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blue-sky (verb)
: to offer ideas that are conceived by unrestrained imagination or optimism.
Hosted by Erin O’Toole, President and Managing Director of ADIT North America. Erin is the former Member of Parliament for Durham and former leader of the Conservative Party of Canada. The Blue Skies political podcast explores issues facing Canada and the world in a format that brings together thought leaders for an informed and engaging conversation.
Erin O'Toole (00:02.178)
Welcome to Blue Skies. Today we're gonna talk about this great country of ours, Canada. One of the largest countries in the world, diverse, strong, ten great provinces, thirteen territories. And in the general election in twenty twenty five, this was a major theme.
On several occasions, Prime Minister Kearney asking for the Trust Canadians said we can turn 13 economies into one economy. In fact, in May, after their throne speech, after winning the election, they had the One Canadian Economy Act, Bill C five, which is now known for the major projects and other things we need to do, but always underscoring all the rhetoric about the challenges from the United States was
Breaking down internal trade barriers, getting a one economy approach to the Canadian economy, unlocking up to 4% of GDP just by eliminating these barriers. So today, a year and a bit after those grand promises, we're going to do a little bit of a report card, a little bit of a checkup to see how that one Canadian economy is going. And Blue Skies is so fortunate to be joined by the leading Canadian policy expert.
on this topic. Ryan Minucha is a research fellow at the C.D. Howe Institute after a distinguished academic career with an economics degree from Yale, a law degree from Harvard, and that work at Harvard led to his first book, Booze, Cigarettes and Constitutional Dust-Ups. There's the little plug for it. Beyond just being an amazing title for a book on Canadian politics and public policy,
The book did cause a bit of sensation a few years ago. It won the Donner Prize for Public Policy in 2022, was a finalist the next year for the Balzilli Prize, and it really helped spark a conversation that then with the re-election of Donald Trump led us to this discussion about breaking down barriers in Canada. Let's do that today on Blue Skies. Welcome to Blue Skies, Ryan.
Ryan Manucha (02:15.171)
Thank you so much, Erin. It's such a privilege to be here. Very excited.
Erin O'Toole (02:19.052)
Well, listen, we first started talking internal trade on the five one streetcar in Toronto as we were going from the east end of the city to the downtown core. And you recognized me, I think, reading the Globe and we had a great little talk about your book. What really led to the book? talk a little bit about the work you were doing at Harvard and then how that translated into a book that's been widely read in Ottawa.
Ryan Manucha (02:47.419)
was studying international trade law, which was something I was really, really interested in at law school, when all of a sudden, this was back in 2018, 2019, a big domestic dispute arose where Alberta was trying to get more bitumen out to the coast and BC, I mean it's kind of a redux of present conversation, BC said no, so Alberta said, okay, in response, we're not going to sell any more BC wine in our liquor stores. And so you had this domestic trade be trade battle taking place.
And I said, well, what are the institutions to resolve this kind of dispute? What's our history with this? And as soon as I started pulling the thread, I learned about these incredible episodes in Canadian history, like these chicken and egg wars of the nineteen seventies, where, you know, protectionist egg and chicken industries were causing millions of eggs to
wrought in literally in fields in Manitoba because of the provincialism of the Canadian system. So I was really trying to unpack, how did we get to where we are? Are we one nation where you can trade internally, seamlessly? Or are we like sovereign states with one another and trying to figure out the the puzzle?
Erin O'Toole (03:55.01)
So that that dispute w which
Is still sort of raging, although the Prime Minister seems to have locked in an agreement with Premier Smith's government and reluctantly David Eby's government in BC to get a a pipeline to to tide water on the Pacific. But you saw how the provinces were using that to basically negotiate against one another and it it led to a wider piece. Did you do an essay at Harvard or anything that was an early version of this book that you then decided to grow?
