Eyes on the Prize: A Game Plan to Speed Up Removal of Internal Trade Barriers in Canada

Introduction

Liberalized trade is more important than ever in the context of the Trump Administration’s levying of tariffs on Canada. There has been a conspicuous wave of government and business support for reducing internal trade barriers in the wake of Trump’s actions.

Canadians have much to gain from reducing internal trade barriers, which arise from clashing laws and regulations that make it hard for goods, services and people to cross a domestic frontier. Removing all obstacles to trade between provinces and territories that might be susceptible to policy intervention could increase the Canadian GDP by up to $200 billion annually – a 7.9 percent boost.¹1 The impact would be far-reaching, helping on a range of downstream issues that Canadians care about like housing affordability, healthcare worker shortages, supply chain resilience, real wage growth, consumer choice, productivity and industrial competitiveness. For issues ranging from electrical codes to drug scheduling to gasfitter certifications, regulatory reconciliation unlocks Canada’s potential.

This paper looks at improving the chief apparatus used to unblock domestic commerce. Moreover, after nearly eight years of existence, the time is right to take stock of the Canadian Free Trade Agreement’s (CFTA) Regulatory Reconciliation and Cooperation Table (RCT) and the factors that contribute to successful trade barrier resolution (CFTA 2024). Based on independent research and interviews with RCT & CFTA stakeholders from across the country, this paper identifies conditions for RCT effectiveness and uses these insights to advance actionable recommendations that will improve the RCT’s performance.

RCT reform is the focus of this paper, though it is not the only path forward for freer internal trade. Provinces and territories can pursue unilateral provincial action, or strike mutual recognition arrangements outside of the CFTA, and these efforts should be encouraged. Such parallel initiatives do not diminish the RCT’s role as a lasting and unifying institution, especially given its capacity to address emergent barriers.

This paper draws on nearly two dozen interviews conducted by the author between spring 2023 and spring 2024 with RCT Representatives, Internal Trade Representatives, Working Group members and policymakers. Author outreach covered all provinces, territories and the federal government, with direct engagement from officials across multiple provinces, territories, and the federal government. Prior interviews with representatives from Nunavut, Manitoba, and the Northwest Territories also informed this research. Efforts were made to ensure broad geographic and institutional representation.

Part 1: What is Success Under the RCT?

When the CFTA replaced the AIT in 2017, it also created the Regulatory Reconciliation and Cooperation Table (RCT). The RCT is a formal intergovernmental institution that serves as a venue to reconcile regulatory differences that generate domestic trade barriers and to facilitate cooperation on future regulatory development. During CFTA negotiations, Canadian governments were unable to align on exact specifications as to how the RCT would operate. Annex 404 of the CFTA establishes the RCT, and, in very broad terms, outlines how it will function. However, at barely 2.5 pages long, Annex 404 is relatively sparse on formal guidance. In the absence of detailed instruction, Canada’s governments have developed and experimented with informal (and often unwritten) customs and procedures.

Authority over the RCT outside of the CFTA’s text remains ambiguous. Oversight and management of the CFTA is performed by the Committee on Internal Trade (CIT) – a body of cabinet-level representatives from each Canadian government. However, as discussed below, the CFTA is not clear on the relationship between the RCT and the CIT, which requires redress.

Following eight years of use, we can observe that the RCT resolves trade barriers using a four-part process.

RCT success with respect to an individual trade barrier (in the form of an individual Work Plan Item) is determined by whether the parties were able to arrive at a reconciliation agreement that addresses the trade barrier (i.e., successful conclusion to Step 3 above). It is outside the scope of the RCT’s mandate to implement the reconciliation agreement – that responsibility rests in the hands of legislators and administrative officials within home governments across the country. With that said, as will be discussed later in this paper, the RCT should play a larger role in tracking Step 4 outcomes so that it can better update the public and policymakers on the progress of trade barrier resolution.

The RCT commonly leverages Federal-Provincial-Territorial (FPT) bodies with subject matter expertise to address regulatory differences. While these bodies were already in existence, the RCT’s assignment of tasks introduces a new focus on trade liberalization. For instance, the RCT assigned the resolution of Item 8 (wide base single tires) to the Task Force on Vehicle Weights and Dimensions as well as the Task Force on Trucking Harmonization. Though both FPT bodies were aware of the issue, the RCT’s directive served to accelerate progress.

Part 2: Factors Leading to Successful Outcomes

The list in Table 2 summarizes the factors that improve RCT success at the individual barrier level. It flows from close study of the RCT’s eight-year history, and cross-country interviews with participants in the Canadian interprovincial trade ecosystem. It draws especially from the highly successful experience of the reconciliation of construction codes (Work Plan Item 12). Given Item 12’s large scope and the magnitude of its future impact, it not only shows that the RCT can work as intended, but it also offers important lessons on what conditions pave the way for success. All proposed changes would require tacit acquiescence of, if not active approval of, all governments. Some changes would merely require informal adjustment to RCT policies and procedures. Others might warrant a memorandum of understanding (MOU) or even amendment to the CFTA itself.

