Canada’s Internal Trade Barrier Elimination Improving: Canadian Federation of Independent Business
Canada has long struggled with internal trade barriers—rules and regulations that restrict the free movement of goods, services, and labour across provincial and territorial borders. These barriers have cost the Canadian economy an estimated $200 billion annually, making it more expensive and complicated for businesses to operate nationwide.
Despite decades of discussion, meaningful progress was slow until recently. In 2025, the federal government made historic moves to dismantle internal trade barriers with the passage of Bill C-5, the One Canadian Economy Act. This legislation eliminated all remaining federal exceptions under the Canadian Free Trade Agreement (CFTA), removing 53 exceptions since the agreement’s inception in 2017.
Most of these exceptions were related to government procurement, such as contracts involving financial entities, commercial land development, transportation services, and space projects. By scrapping these exceptions, the federal government aims to provide Canadian businesses with new opportunities to compete and expand nationwide, building a more unified economic space.
While the federal government has removed its last barriers to internal trade, provinces and territories must also review their own exceptions under the CFTA. All have pledged to undertake this review, with progress expected to be reported at the next Committee on Internal Trade meeting. The Canadian Federation of Independent Business (CFIB) notes that more progress has occurred in the past six months than in the previous eight years since the CFTA was signed.
Some provinces are now introducing mutual recognition legislation, allowing goods or credentials approved in one province to be accepted elsewhere, reducing duplication and red tape. However, experts caution that progress is uneven, with each jurisdiction developing its own approach to mutual recognition. This “patchwork” could potentially introduce new challenges, replacing nationwide barriers with inconsistent provincial rules.
While there is momentum, the elimination of all barriers is far from complete. Experts describe the legislative changes as “the starting gun,” signaling the beginning of continued efforts rather than their conclusion. The push to eliminate internal trade barriers gained urgency following the United States’ imposition of tariffs on Canadian goods, prompting concerns about competitiveness and economic security.
The federal government remains committed to leading further reforms, working with the provinces and territories to strengthen the CFTA, pursue mutual recognition policies, and ensure seamless labour mobility within Canada. The goal is to remove remaining barriers, harmonize standards, and support major nation-building infrastructure projects.
In summary, Canada is at a pivotal point in its long effort to create a true national economic market. The removal of federal internal trade barriers and the push for mutual recognition among provinces signal unprecedented progress, but the full realization of free internal trade will depend on ongoing collaboration and the resolution of jurisdictional differences.
Economic and Political Context
The estimated $200 billion annual cost of internal trade barriers has long weighed on the Canadian economy, complicating operations for businesses and stifling growth. However, the push to dismantle these barriers gained renewed urgency following the United States’ imposition of tariffs on Canadian goods. This external pressure highlighted the need for Canada to enhance its internal competitiveness and economic security, prompting leaders to rethink their approach to domestic regulation and risk.
The introduction of Bill C-5, once considered an “academic theory,” marks a significant shift from rhetoric to action. This legislation eliminates all remaining federal exceptions under the Canadian Free Trade Agreement (CFTA), removing 53 exceptions since the agreement’s inception in 2017. Most of these exceptions were related to government procurement, such as contracts involving financial entities, commercial land development, transportation services, and space projects. By scrapping these exceptions, the federal government aims to provide Canadian businesses with new opportunities to compete and expand nationwide, building a more unified economic space.
While the federal government has removed its last barriers to internal trade, provinces and territories must also review their own exceptions under the CFTA. All have pledged to undertake this review, with progress expected to be reported at the next Committee on Internal Trade meeting. The Canadian Federation of Independent Business (CFIB) notes that more progress has occurred in the past six months than in the previous eight years since the CFTA was signed.
Some provinces are now introducing mutual recognition legislation, allowing goods or credentials approved in one province to be accepted elsewhere, reducing duplication and red tape. However, experts caution that progress is uneven, with each jurisdiction developing its own approach to mutual recognition. This “patchwork” could potentially introduce new challenges, replacing nationwide barriers with inconsistent provincial rules.
While there is momentum, the elimination of all barriers is far from complete. Experts describe the legislative changes as “the starting gun,” signaling the beginning of continued efforts rather than their conclusion. The push to eliminate internal trade barriers gained urgency following the United States’ imposition of tariffs on Canadian goods, prompting concerns about competitiveness and economic security.
The federal government remains committed to leading further reforms, working with the provinces and territories to strengthen the CFTA, pursue mutual recognition policies, and ensure seamless labour mobility within Canada. The goal is to remove remaining barriers, harmonize standards, and support major nation-building infrastructure projects.
Conclusion
The elimination of internal trade barriers in Canada marks a pivotal moment in the nation’s economic evolution. The federal government’s removal of all exceptions under the Canadian Free Trade Agreement (CFTA) through Bill C-5 signifies a bold step toward fostering a more unified and competitive economy. While progress has been significant, with provinces and territories committing to reviewing their own exceptions, the journey is far from over. The introduction of mutual recognition legislation and the push for seamless labour mobility highlight the momentum, but the patchwork approach across jurisdictions could pose new challenges. As Canada continues to address these issues, the goal remains clear: to dismantle remaining barriers, harmonize standards, and build a stronger, more resilient economic framework for the future.
Frequently Asked Questions
What is the estimated annual cost of internal trade barriers in Canada?
The estimated annual cost of internal trade barriers in Canada is $200 billion.
What is Bill C-5, and what does it aim to achieve?
Bill C-5 eliminates all remaining federal exceptions under the Canadian Free Trade Agreement (CFTA), removing 53 exceptions since the agreement’s inception in 2017. Its goal is to enhance internal trade by providing Canadian businesses with new opportunities to compete and expand nationwide.
What is mutual recognition legislation, and how does it impact trade?
Mutual recognition legislation allows goods or credentials approved in one province to be accepted elsewhere, reducing duplication and red tape. However, its implementation varies across provinces, potentially leading to a patchwork of rules.
What role do provinces and territories play in eliminating internal trade barriers?
Provinces and territories are responsible for reviewing their own exceptions under the CFTA. While progress has been made, with some introducing mutual recognition legislation, the approach remains uneven across jurisdictions.
What are the next steps in eliminating internal trade barriers in Canada?
The federal government is committed to leading further reforms, working with provinces and territories to strengthen the CFTA, pursue mutual recognition policies, and ensure seamless labour mobility. The focus is on removing remaining barriers, harmonizing standards, and supporting nation-building infrastructure projects.