Ryan Manucha (04:28.567)
It's very interesting we're talking this week 'cause just last week was the first
trade court internal trade court case in almost a decade between an Ontario construction company and the government of New Brunswick. And so when I wa back in the early days, I was studying Canada's nascent internal trade court because no one had looked at the case law coming out of it. We'd had eight, thirteen disputes whether it be about accounting or dairy or dairy or dairy or other other a couple other things. but trying to figure out what is the jurisprudence because if you have again in the case last week it was this Ontario construction
Erin O'Toole (04:54.094)
Horse, heart.
Ryan Manucha (05:03.281)
company who was winning contracts to repair bridges in New Brunswick. And the claim was that New Brunswick is holding Ontario this Ontario firm to a higher standard than the domestic New Brunswick equivalents in violation of our internal trade agreement. So that's where it all birthed from for me, which was studying what's the institutional apparatus to resolve these conflicts before we start whipping out very you know the Treyberry pistols like complete blockages at internal frontiers.
Erin O'Toole (05:32.63)
before the latest dust up, as as you describe them in your book. Well let's go back to the
Ryan Manucha (05:34.785)
Yeah.
Erin O'Toole (05:39.106)
The first word in the title, I'll do one last shameless plug for Ryan's book here. Booze. You didn't pick milk, you didn't pick eggs, you picked booze and cigarettes, which I guess, you know, hasn't really changed from the early days of Canada. but the gold seal case, which you discuss in your book, which really set the tone for the challenges we've we have in terms of internal trade in Canada, set the scene. what was the gold seal case? Set
Set the scene for why booze is the first word in the title of your book.
Ryan Manucha (06:13.401)
It's the early 1920s, late twent 1910s, and temperance is all the rage. Moral purity, especially in Western Canada, was something that the local electorate was very much in favor of. And so this wave of no alcohol in certain western provinces was flooding through. And of course, who didn't like that? It was people who made business by selling booze. And so this entrepreneurial firm, this booze firm, said, you know what, let's try to get these temperance laws declared as unconstitutional.
break down temperance. And let's do so by pointing to our what I call what many call Free Trade Clause in the British in the Constitution Act, which so this you know, let's so they said, okay, we're gonna send a shipment of booze from Calgary to Moose Jaw.
And ask the CPR to do so. And the CPR says, no, no, no, we can't do that. This is in violation of all the temperance laws that have been flying around. So they said, Okay, CPR, we're taking you to court. this what you're denying me is a sort of protected under the Constitution. And so a story about an entrepreneurial b booze from trying to tear down temperance laws got us our first ever case on the meaning of
internal free trade according to our constitution. And according to those judges in the 1920s, none of whom really had economics degrees or we had never been party to economics considerations, said no, an internal trade barrier has to do with a a customs duty or a tariff. If it's if I don't see a customs duty or tariff, I don't think of it as an internal trade barrier. And therefore this temperance law was allowed to pass.
and it does not considered to be in violation of the free trade clause. And so the you know, the in the 1920s, the economics profession was dominated by the clergy, ex-stockbrokers. We really didn't have people who had PhDs in econom economics like we do today. It was very rudimentary our thinking about economics and what a trade barrier was. And we never really considered, you could have things that are not tariffs act as trade barriers. And you might tell someone south of the border that there are other things other than tariffs that can serve as trade barriers.
Ryan Manucha (08:20.575)
but that really had not entered the vernacular of of certainly the the judges of the Supreme Court in Canada in the nineteen twenties. And so we got stuck with this idea of what is a trade barrier, and it's really affected us to the current day.
Erin O'Toole (08:33.57)
Let's break that down even more because as you said, temperance was the issue and but the federal parliament had actually turned down a plebiscite on temperance on prohibition, right? It which had actually slightly won. but the the Parliament of Canada probably in the lounges which at that time had had booze in them kind of
Ryan Manucha (08:55.407)
Mm-hmm.
