Non-compliance penalties planned for interprovincial trade

New federal legislation will lay out cash penalties for provinces, and for the federal government itself, against violations of the provinces’ Agreement on Internal Trade.

The Improving Trade Within Canada Act (ITCA), introduced Thursday in the House of Commons, would impose penalties of up to $5 million for non-compliance with AIT obligations, the government said.

The size of a penalty would depend on the population of the jurisdiction involved, the government said, pegging the maximum for smaller provinces and territories at $250,000, while the federal government and larger provinces could face fines of up to $5 million.

The ITCA would also provide panels presiding over AIT disputes with the power to order a monetary penalty, and lay out “additional qualification criteria” for members of such panels.

Provincial and territorial ministers are “in the process of taking similar steps” by April 2011, to put accountability for compliance with the AIT fully in effect across the country. The ITCA covers only penalties against the federal government.

Canada’s premiers first signed the AIT in 1994 and since then have made “key improvements” in labour mobility for professions, trade in agricultural products, procurement practices and reduced interprovincial shipping barriers.

But the current moves to strengthen enforcement of the AIT and boost government accountability address recommendations put forward by private sector stakeholders, international organizations and think tanks, the federal government said.

“Such groups have long pointed out that the enforcement of panel rulings of non-compliance with the AIT is weak. More generally, they have also called for increased federal leadership in removing internal trade barriers.”

Alberta and the other western provinces last month mounted an AIT panel challenge of the Ontario Milk Act over Ontario’s restrictions on the sale of certain vegetable oil-blended dairy products.

An AIT summary panel gave Ontario until Feb. 1, 2011 to comply with the agreement by ensuring its policies are consistent with the AIT, the Alberta government said at the time, adding that if Ontario remains in breach, it could now face a cash penalty of up to $5 million.

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