Question Period Note: INTERPROVINCIAL TRADE

Q1 – How does the Canadian Free Trade Agreement (CFTA) apply to the agriculture and agri-food sector? Q2 – How is Agriculture and Agri-Food Canada (AAFC) helping reduce interprovincial trade barriers in Canada? Q3 – What international trade obligations impact interprovincial trade in Canada’s agricultural sector?

R.1 - The CFTA is an intergovernmental trade agreement signed by the federal government and all provinces and territories. The objective of the CFTA is to reduce and eliminate, to the extent possible, barriers to the free movement of persons, goods, services, and investments within Canada and to establish an open, efficient, and stable domestic market.
The agreement includes exceptions for agricultural commodities relating to collective marketing arrangements. This includes activities such as production, pricing, buying, and selling agricultural products. These exceptions place restrictions on agricultural goods and require provincial and territorial support to amend.
Outside of the CFTA, regional agreements, such as the New West Partnership, also exist and limit the movement of some goods. R.2 - The Canadian Food Inspection Agency (CFIA) has been in discussions with several provincial and territorial governments on pathways to facilitate more domestic trade of meat by having more companies access the federally regulated system.
AAFC has been supporting the CFIA in the development of domestic meat trade pilots, most notably the “Ready to Grow” pilot with Ontario. The pilot will support select provincially licensed meat businesses in obtaining a federal license under the Safe Foods for Canadians Regulations (SFCR) to enable them to trade interprovincially.
The pilot could include financial supports from AAFC to firms upgrading to the federal system or time-limited flexibilities where they can work with the CFIA and trade at the federal level as they work towards being federally regulated. The structure of the pilot is still being finalized. R.3 - Canada takes seriously its commitments at the World Trade Organization. The “national treatment” rule prohibits discriminating between products based on origin, whether by imposing extra fees or unequal regulatory requirements. This includes fees imposed for procedures (such as inspections) on imported products, which must be equal to those imposed on domestic products and not exceed the cost of the service provided.

With the threat and imposition of United States tariffs, increased attention is being paid to domestic trade barriers and their potential removal. For agriculture and agri-food, these trade barriers vary across different commodities and sectors for different reasons. Due to the shared authority over agriculture and agri-food between the federal and provincial governments, each province institutes its own regulatory system that is separate and unique from the federal regulatory system. This causes barriers to interprovincial trade, notably because:
• There is a lack of regulatory alignment between federal and provincial food safety systems. The federal Safe Food for Canadians Regulations SFCR administered by the CFIA apply to both international and interprovincial trade of food, to ensure both are held to the same standards. World Trade Organization rules stipulate domestic companies cannot receive preferential treatment relative to international competitors, so consistency is necessary to meet Canada’s international trade obligations.
o Provincially regulated meat processing facilities looking to expand their markets report challenges in meeting SFCR standards, thereby limiting domestic trade opportunities. Overall, 97% of meat slaughter already occurs at federally inspected abattoirs.
• Some sectors have marketing boards and related provincial legislative requirements that may impose limitations on movement of some products (e.g. potatoes). The SFCR also provides for some non-food safety requirements such as labeling, grades, or container size, and flexibilities in these areas can require exemptions from responsible agriculture ministers to move across provincial borders.
o While separate from the SFCR and sector or provincial legislative requirements, the CFTA provides a fairly broad set of exemptions for any commodities subject to collective marketing or related arrangements (e.g. supply managed products).
• Provincial barriers, such as those placed on alcohol across provincial borders, also limit interprovincial trade opportunities.
Existing FPT Government Forum (Domestic Food Trade Working Group)
AAFC and the CFIA are engaging with provincial/ territorial counterparts to address barriers to interprovincial trade through the Domestic Food Trade Working Group, which brings together the provinces and territories with the federal government to better understand the barriers to internal trade and examine opportunities to address obstacles.
Initiatives by other Federal Departments
Other federal departments are also advancing initiatives that will have positive effects on interprovincial trade in the agriculture and agri-food sector. AAFC is supporting these initiatives which include:
• Continued support for a Transport Canada mutual recognition trucking pilot
o Explore opportunities with partners to enhance the performance, resiliency and capacity of Canada’s domestic transportation system by increasing the number of mutually recognized regulations
• Direct-to-consumer alcohol sales led by the Privy Council Office intergovernmental affairs
o At its January 31st, 2025, meeting, the Committee on Internal Trade recommended that willing jurisdictions implement a Direct-to-Consumers sales system for alcohol
o Canada, Ontario, and Saskatchewan were named co-leads to advance this work

• The free movement of agriculture and agri-food products within Canada is important for our economy and food security.

• Most products can already move freely within Canada.

• We are working with provinces on pilot projects that support businesses in obtaining federal licensing to encourage interprovincial trade.

• Removing barriers in other sectors, like transportation, labour and alcohol, would also benefit the agriculture sector.

• We will work collaboratively across government to support the removal of internal trade barriers in all areas that will encourage the free flow of agriculture and agri-food products across Canada.