Canada could increase real GDP by 7% if it drops all internal trade barriers: IMF
Global News
The IMF says in some sectors, such as educational and health-care services, interprovincial trade barriers exceed the equivalent of a 40 per cent tariff.
If Canada were to fully eliminate its internal trade barriers, it could increase its real GDP by about seven per cent in the long run, the International Monetary Fund says in a new report.
The report, published Tuesday, said such a move could mean roughly $210 billion in GDP, with the IMF saying the gains per province and territory “reinforces the case for reform.”
“These frictions are economically consequential,” the IMF report says.
“Goods, services, and workers face significant barriers when moving across provincial and territorial lines — a fragmentation that affects productivity, competitiveness, and overall resilience.”
The IMF notes the interprovincial trade barriers that remain in place equate to about a nine per cent tariff nationally, using “widely accepted trade analysis methods.”
It says the costs are mostly concentrated in services, which make up the majority of trade between provinces. But the report adds barriers in some sectors, such as health-care services and education, amount to a tariff of 40 per cent.
Provinces and territories also face “uneven” barriers, the report warns, with smaller provinces facing costs that are “multiples higher” in sectors like health, retail trade and professional services.
“The result is a patchwork economy where geography and regulation jointly shape opportunity —and where advantages that normally come with scale are muted,” the report says.