Erin O'Toole (08:58.21)
discounted the the plebiscite and left it to the provinces to have their temperance decision. So the federal government could have made this a national policy, did not. Certain provinces did. In in fact, I think certain cities did. Like Toronto, the downtown was a dry and I always remember, you know, the bars were set up just outside the the town limits of Toronto and became quite famous because the downtown was f for the teetotlers. Talk a little bit about Parliament ignoring the issue.
Ryan Manucha (09:12.9)
Mm-hmm.
Ryan Manucha (09:21.263)
Yeah.
Erin O'Toole (09:28.144)
than letting the the the provinces take it up.
Ryan Manucha (09:31.406)
Yeah. I mean this has been a common theme and I think you said it in initially with the MOU with Alberta on pipelines, right? I think there's and I'll give you another instance where y the next w the next big case, there are a couple of big pick cases, but let's pick on this one about you know, the cost of feed for turkeys in the nineteen fifties was which was another big internal trade court case. the internal trade court the sorry, internal trade clause, free internal trade clause
has always been a device that people have used to achieve another means. one section yes, one section one twenty one. Cause remember, go back in time, eighteen sixty seven, you had border agents at the border of Upper and Lower Canada at Coteau du Lac, watching the flow of goods, you know, between upper and lower Canada. Governments raised revenue on the backs of tariffs and customs duties. It was very hard to implement sophisticated income tax systems. Like that was almost impossible in early Canada. and but what the
Erin O'Toole (10:04.214)
And that's section one twenty one, right? Yeah.
Ryan Manucha (10:28.889)
Fathers of Confederation truly understood because twice in their adulthoods they'd seen sort of the
economic order upended on them was foreign trading partners changing the rules of the road. So they said, we need deeper internal markets to be able to withstand the ebbs and flows of what might happen externally to Canada. And so one of the things that they needed to densify and create deeper internal markets was say, okay, tariffs and custom duties, those are distortive. Let's that's no longer gonna be a legitimate means of you to raise revenue amongst the provinces.
And so you create this delicate balancing act in the s world's second largest country by landmass, these subnational units who need the ability to regulate in light of local circumstances on the one hand, but at the same time, we're all driving towards national objectives, national growth, national GDP, competitive economy that can again withstand what they saw in eighteen sixty-seven was the whims of the US canceling an early US Canada Free Trade Agreement. so the question is how far and how quickly can the federal government really
sort of act as a central convener on internal trade.
Erin O'Toole (11:33.58)
Yeah. Yeah. Let me jump in on that too, because the court in the Gold Seal case, did they look at the constitutional debates, you know
The the whole I if you look at the One Canada Act of May introduced in May twenty twenty five by the Kearney government, that was essentially the pitch of Sir John A. Macdonald with Confederation in the years after the US Civil War. Even the Pacific Railway Project was all about building East-West trade within Canada, internal trade and an internal country to overcome the manifest destiny from the United States. So we're once
again facing that, you know, almost 160 years later. But did the court look at that as the legislative intent behind
Ryan Manucha (12:16.429)
Mm-hmm. Mm-hmm.
Erin O'Toole (12:27.124)
121, the British North American Act, was to actually break down these barriers because, as you said, they kind of allowed barriers to be set up of a of a different type with temperance. But that decision became the precedent of the land and has kind of hamstrung the entire internal trade debate since.
Ryan Manucha (12:49.665)
Mm-hmm. The early twentieth century
High court jurisprudence on what is a power in the province's hands versus the federal government's hands was very delicate. It's both Canada Canada's Supreme Court was actually not the highest Supreme highest final court until you know the late 40s. because many of the cases in some of the later internal trade court cases go all the way to England, because that was the they were the highest court at at that time. And they were trying to figure out again, another example of a free trade case was about whether or not New Brunswick had the ability to
Erin O'Toole (13:11.714)
Yeah.