Part 3: Discussion of Factors and Recommendations

1. Estimates of the economic costs of the trade barrier(s) encompassed by each Work Plan Item to be produced to inspire progress and enable prioritization.

Reconciliation often involves a lot of work, bruising turf wars and political mustering. Interviewees articulated that RCT Representatives (and their political superiors) are more willing and able to undertake the labour required when they know the benefits that could accrue to the Canadian economy. In addition to strengthening the resolve to undertake the necessary work, interviewees reported that knowing the cost of a trade barrier to the economy could help better prioritize the efforts of the RCT Members. At present, each open Work Plan Item generally receives equal attention, notwithstanding that resolution of some may unlock more growth than others. The capacity of RCT Representatives (and Working Groups) is finite. Each RCT Member is entitled to add new Work Plan Items, and at present there is no way of knowing the economic benefit attributable to reconciliation of the Work Plan Item. Without knowing the relative economic impact, it is difficult to allocate time and attention most effectively.

Many interviewees pointed towards RCT Work Plan Item 12 (construction codes) as an instance wherein economic figures furthered RCT progress. Interviewees shared that RCT Members were inspired by the estimates of up to $1 billion in annual savings. Such estimates also make clear to all parties that the return on investment from often exhaustive reconciliation efforts is high and worthwhile.

In addition, supplying estimates of the costs attributable to the trade barriers encompassed by a Work Plan Item will draw in the attention (and pressure for resolution) of business and industry groups, as well as the general public. The estimation of economic costs helps articulate the problem, particularly where Work Plan Items deal with highly technical regulatory matters, or trade barriers that are difficult to articulate.

Recommendation: The CFTA parties should augment funding and support to facilitate research aimed at estimating economic costs of Work Plan Items. Doing so helps inspire progress, and aids in prioritizing RCT resources. Consider as guidance the policy of cost-benefit analysis. Such a practice does not require CFTA amendment but could be enshrined in the RCT’s internal policies/procedures. Relevant experts can be tapped to conduct this research, which the Secretariat can coordinate on behalf of the RCT.

2. RCT Representative roles to be occupied by senior level officials with strong leadership capabilities and regulatory experience.

Many interviewees noted that at the genesis of the RCT in 2017, it was envisioned that RCT Representative positions would be occupied by government officials at the Deputy Minister level or, at lowest, Director level. Over time, however, increasingly junior officials have started to occupy the de facto2 post of RCT Rep in several governments. In some cases, a government’s RCT Rep and CFTA Rep (known as their “Internal Trade Representative”) are the same individual. This situation is suboptimal given that the ideal experience and qualification set of both positions is unlikely to be possessed by the same individual. The former should have a background in the regulatory process, while the latter is well-versed in trade policy. Interviewees further noted that the ideal RCT Rep is a solutions-oriented professional leader with negotiation experience.

The reasons provided for sufficiently senior officials in the RCT Rep post were several. First, owing to the highly political nature of many trade barriers, it was noted that an RCT Rep of sufficient seniority, and with access to their cabinet and even their First Minister, was more likely to yield success. Second, senior officials are better positioned to escalate politically sensitive matters to First Ministers, helping to ensure progress and momentum. Third, whole-of-government coordination is often required to adequately address Work Plan Items, and RCT Reps of sufficient seniority with linkages across their home governments (and with experience managing whole-of-government initiatives) make reform far more likely.

Recommendation: Committee on Internal Trade should lead renewed CIT commitment to appoint sufficiently senior officials to the position of RCT Rep. This can be done by way of a Memorandum of Understanding under the auspices of the CFTA to broadly define the qualifications of the RCT Rep. RCT Reps should (i) at minimum be Deputy Minister-level or Assistant Deputy Minister-level within their home-governments, (ii) have a background in the regulatory process, and (iii) possess negotiation experience. The process itself (even if no MOU is achieved) would serve as an important reminder to all parties of the qualifications of a successful & impactful RCT Rep.

3. Federal government leadership and capacity assistance to be provided.

Many interviewees emphasized that full federal engagement is a key factor in the successful resolution of individual RCT Work Plan Items. While the exact role assumed by the federal government will vary by barrier, several provincial and territorial (PT) officials generally welcomed federal leadership in breaking deadlocks. It goes without saying that many interviewees were cautious of an overly dominant federal voice at a collaborative FPT institution.

