet; Business Council of British Columbia (2006) An Overview of the BC-Alberta Trade, Investment and Labour Mobility Agreement, Policy Perspectives Vol 13 No 3, July 2006. The Conference Board of Canada (2006) Death by a Thousand Paper Cuts: The Effects of Barriers to Competition on Canadian Productivity; Government of British Columbia (2006) Backgrounder: B.C. – AB Agreement on Trade, Investment and Labour Mobility; Council of the Federation (2006) News Release: Progress Achieved on Action Plan to Improve Internal Trade.