Ryan Manucha (13:22.737)
A provincial sales tax. Like there were some very early Canada questions rearing their heads, and the internal trade clause kept popping up as a device that very smart lawyers were trying to use as a way to achieve either an end for like a a new power for a provincial government or mitigating a federal power. And it's very, very difficult because you had.
You know, what many scholars would argue you had a an England that was very intent on ensuring provinces had more power than perhaps folks in Ottawa at the same time in the early twentieth century would have wanted. So it's this it's it's a challenge because again our highest court was not in Ottawa for a great period of time during when the the the the table was being set on what is internal trade in Canada.
Erin O'Toole (14:15.336)
And this issue was set
In this post-temperance time, as you said, the sort of jurisprudence from the from the 30s, you know, from the 20s, 30s, set the tone for how this free trade across Canada was going to be set. So it allowed these little fiefdoms to be set up. And then provincial regimes about beer, for example, that you had to brew the beer within the province to sell it within the province, all these little hierarchies.
Kind of created a an early Canada that allowed you to be a very big fish in a small pond, but not swim into any other pond. Was was that kind of a reinforcing mechanism of this sort of provincial dominance, pro provincial protectionism, and the fact that the federal court had not allowed that to be broken down? It just built these fiefdoms up.
Ryan Manucha (15:10.361)
Mm-hmm. Mm-hmm.
Canada was so small. I mean, just take you talked about Toronto a moment ago with the bars on the outer rims of the city. Think about like within the lifetime of the generation that was dealing with the fur like in the early twenties and thirties, th they were the sort of the inheritors, sort of the last vestiges of the family compact, where they were just trading around these positions of power within Upper Canada. and then you had the Chateau Clique over in Montreal. It was indeed about creating these little little empires and ensuring that the right families with the you know were allowed to mint the right.
Right kind of cash and control the the decisions of you know a population of Toronto which you know barely you know 50 70 years prior to that was you know at 10,000. so you're absolutely right. Think about even bring us into sort of the modern day, and I'm sure you you could speak to I don't I don't I don't want to put on the put that spot, but you know, the the regulatory fief thems that do emerge over time and about sort of internal empire building. I'm reading this great book, just at the beginning stages of it, but.
the licensing racket in the United States where you create the credentialing system is a way to create again those i you know it it we're we're it's it's the later stage version of of the guilds and you know for you know for we can talk about w why and and the the normative piece about it. Should we have these are these important to protect workers and protect you know consumers but they are forms of protection and they and they entrench status quo.
Erin O'Toole (16:26.04)
Mm-hmm.
Erin O'Toole (16:40.054)
Yes, and the status quo is entrenched right to the present day. So let's keep with the theme of booze. In twenty twelve, a guy named Gerald Camo bought some discount beer at the Costco in Quebec.
And tried to drive it home to his home in in New Brunswick. You know, heaven, heaven forbid you have a flat of beer in your car as you're on the Trans Canada traveling between Quebec and New Brunswick. But here we were again, a little under a century later. tell me a little bit about the Camo case and how the Supreme Court had had a chance to look at this again and what they what did they do?
Ryan Manucha (17:26.337)
Mm-hmm. Kumo entered the pantheon of internal trade gods when he took up his case in twenty twelve, 'cause he comes back with a trunk full of beer, and he had, you know, close to twelve cases, the limit being twelve beers, so he well in excess. Booze confiscated.
Erin O'Toole (17:30.646)
Yeah.
Ryan Manucha (17:42.7)
$300 fine and he but he doesn't like he doesn't just sit on that. He says this is crazy. And he found himself a willing lawyer. He the con Canadian Constitutional Foundation came in and sort of provided funding assistance. And he said, Let's let's make a change. I what I it's a great story of a change maker from someone who didn't need to be given a title or a position. He said, I am going to try to make a difference here. And he tried to inch the internal trade narrative forward. and 2012, all the way to 2018, which is when the Supreme Court
Court decision comes out and he loses, resoundingly loses. It's a shutout. And, you know, we can talk about what the Supreme Court was trying to do. Was there a political sort of tension? There's a number of things. Did they get it right? Did they get it wrong? And we're going unpack that in this conversation. But Mr. Kumeau was doing what I think that most other Canadians would do, which is react in an outcry about just doing a shopping on the other side of a Canadian border. And I'll tell you this as a code, and we're going unpack the Kumot decision.
