TILMA Means Big-Picture Benefits

Commentary, David Seymour, Trade, Uncategorized

The debate over Saskatchewan signing the Trade, Investment and Labour Mobility Agreement (TILMA), a free trade arrangement with B.C. and Alberta, goes to the heart of our province’s politics and identity. TILMA would shift sovereignty over some decisions from the politicians and the provincial government to people who trade with each other. It would also open up economic opportunities that are now hobbled by inter-provincial discrimination, but it may hurt some current special interest groups.

It is worth noting that there are few conventional trade barriers between Saskatchewan, Alberta, and B.C. While some jurisdictions use tariffs, quotas, and outright bans on outsiders doing business, TILMA targets the differences in regulations and the governments offering preferential treatment for locals. These barriers effectively mean that you can play on our field, but our players will have insider privileges. TILMA is designed to level the playing field by removing these privileges.

The agreement says that governments must treat traders, investors, and labourers from the signatory provinces “no less favourably … than their own.” Regulations must be harmonized, and government relations with business must be transparent and fair rather than closed and political. Traders who think they were wronged by another provincial government have the option of seeking up to $5 million in compensation.

Opponents say this is undemocratic. Why, they ask, should people in other provinces be able to prevent a government from favouring local businesses in order to protect them from competition?

Nevertheless, it is worth asking why people would oppose a level playing field. The only plausible answer is that they profit from offering worse and/or more expensive products and services under provincial protectionism. It is also worth asking why people from another province would go through the process of challenging our government through TILMA: Presumably they believe that with a level playing field they can compete with better and/or cheaper products and services for Saskatchewan residents. If sovereignty means having a government that can play favourites with some local businesses at the expense of all consumers, then the ‘sovereignty’ that TILMA opponents seek to protect is misused anyway.

Other objectors to TILMA claim the agreement will prevent the government from fulfilling social priorities. This is simply not true. As long as a government action comes from a long list of legitimate objectives (including protection of the environment, provision of social and health services, and affirmative action programs) and achieves the objective without unnecessary restriction to trade, it will be exempt.

Of course, everything that applies to other Canadians trading here works in reverse if Saskatchewanians experience discrimination while doing business in other provinces. Our opportunities for trading in other provinces are increased just as much as is our ability to benefit from better deals at home. Further, the transparency and fairness required for inter-provincial trade may have positive spin-offs for any local businesses shut out by government discrimination.

There has been considerable controversy over the exact level of benefits. The Conference Board of Canada has projected that TILMA would add almost $300 million annually to the Saskatchewan economy, and it would lead to the creation of 4,400 jobs. Professor Eric Howe at the University of Saskatchewan argues that this is an underestimate of the benefits, while others have aggressively attacked the projection as an overestimate.

Predicting how a million people will take advantage of new opportunities on a levelled playing field is difficult to do, and will create controversy. Nonetheless, the projections are for significant extra wealth and are supported by credible experts. It makes sense that removing barriers to inter-provincial trade, labour, and investment will open up new opportunities, leading to significant new wealth.

Joining TILMA would be a statement that we are confident that we can foot it with our western neighbours in the modern open economy, and that we are comfortable with the opportunities it would bring. Evading the agreement implies an acceptance that we operate at a different standard than our neighbours, and that we survive only with the help of government protection. Currently, the decision is driven by politically organized vested interests that invoke spurious moral principle. It is the concentrated, organized few who once again seek to prevail at the expense of the organized, diffused many.

Saskatchewan should not reject more and cheaper services and greater export opportunities because the politically organized find it is not in their interest. We should not believe, as some have suggested, that competition with our neighbours will mean a race to the bottom for Saskatchewan.

A more prosperous future for Saskatchewan depends on political leadership that can see beyond the usual narrow special interests to the broader opportunities TILMA entails.