Removing Barriers to Inter-provincial Trade

Alberta and British Columbia enter into the Trade, Investment, and Labour Mobility Agreement

Written By Milos Barutciski and Andrew L. Buddle

In April of 2006, the governments of Alberta and British Columbia announced that they had entered into the Trade, Investment, and Labour Mobility Agreement (TILMA). The inter-provincial trade pact is being phased in over two years beginning on April 1, 2007.

TILMA builds on the Agreement on Internal Trade (AIT), an inter-provincial agreement concluded in 1994 between Canada's federal, provincial and territorial governments. It is widely acknowledged that inter-provincial barriers to trade, investment and labour mobility impose immense costs on businesses and individual Canadians. TILMA takes important steps to break down those barriers as between Alberta and B.C. by, among other things, enhancing labour mobility, streamlining business and transportation registration requirements, and opening up government procurement to suppliers from both provinces.

Legal Framework

TILMA establishes rules that apply to all government measures – including legislation, regulations, standards, policies, procedures and guidelines – that affect trade, investment and labour mobility, and secures compliance through an inter-provincial dispute settlement procedure similar to that used in international free trade agreements.

TILMA is a “top-down” agreement that applies to all sectors of the Alberta and B.C. economies, unless expressly exempted. In other words, unless a measure or an industry is clearly identified in TILMA as exempt from its application, it is covered by TILMA. By contrast, the AIT was a “bottom-up” agreement that applied only to those sectors that were expressly made subject to it. The governments of Alberta and B.C. have committed to extending the scope of TILMA through negotiations to be completed by April 2009 to areas currently not enumerated. At the present time, the following areas are not covered by TILMA: public policy objectives such as taxation and royalties, public safety and security, water and the environment, consumer protection, social policy, Aboriginal policies, labour standards and worker health and safety.

TILMA also contemplates that other provinces and territories might join if they are prepared to agree to all TILMA terms. Ontario, for one, has indicated that it is interested in joining TILMA, as have Saskatchewan, Manitoba and Yukon.

Labour Mobility

The most immediate impact of TILMA will be on labour mobility. Currently, skilled tradespersons and professionals in many occupations face redundant – but costly and time-consuming – requalification requirements if they want to work outside their home province. Under TILMA, qualifications for more than 60 professions and occupations issued by either province will be automatically recognized in both provinces.

Trade and Investment

TILMA contains several key provisions that are intended to remove or reduce impediments to effective competition between Alberta and B.C. Among other things, each province has agreed to:

• ensure that its measures do not impede trade or investment between the two provinces;
• not discriminate between goods, persons, services and investments of the other province and its own;
• administer and establish standards and regulations in a manner that does not impede inter-provincial trade or investment, including initiatives to harmonize or provide for mutual recognition of standards and regulations;
• reconcile business registration and reporting requirements and eliminate business residency requirements, so that any business registered in one province is qualified to do business in the other; and
• not provide subsidies that distort trade investment between the two provinces or use subsidies to lure investment to one province rather than another.

Government Procurement

Effective April 1, 2007, TILMA has opened up government procurement opportunities in Alberta and B.C. to suppliers from both provinces where the procurement value is:

1. $10,000 or greater for goods;
2. $75,000 or greater for services; or
3. $100,000 or greater for construction.

These new thresholds apply to all government entities, including departments, ministries, agencies, boards, councils, committees and commissions, and include many more procurements than were previously covered by AIT. The procurement provisions will be extended by April 1, 2009, to also apply to Crown corporations, government-owned commercial enterprises, regional, local, district or municipal governments, school boards, publicly-funded academic, health and social service entities and non-governmental bodies that exercise authority delegated by law.

Dispute Settlement and Penalties

Part IV of TILMA establishes a dispute resolution procedure applicable to both government-to-government and private claimant-to-government disputes. If the dispute relates to a matter that falls within the jurisdiction of the B.C. Utilities Commission, the B.C. Oil and Gas Commission or the Alberta Energy and Utilities Board, then the matter must be submitted to the relevant body before the dispute settlement procedure can be invoked.

The dispute settlement procedure includes a preliminary consultation procedure. Where a dispute is not resolved through consultations, the complainant may seek binding arbitration before an independent panel. The panel procedure is intended to take approximately 115 days from the time a party requests that the matter be submitted to arbitration. A panel's findings are binding and, if a province fails to implement a panel's recommendation, the panel may make a monetary award of up to $5 million to the claimant. Panels may also award costs in their discretion. Monetary and costs awards are enforceable in the same manner as if they were an order of the Court of Queen's Bench in Alberta or the Supreme Court of British Columbia.

Conclusion

TILMA is a novel and potentially robust tool for businesses to use when they encounter trade or investment barriers between Alberta and British Columbia. In addition, the labour mobility provisions are a long-overdue step toward liberalizing inter-provincial employment markets and eliminating wasteful and redundant regulatory restrictions on professions and skilled trades. These developments will ultimately benefit both employees and employers.