Question Period Note: INTERNAL 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? Q4 – How will the Free Trade and Labour Mobility in Canada Act (One Canadian Economy Act) improve internal trade in Canada’s agriculture and agri-food 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 federal government removed all party specific exceptions from the CFTA, echoing the actions of some provinces. This has bolstered the CFTA and ensured it enables free internal trade in more sectors of our economy.
The agreement includes general 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. These general exceptions have not been removed from the CFTA, maintaining the price and supply stability enjoyed by both Canadian farmers and consumers.
Outside of the CFTA, regional agreements, such as the New West Partnership, also exist and support interprovincial trade, but do have limitations on the movement of some goods. R.2 - Agriculture and Agri-Food Canada (AAFC) and the Canadian Food Inspection Agency (CFIA) have been working closely with several provincial and territorial governments through FPT government tables, including the Domestic Food Trade Working Group, to identify 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.
AAFC routinely works with provinces and territories to better understand barriers to internal trade and support efforts to reduce them. AAFC is committed to advancing internal trade while maintaining high food safety standards which serve as the foundation for international trade as well as protecting Canada’s supply management system. R.3 - Canada takes its commitments at the World Trade Organization seriously, ensuring that our approach to trade reflects both global dynamics and domestic priorities. International markets are vital to sustaining and growing Canada’s agriculture sector, whereby we remain a strong proponent of a fair, rules-based trading system. R.4 - The One Canadian Economy Act will remove federal barriers to the movement of goods, services and workers across Canada while ensuring Canadians’ health, safety, security, and economic wellbeing is protected.
The One Canadian Economy Act removes federal barriers to internal trade by ensuring that a good or service that meets a provincial or territorial requirement will be considered compliant with any comparable federal requirements. We have worked with provinces and territories to compliment ambitious efforts they have already made to increase internal trade.
The Government of Canada is currently working on regulations to operationalize the Act and deliver benefits to Canadians. Regulations will define comparability and outline any exceptions needed - ensuring the Act improves internal trade - while continuing to uphold invaluable regulations that protect the health and safety of Canadians.

In light of current trade issues and imposition of tariffs, there is heightened public interest in increasing internal trade within Canada. The recently passed One Canadian Economy Act, which was enacted as part of Bill C-5, aims to reduce federal barriers to trade within Canada. If a good, such as food, is produced, used or sold according to provincial or territorial rules, it is considered to meet comparable federal requirements, unless specific regulations say otherwise. Supporting regulations are still needed to put the Act into force. Work to develop the regulations is ongoing, which will include consideration of whether any food commodities should be excepted from the Act.
For the agriculture and agri-food sector, trade barriers vary across different commodities. The shared authority over agriculture and agri-food between the federal and provincial governments has resulted in each province instituting its own regulatory system that is separate and unique from the federal regulatory system. The federal government has authority over trade and commerce, meaning that it regulates agricultural and agri-food products that cross provincial, territorial, or international borders. This structure has led to 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. In addition, there are various considerations regarding trade agreements to which Canada is a party that are designed to facilitate trade in safe food between parties. These agreements help Canada access markets as a major food exporter.
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.
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.
Removal of Federal Party-Specific Exceptions in the Canadian Free Trade Agreement (CFTA)
The preamble to Part 1 of Bill C-5 included the Government of Canada’s intent to remove CFTA federal exceptions. On July 1, 2025, the Government announced that all federal exceptions to the CFTA were removed. The removal of federal exceptions to the CFTA does not alter the General Exception Chapter of the CFTA (which includes exceptions for collective marketing and supply management).
Impact of the One Canadian Economy Act on AAFC Legislation
Implementation of the One Canadian Economy Act will not impact the supply management system for dairy, poultry, and eggs, consistent with the Government’s commitment to protect supply management. The general exception on collective marketing under the Canada Free Trade Agreement (Article 812), which protects supply management, also remains in place. Comparable food safety regulations under the jurisdiction of the CFIA are also likely in scope of the Act and are being analysed by CFIA.

AAFC is actively working with Privy Council Office (PCO) and other departments to guide the implementation of the FTLMCA including the development of regulations to ensure the comparability definition and exceptions best serve the agriculture and agri-food sector.
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’s Intergovernmental Affairs
o As of July 25, 2025, ten jurisdictions have agreed to a memorandum of understanding to advance direct-to-consumer (DTC) alcohol sales. Parties will now work towards finalizing more detailed operating agreements, or implementing their own frameworks, required to implement DTC alcohol sales by May 2026.
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 and territories on efforts to eliminate internal trade barriers, while maintaining health and safety standards that are important for Canadians and our strong international reputation.

• We are also working across government and with stakeholders to ensure the smooth implementation of the Free Trade and Labour Mobility in Canada Act, which will remove barriers to internal trade and build one Canadian economy.

• Removing barriers in other sectors, like transportation, would also benefit the agriculture sector. We are committed to working across government in all areas where the removal of internal trade barriers further encourages the free flow of agriculture and agri-food products across Canada.