I think in this conversation, but New Brunswick fought tooth and nail all the way to the Supreme Court, and they won, and they kept that rule in place until early last year. All the Trump rhetoric comes out, and Premier Susan Holt comes out and removes the offending rule that got Kumo in so much trouble. It really does go to show how
you know, these these these are all choices, right? And they're all circumst we're all circumstances or conditions and our elected leaders, when they really care to, can make that change, when it comes to an internal trade barrier when they're active.
Erin O'Toole (19:17.536)
Yes, and so can the courts. So let's go back to Como because I actually thought the Supreme Court got it wrong.
And I would love to hear your take as the constitutional expert. I'm a I'm an amateur that plays a lawyer occasionally on podcasts. But the the the the the thing that drove me nuts and I remember I think I was running for leader the first or second time and I did a video. My office was like across the street from the Supreme Court or across the parking lot, and I did a video basically saying, you know, the Supreme Court all the time uses the living tree approach to the Constitution to look at
Ryan Manucha (19:32.345)
So you're too humble.
Erin O'Toole (19:54.56)
An older issue in the modern setting, modern Canada. And I really thought there was an ability.
To re-look at what was the jurisprudence going back to Gold Seal. I always found, as you said, it was, you know, the justices at that time of the Gold Seal really didn't have an economic outlook. You know, there was no study of law and economics. I did think it was quite iron ironic that Justice Duff of the famous Simpsons Beer Duff was was, I think, I'm not sure if he wrote the opinion, but he was.
Involved. This was a time that the modern court, the McLaughlin court by this point, could have revisited the matter. What are your thoughts on the decision and you know, could it have been pushed to the legislatures and and parliament better? Was there a chance for the Supreme Court to see the the rationale being advanced by Camo?
Ryan Manucha (20:52.417)
Mm-hmm. The Supreme Court was afraid of changing an established understanding that had persisted for over a you know nearly a century at that point. The idea was look, we're going to defer and give you know room to the provinces to regulate under their you know their their constitutional heads of power. and you know, they I'm I'm not saying I agree with them. I think they got it wrong too. I think that they portrayed the Kumo decision as binary. There was one option or
another option and we don't like the option he's presenting and they mischaracterized what he was asking for. So we're gonna go and be very deferential. and they could have taken a middle road and the leading scholar, the the absolute leading scholar on the Trade and Commerce Clause in Canada, Professor Malcolm Lavois, I think he was an intervener, was representing an intervener at that Supreme Court. And his enunciation of what the judicial test should be for the internal trade clause that was I think the test that the Supreme Court should have adopted.
Erin O'Toole (21:29.507)
Mm-hmm.
Ryan Manucha (21:52.694)
And without getting too into the weeds of sort of you know all the ins and outs jurisprudence, what he was offering was so he was saying, look, you can't just take at face value the reason for a trade-infringing regulation. Let's say, like Ontario says, Look, apples coming in from Quebec, we gotta fumigate them like five times. We're really concerned about the consumer safety of this. And you say, Okay, five times. That's like I get, I get you have an interest in consumer safety, Ontario, but
Like w
That seems a little excessive. What happened why why what about the second one didn't work for you? And so you know Malcolm's test was effectively saying like you need to balance, there needs to be a necessity component to this and you need to be a little bit more searching. Did you was there a less trade-infringing way to achieve your policy objective? If you care about the health and safety of Ontario Apple consumers, is there a way you could do this without fumigating five or ten times, right? and his version of the test absolutely was at their fingertips. It's well used throughout
Other parts of Canadian jurisprudence and they did not pick it up. And maybe in 20 years we'll get another case where they do. But I think you're right. I think that the Supreme Court jurisprudence on internal trade and internal labor mobility has been off for the past 25 years. And it's gone in a direction with a set of Supreme Court justices who, again, may, I may I getting into their heads, I think, may be wanting to punt the issue back to the legislature and say, hey, this is the common understanding of things, like if you want to change it.
