The Power of Perspectives

The Canadian Bar Association

CBA/ABC National

The new face of globalization: Internal trade

September 16 2016 16 September 2016

In his latest column, Tyler Cowen refutes the notion that globalization has “hit a wall”, post-Brexit, and with TPP and TTIP on the skids:

Globalization isn’t so much slowing as it is taking new forms. The most potent form of globalization today is occurring inside nations, notably China and India.

Globalization typically is defined as the movement of goods, services, ideas, labor and investment across national borders. But many nations lack integrated economic relations within their borders, and thus they could reap high gains from trade by opening up internally. This is happening, and its logic very much resembles that of globalization. 

While China and India are lowering internal trade barriers to fuel growth, Canada is also confronting the problem of internal trade barriers. This summer, provincial and territorial leaders negotiated and agreed to an (admittedly cautious) interprovincial trade deal.  That came on the heels of a New Brunswick Provincial Court ruling in R v. Comeau, to be appealed, which held that a prohibition against buying and bringing in liquor from outside the province was unconstitutional and in violation of Section 121 of the Constitution Act. The provision governs the movement of goods in Canada (though it has been restrictively interpreted for close to a century). Then last month the Standing Senate Committee on Banking, Trade and Commerce released its report calling for the elimination of inter-provincial and territorial barriers in Canada and recommending that the meaning of Section 121 be referred to the Supreme Court for clarification. Others have suggested that the Comeau ruling be referred along with it.

Cyndee Todgham Cherniak has a good primer on the agreement in principle on a new Canadian Free Trade Agreement. Bottom line:

Usually, the phrase “agreement in principle” is used when the parties are not in agreement on all aspects, but want to announce that progress is being made.  It is watered-down language.

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