Beyond its constitutional Trade and Commerce powers, the federal government may have relative expertise that could inform or facilitate forward progress. It also has greater resources to study barriers and identify means of resolution, especially when compared to smaller PTs. This greater bandwidth is salient in light of the current unofficial practice wherein those governments that add new items to the RCT Work Plan must also lead reconciliation efforts and justify their importance. However, individual Canadian governments are reluctant to invest in barrier resolution beyond their local cost even if national benefits are far greater. The federal government is uniquely positioned to consider aggregate national gains and coordinate a commensurate investment in resolution. The federal government is well-positioned to help PTs overcome collective action problems on Work Plan Items.

The return on investment from federal assistance can be enormous. For example, on Item 12, the federal government’s $20M investment to make construction codes freely available was a major driver of success. Additionally, its paying for RCT Rep travel to, and accommodation in, Ottawa played a crucial role in reconciling the codes.

To dwell on this point of in-person meetings a little longer: in many interviews it was noted that in-person RCT (and Internal Trade Representative) meetings were essential for advancing reconciliation. Prior to the pandemic, regular in-person RCT and ITR gatherings were pivotal for fostering alignment and reaching consensus. Cultivating strong professional relationships among RCT and ITR representatives fosters trust, establishes interjurisdictional regulator linkages & avenues for diplomacy, and facilitates tangible progress at a working level. Where possible, in-person meetings should resume.

Recommendation: Federal government should take on stronger leadership role in Work Plan Item research and enhance overall capacity support. Additionally, federal government should subsidize travel and accommodation costs to support in-person collaboration among RCT Reps and Working Group Reps on specific Work Plan Items.

4. Highly active RCT Chairs to be selected who consistently and meaningfully engage with Working Groups.

Many interviewees discussed the importance of an active RCT Chair as a determinant of success for Work Plan Item resolution. Specifically, this means an RCT Chair who attends (and meaningfully supports) meetings and work of the Working Groups. Once a Work Plan Item is delegated to an RCT Working Group, historical practice has been to appoint a liaison to act as a conduit between the RCT Reps and the Working Group. In the case of Item 12 (construction codes), however, the RCT Chair was highly participatory at the Working Group level. The benefits of a highly involved Chair include real-time knowledge transfer to the rest of the RCT, and the encouragement and empowerment of the Working Group. The feedback mechanism offered by an involved RCT Chair accelerated negotiations and offered greater clarity as to objectives and the mandate of the Working Group. Obviously, a single person serving as RCT Chair has finite capacity. At any one time there are a number of Working Groups engaged in Work Plan Items. To solve for this, and in connection with factor 3 above, the addition of a permanent federal Co-Chair would bolster the capacity and bench-strength of the ‘Chair’ role, enabling greater engagement at the Working Group level. Provinces and territories may be skeptical of this recommendation. However, the federal government’s leadership in the pilot project for mutual recognition of trucking regulations is a clear demonstration of its vital role as a central, coordinating force in tackling major interprovincial trade barriers.

Recommendation: Establish a permanent federal co-chair to provide capacity support and institutionalized leadership capabilities at the Working Group level.

5. High political engagement by both First Ministers and the Committee on Internal Trade to be facilitated, with expectations for deliverables.

Many interviewees noted the importance of senior political engagement on RCT Work Plan Items, especially for those trade barriers in politically sensitive areas. There is greater RCT progress where there is top-down political direction. Interviewees noted that requiring the RCT to submit deliverables to the CIT and/or First Ministers at a regular cadence helps sustain momentum on Work Plan Items, as seen in the reconciliation of construction codes.

To strengthen the RCT’s effectiveness, the CIT should provide it with a clear annual mandate, setting out the RCT’s areas of focus and objectives for the upcoming year - akin to ministerial mandate letters. This does entail a more formal reporting structure between the RCT and CIT, which would likely require a CFTA amendment to make this clear to all parties. Interviews revealed disagreement over who the RCT reports to. Some believe that the RCT reports directly to First Ministers, while others contend that it reports to the CIT, while yet another cohort advocates for the creation of a Deputy Minister Table that sits beneath and supports the CIT in its oversight of the RCT. This paper advances the position that the RCT should report directly to the CIT; doing so ensures focused oversight without adding an additional reporting layer and also guards against relying on First Ministers who have a much broader range of priorities.

Recommendation: CIT should provide RCT a clear mandate on an annual basis. CFTA amendments should make clear that the RCT does indeed report to the CIT. Additionally, any amendment to Annex 404 should require semi- or quarter- annual reporting, made publicly available, of RCT progress with respect to the annual mandate.

6. Targeted and focused Work Plan Items to be generated, with clear definition of problem and acceptance criteria for Working Groups.

