Interprovincial trade barriers weigh down GDP, boost freight costs: study

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This article was published 22/05/2024 (497 days ago), so information in it may no longer be current.

A new research paper by the Macdonald-Laurier Institute estimates interprovincial trade barriers in the trucking industry add 8.3 per cent to the cost of freight rates in Canada.

Although there has been some progress over the years in chipping away at them, the industry potholes have been a bone of contention for several decades.

The paper from the Ottawa-based think tank suggests Canada’s overall real GDP could increase by over $1.6 billion per year if these barriers to be eliminated, taking into account the downstream impacts.

One of its co-authors, Trevor Tombe, a professor and graduate program director at the University of Calgary’s department of economics and a research fellow at the School of Public Policy, said the differing regulations are not specifically designed to cause disruptions.

While there are all sorts of legitimate reasons to maintain specific regional regulations regarding trucking, there remain plenty that continue to cause drag.

“Differing jurisdictions will unavoidably converge on slightly different rules,” Tombe said in an interview. “But to harmonize with others is, in part, ceding a little bit of independence in areas under your jurisdiction and there is a natural hesitation on the part of provincial government across the country to eliminating interprovincial trade barriers because that would in part mean ceding some of the authority that they currently have.”

Tombe and his co-author, Ryan Manucha, suggest the deployment of mutual recognition agreements under the Canadian Free Trade Agreement to solve several of the trade barriers the truck transportation sector faces.

It is a process that already exists, though Tombe said it can be a slow process.

Meanwhile, the trucking industry still face a number of interjurisdictional regulatory differences.

In 2023, the Canadian Trucking Alliance listed a number of them, including: differing driver qualifications for long combination vehicles; variations in trailer registration validity periods; 60-foot, six-inch semi-trailers not uniformly accepted across Canada; varying caps on the maximum sizes of tow trucks; and burdensome and non-harmonized oversize/overweight permitting processes.

Aaron Dolyniuk, executive director of the Manitoba Trucking Association, helped draft that list.

Dolyniuk said interjurisdictional issues remain and some of them border on the ridiculous. “For example, the definition of day time and night time,” he said. “It really impacts the way a load can moved.”

He said that definition is different between Alberta and Saskatchewan, Saskatchewan is different than Manitoba and Manitoba is different than both Ontario and North Dakota.

“So when you are planning a trip, the flagging and lighting that you need for an over-dimensional load … is too complicated,” he said. “There are some that are the same, but they don’t actually line up beside one another.”

Tombe said the New West Partnership Trade Agreement between the four western provinces is an indication there is willpower to address some of these issues and that has contributed to a modest 2.3 per cent reduction in interprovincial trade costs.

He said for further progress to be made on levelling-off regulatory differences in the trucking industry would probably benefit from some sort of leadership.

Despite the technical and sometimes esoteric nature of some of the differences, Tombe said, “We found the gains can be pretty large, so it may be worth governments exploring this further.”

martin.cash@freepress.mb.ca