That doesn't that doesn't defend their interpretation of the mobility clause under the charter nor section one twenty-one. but that's sort of my my read of the tea leaves. You probably have better better insights.
Erin O'Toole (23:34.806)
Yeah. No, yeah, maybe this new Chief Justice, you know, big peace on the globe in the globe on the weekend on Justice Wagner. I I think I I had said after the time, and in fact one of my leaderships, maybe even in our final policy in twenty twenty one, I put forward an idea of having new federal legislation
Ryan Manucha (23:41.229)
Mm-hmm. Mm-hmm.
Erin O'Toole (23:56.974)
We weren't going to call it the One Canada Act, but Internal Trade Barrier Act, and send it to the Supreme Court on a special reference to say this is now our intention. This is what we think and then send it as a reference, much like Harper had done with proposals to reform the Senate. That's what I was was going to do, woulda, coulda, shoulda ha had I become Prime Minister. But I'm I'm glad the the the subject's being debated now, and I do I do think that.
The the Trump re-election reignited the need for us to visit this. You know, there's various Bank of Canada and IMF studies that that say to us, you know, there's eighty billion dollars plus, like three and a half percent of GDP could be unlocked by taking down these barriers.
And so why why are we not doing it? So I want to go to the second part of the the the the podcast because we've we've talked about the booze. You know, I had to start and and we hammered hammered home the booze. But we had the one Canadian Economy Act. In fact, the Conservatives and the minority Carney had at the time, and with MP departures, he seems to be majority and then minority, majority, minority. But the conservatives helped pass Bill C five.
We're now a year later. Let's do a bit of a report card. and then we'll talk in a moment about the report you just did with the Ontario Chamber, but do we have one economy out of thirteen? Ha how how how are we doing, Ryan, one year plus after passage of the One Canada Economy Act?
Ryan Manucha (25:38.872)
We are certainly we were swamped last year with a lot of exciting announcements for a guy who's been on internal trade and sees and you've s you've seen it too. It moves, you know, like a iceberg sort of melting. Like
The amount of announcements and momentum and excitement and energy last year, it was so exciting because usually it moves at a snail's pace. But the big thing is do announcements translate to actual policy and implementation? And are people focused on the right things? Number one. Number two, are you truly and sincerely going to have an active central government form as a policy formation body around key technical, you know, very entrenched subject matter and very entrenched internal trade barriers? When you and I met on that streetcar.
Like I was really impressed with your command, like, and you've you've had command of the internal trade file for a long time and connecting the dots. And we can we talk about booze, and I'd say 99.9% of folks who think about internal trade barriers think about it in terms of hard goods and alcohol. And you know, you you and I had that great conversation where we're talking about how wide-ranging an internal trade barrier should be conceived of as, right? We're talking about standards, we're talking about labor credentials, we're talking about movement of services across provincial borders. And when you start to open the aperture of what constitutes an
Internal trade barrier, which from my definition really is you know, it's the fragmentation amongst the provinces when it comes to key regulatory moments. that's where there's so much work. No longer does it take, what, three weeks to walk from you know Kingston to Toronto? Like you can't we cannot afford to regulate as if we're all local economies anymore. We can't pretend that a country of 40 million can divine the best regulation for each aspect of the economy from coast to coast. and so this is what's been really exciting. So long story short.
Erin O'Toole (27:17.368)
Yeah.