Many interviewees noted the importance of targeted and focused Work Plan Items as a determinant of RCT success. Ideally, Work Plan Items should clearly define the problem and the source of the trade barrier(s). Moreover, the instructions to Working Groups should be appropriately scoped and detailed to guide necessary undertakings. It was reported that without clarity of the trade barrier or of RCT expectations, Working Groups end up spinning their wheels, or even refusing to undertake the assignment. Interviewees noted the importance of upfront work including clearly identifying the objective, narrowly scoping what is expected of the Working Group, and crystallizing the acceptance criteria for the reconciliation agreement. This groundwork guides the Working Group’s process and output.

Recommendation: RCT Reps should ensure (i) Work Plan Items clearly define and articulate trade barriers, (ii) the regulatory sources of trade barriers are more clearly identified, (ii) Working Groups receive appropriate and scoped instructions, (iii) clear acceptance criteria are provided to guide Working Group output.

7. Robust industry engagement.

Many interviewees shared that there is greater success on Work Plan Items that have the focus and attention of businesses, trade groups or industry organizations. This is especially the case on complex and politically sensitive trade barriers. Widely cited was Item 12 (construction codes) where industry was particularly motivated to see a successful outcome, and engaged with regulators and political leaders to advance reconciliation. When elected officials know that they have a constituency, they will be more inclined to press civil servants for action. Several interviewees went even farther by noting that trade barrier identification should primarily be coming from the business community; business groups should be raising and directing the attention of the RCT. This makes sense: RCT Reps should be focusing on actual pain points experienced by corporate Canada. On this latter point, one viable launchpad would be leveraging the list of claims lodged for dispute resolution proceedings, as a way to understand if particular sectors (geographically defined or otherwise) are more greatly hindered by trade barriers than others. In essence, as a starting point, letting the market guide focus areas.

Recommendation: RCT Reps should strengthen outreach to business and industry stakeholders, with a novel focus on those linked to dispute claims. RCT Reps should host an annual business symposium to (1) offer external stakeholders an opportunity to signal priorities, and (2) report on RCT progress.

8. Strong monitoring mechanisms.

RCT Reporting. Interviewees noted that at one time, there used to be a period where Working Group representatives would report to the RCT Reps on a quarterly cadence – a practice that was since discontinued for unknown reasons. A practice of consistent reporting (at a quarterly or semi-annual frequency) would encourage continued progress, given the concomitant expectation to notch successes at each interval.

Implementation of Reconciliation Agreements. Interviewees noted that even if CFTA member governments sign off on a reconciliation agreement for a Work Plan Item, success still depends on the implementation of corresponding legislative and/or regulatory change. Ultimate success depends on these changes, and yet there is no system to track progress or completion. To improve transparency, clear acceptance criteria tailored to each member government at the time of signing the reconciliation agreement would help provide clarity as to whether the necessary changes had been completed. It was noted that a newly developed template for reconciliation addresses this, marking progress. However, an institutional reporting mechanism for when the necessary legislative/regulatory changes are completed would help ensure real-time monitoring of Work Plan Item resolution, firming up adherence to RCT/CFTA commitments.

Recommendation: (1) Working Groups should resume reporting to RCT Reps at a quarterly or semi-annual cadence; these summary reports should be made publicly available and include concrete forward-looking objectives, as well as achievements with respect to the objectives of the previous period. (2) RCT Reps should define acceptance criteria for implementation by each government during reconciliation agreement drafting. Relatedly, CFTA parties should amend Annex 404 to require notification to other parties following reconciliation agreement implementation within their home government’s laws and regulations.

Conclusion

The Regulatory Reconciliation and Cooperation Table, established in 2017, represents one of the most significant advancements for Canadian internal trade since the Agreement on Internal Trade came into force in 1995. Now a vital cornerstone for trade barrier reconciliation, the RCT serves as the primary forum for subject matter experts to mutually recognize or harmonize the patchwork of laws and regulations that currently hinder domestic commerce. After eight years of operation, and given the imperative to strengthen East-West trade, the time is ripe for improvements to the RCT. This investigation found eight key factors for success, and leverages these insights to recommend actionable reforms. Internal trade policymakers must strengthen a vital institution that bolsters the benefits of Canada’s economic union and national prosperity.

Appendix

References

Canadian Free Trade Agreement – Consolidated Version, online: Canadian Free Trade Agreement. Accessed at: https://www.cfta-alec.ca/wp-content/uploads/2025/03/CFTA-Consolidated-Text-March-20-2025_en.pdf (accessed 25 March 2025).

Regulatory Reconciliation and Cooperation Table. Accessed at: Reconciliation Agreement on Construction Codes. (2019). Retrieved at https://rct-tccr.ca/wp-content/uploads/2023/07/Construction-Codes-RA-2019.pdf.