The Canadian Press - ONLINE EDITION

Ontario reluctant to remove some barriers to interprovincial trade; open to talks

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TORONTO - Ontario's governing Liberals say they're open to removing barriers to interprovincial trade, but suggest they're reluctant to lift some restrictions that give Ontario companies an advantage.

"We have a number of sectors within the economy that are protected, and the strength of those sectors exist because of some of the processes we put in place," Finance Minister Charles Sousa said Thursday after a speech to the Empire Club of Canada.

"We don't want to jeopardize the livelihood of Ontario companies as well. So we've got to make certain that we're working fairly for all concerned."

There are restrictions in Ontario that make it more difficult for companies outside the province to bid on infrastructure projects, for example, which are getting a big funding boost from the Liberals over the next few years.

Ontario consumers of wine and spirits must also buy their booze through the Liquor Control Board of Ontario, instead of having it shipped directly from a producer outside the province. The LCBO has a private ordering business for products they don't carry.

Residents can personally bring back wine, beer and spirits that they've purchased in other provinces or territories, but quantities are restricted.

Sousa's comments come after the leaders of three western provinces called for the removal of trade barriers to reduce the cost of doing business and help provincial economies grow.

Saskatchewan Premier Brad Wall, Alberta Premier Dave Hancock and B.C. Premier Christy Clark sent a letter to other premiers on Wednesday saying it's time for a more modern approach.

Wall argues that it's easier for a company in the United States to bid on government procurement in Canada than it is for some Canadian companies to bid on projects in their own country.

The current Agreement on Internal Trade, which came into effect in 1995, allows "anti-free trade behaviour which puts us on a slippery slope to protectionism," their letter said.

Wall says the old agreement takes the approach that every sector of the economy is protected unless an exception is added in. A new Canada free-trade zone would say that everything is subject to free trade between the provinces unless exceptions are negotiated.

The three premiers say in the letter that they want to see a commitment for change when all the premiers meet in Charlottetown in August.

Ontario Infrastructure Minister Brad Duguid said the province is "very eager" to talk about freer trade between provinces and territories, but every jurisdiction has their priorities and sectors important to their economies.

"It's far too premature to start picking individual sectors to determine what may or may not be involved in that discussion," he said.

"We haven't as provinces determined yet what's on the table entirely. That's something that we need to gain consensus, I think, across the country."

With the possible implementation of a trade agreement between Canada and the European Union, the provinces and territories must first make sure that Canadian companies aren't at a disadvantage in competing with European businesses, Duguid said.

The cash-strapped province plans to spend $130 billion on infrastructure projects over the next decade to help boost Ontario's economy, a key plank in the big spending budget they're re-introducing on Monday.

But the re-elected Liberals insist they can also eliminate a $12.5-billion deficit in 2017-18.

Moody's debt-rating agency changed its outlook on Ontario's debt rating from stable to negative last week, citing concerns about the government's ability to do what it takes to balance the books in three years.

Sousa said he understands those concerns and shares them.

"I'm the one that's also suggesting that we can't put our heads in the sand, that we've got to take corrective measures," he said. "This budget speaks to those measures."

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