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New Canada Free Trade Agreement Update

The new Canada Free Trade Agreement (CFTA) that will remove domestic trade barriers is expected to add billions of dollars to the economy, but an agreement on booze will have to wait.

The internal trade deal, unveiled April 7 in Toronto, takes a “negative list” approach, meaning it automatically covers all sectors except when exemptions are listed.

Exempt sectors include taxation, water and tobacco control. The deal replaces the Agreement on Internal Trade from 1995, which essentially took the opposite approach.

Officials have struggled to pin a number on the potential economic benefits of the agreement, but Ontario Economic Development Minister Brad Duguid, who was also chair of the negotiations, said the deal is expected to add $25 billion a year to the economy.

What’s not in the deal is an agreement to streamline standards for alcohol across Canada. Instead a working group will report back by July 1, 2018.

The deal does, however, lay the groundwork for talks to eventually establish a process to help provinces and territories regulate the trade of recreational pot.

The deal, which takes effect July 1, establishes a process to reconcile regulations in different provinces that make trade or labour mobility difficult.

The Canadian Federation of Independent Business applauded the deal as a “major step.”

Federal Economic Development Minister Navdeep Bains said as protectionism is on the rise in the world, the deal demonstrates that Canada is open. The deal will put Canadian businesses on equal footing with foreign companies when competing for government procurement contracts across the country, officials said.

With the upcoming Comprehensive Economic and Trade Agreement with the EU, foreign companies could have had better access to provincial markets than Canadian companies, Duguid said.

The Canadian Trucking Alliance gave a “cautionary thumbs up” to the deal. Different trucking regulations across Canada make it difficult for drivers going between provinces.

The CFTA enables suppliers to most publicly owned energy utilities to bid for government contracts in various parts of the country, which officials estimate will provide $4.7 billion a year of new business opportunities.

The old deal included a maximum $5-million fine for governments who violate it, and that is now increased to $10 million.

NOTE: All details pertaining to CARM R2 processes are based on the current information available at the time of writing. As this is subject to change, it’s recommended you periodically check in with the CBSA or your customs broker.