Provinces in Canada Spar over Trade but with Broader Free Trade, Experts Warn That Local Protectionism Will Hurt Jobs

Article excerpt

CANADA'S two most densely populated and economically powerful provinces, Quebec and Ontario, are teetering on the edge of a trade war.

After more than 15 years of complaining about Quebec laws that block the flow of many Ontario goods and services into Quebec, Ontario's government has had enough.

Pressed by unemployment and falling tax revenues, Ontario Premier Bob Rae's government has begun the process of implementing what some call "photocopy" legislation. The laws will basically adapt for Ontario's use the same rules Quebec uses.

"It has become clear to us that Quebec feels little incentive to address our concerns," says Frances Lankin, Ontario Minister of Economic Development and Trade. "We must demonstrate to Quebec why they must put an end to their discrimination." Quebec Industry Minister Gerald Tremblay is reported to have accused Ontario of being unwilling to negotiate. The two provinces were involved in talks through August that broke off. Calls seeking comment from Mr. Tremblay's office were not returned.

The stakes are enormous. Trade between the two provinces is nearly $50 billion (Canadian; US$38 billion) annually. A full-blown trade battle could damage the two battered economies. Yet the Ontario legislature moved forward on legislation that would:

* Discourage cities from buying Quebec-made buses. Quebec gives Novabus of St. Eustache an exclusive contract.

* Block Quebec construction workers from entering Ontario. By some estimates 4,000 Quebec workers daily cross the border into Ontario while only 300 Ontarians are so qualified.

* Encourage Ontario companies and individuals to choose local construction companies when signing contracts for the province's annual $25 billion worth of construction work.

* Exclude Quebec firms from contracting, subcontracting, or supplying materials on Ontario government-financed projects.

"The object is to negotiate an end to the trade barriers," says Paul Howard, an Ontario government spokesman. "The new rules will be dropped as soon as Quebec drops theirs. …


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