Ryan Manucha (27:19.405)
cautiously optimistic a a is so far, but I am seeing some of the wheels start to slow and and and we can discuss that.
Erin O'Toole (27:26.902)
Okay, well with your impeccable educational credentials, you I'm gonna make you give for the the government a a a grade so far. What are the what do they get? Do they get a B, a C plus, an A?
Ryan Manucha (27:37.198)
I'd give them I'd give them a a a B plus or an A minus. The and we're talking about the federal government here. I think all the cer yeah. I think that their focus on removing internal
Erin O'Toole (27:44.194)
Yes.
Ryan Manucha (27:50.926)
Federal internal trade barriers was a little misleading when you know Carney comes up at his Davos speech and talks about the removal of federal like most people who are not in the ins and outs of internal trade barriers heard that speech and said, he talked about removing we've removed all internal trade barriers. No, he talked about, first of all, federal, and he talked about removing them. Two things. Federal government doesn't really have I mean, they have some, and we can talk about what those are, it's a food inspection. But second of all, that's not their only role in the internal trade discourse. Their role is the convener amongst 13 subnational jurisdictions who need to align.
Erin O'Toole (28:00.046)
It's yeah.
Ryan Manucha (28:20.849)
And there's been a lot of incredible work. Like, again, like I have to give credit where credit is due, pan-Canadian collaboration at a rate I have never seen on this internal trade file. Even like studying it sort of pre-confederation to the present, like it's really impressive. Substantively, we've moved forward 18 months out. but to portray the federal government's position as like we're a bystander and we're observing no no no, you have a very important central forcing role here. And as you said, like you just talked about, you know, that federal legislation that you could introduce, there is so much more the federal government could be doing.
on a on internal trade and and for them to suggest that sort of mission was accomplished, especially out of Davos, was quite misleading and it creates so many unintended consequences for folks on the internal trade file because people get jaded. They say, he said the internal trade barriers are gone. They don't get the federal asterisk. And then therefore like we're done. But I know they're not done, therefore this is never gonna happen. Like it really starts to harm momentum on the file.
Erin O'Toole (29:11.948)
Yeah. Well, listen, you gave a bit of a critique there, but you gave them an A minus. So like you're the millennial great inflation product. I'm the I I'm the jaded Gen X or I'm giving them a C plus for the very reasons you said. You know, passing the One Canadian Economy Act, doing the mission accomplished in Davos, actually doesn't even touch it. And
Ryan Manucha (29:21.454)
Ha ha.
Erin O'Toole (29:37.418)
I really hope that the Prime Minister, with his economic bona fides, his high approval numbers right now, uses a bit of that political capital to advance this with the provinces. And now we're gonna get into the real nitty-gritty, which I thought your report with the Ontario Chamber of Commerce was very good. When people used to say to me, is it booze that's the big barrier to to internal trade in Canada? You know, and I have to give shout outs to MP Dan Albus.
From the Okanagan in in British Columbia for the Free My Grape and Free My Beer sort of social media campaigns has has shown shined the spotlight on it. And Dan also has a bill about using Canada Post to send to send booze, to use the federal area of jurisdiction. But I used to say the real barrier.
Is construction in the national capital region because we're talking about labor mobility of a tradesman or tradesperson in Ottawa who may want to build on a project in Gatineau. This is really the nitty-gritty. It's labor mobility, it's provincial standardizations and credentialing. and a lot of that is status quo. As you said, the guilds, the unions, the the sort of modern equivalent of the guilds don't
Ryan Manucha (30:44.409)
Mm-hmm. Mm-hmm.
Erin O'Toole (30:58.914)
want to have that labor mobility. is that in your view the largest barrier to to breaking down this internal trade barrier and unlocking that four percent of GDP?
Ryan Manucha (31:12.589)
Yeah, I'll give you a stat. Between two thousand and five and twenty twenty one, the regulatory burden on industry in those fifteen years marched up thirty seven percent on Canadian firms. This was according to the Stats Canada. Like that kind of statistic shows like regulation, the regulatory burden goes in one direction.
And then compound it with the fact that it may not go in the same direction across the several provinces. it's it's the fiefdoms, the regulatory fiefdoms that get created, it's the inertia, it's the fear of changing. I mean, you've you've sat in the position as a minister, and there's folks who would have been underneath you. You get asked to change the rules of the road on how you regulate fall safety training, first aid kits. You're afraid for your minister to have to stand up and answer.
some outcome that came from changing the way that things were regulated, right? There is a a risk aversion that really impedes. And so you need first ministers to be standing up and giving their teams the room to think differently. And I think, and not even necessarily first ministers, you get minister key ministers like Minister Beth and Falvey in Ontario standing up and saying, Ontario is like just last week, I was I was astounded standing up and saying we Ontario is going to join.
The securities passport system. This is like a sort of a new the way of that we modernize regulation for the securities industry. And he, the amount of inertia and pushback he would have, he and his team would have had to go through to make that change was monumental. so you need someone of of of that kind of willingness to stick their own neck out and say, I'm gonna be the leader when it means it means Susan Holt saying we're gonna get rid of the booze rules that got Kumo in trouble. It's that kind of leadership you hope to see in this kind of moment.
Erin O'Toole (32:53.398)
And we've seen a little bit of this in Western Canada because there's been a bit of a Western Canada free trade pact between Alberta, Saskatchewan. talk about that for a minute.
Ryan Manucha (33:05.66)
Mm. I think that you know, that last year
Premier Tim Houston got a lot of fan for being the first province to the turf post-Trump with internal trade legislation. But that sort of alighted the fact that Premier Kenny, prior to Trump even being elected, 2021 was at the table with very, very impressive, far-reaching internal trade liberalization legislation. And that was kind of neglected. Until Alberta has always, always been at the vanguard of the internal trade conversation. And so I think that there was a little bit of there was, you know,
the excitement post Trump, but like credit where credit is due and Western Canada's internal trade pact with the new West Trade Partnership Agreement, trying to go farther than the rest of Canada on breaking down internal trade barriers, is absolutely something that shouldn't be overlooked. And I'm I I'm very impressed with their constant leadership on that.
Erin O'Toole (33:57.774)
Great. So there's some great provincial leadership being shown. the federal government is still seized with it. So after a lot of fanfare, as you said, a little over a year ago and in the election, we're in a bit of a lull.
And we need to re-kick the conversation. And you've kind of done that with the recent Ontario Chamber of Commerce report on internal trade, where you highlighted five areas where there needs to be a prioritization. We've already touched on one of them: labor mobility, second was construction and housing, that's almost related to the labor mobility in some ways. Third, transportation, fourth, food and beverage. That's where the booze would would sick in and and eggs and turn.
Ryan Manucha (34:39.191)
Mm-hmm.
Erin O'Toole (34:41.904)
And some of the other things we've talked about. And fifth being capital mobility. Talk a little bit about the Ontario Chamber report and how you're trying to use that along with Dan Tisch and the Chamber and everybody that was a part of it to kick start and get us out of this lull to make more progress on breaking down these barriers.
Ryan Manucha (35:01.785)
That was so thrilling. I'm so grateful to both Dan Tish and and Jills Gerson at at the Toronto Region Board of Trade. I went to Dan and I said, look, this was early this year, January, like and Canada's internal trade Canada's business community has never self-organized around the concept of internal trade, and yet it affects them immensely and deeply. and I know that there's a continuous craving on the govern part of you know internal trade policymakers. What what should we be doing? What can we, you know, like let's not play whack-a-mole. What's where are the issues and then we will start to address them.
and in very in very effective fashion. So let's create like a feedback loop here. And so we brought together a hundred business leaders, regulators, government officials, industry stakeholders to talk in those five verticals and create that because again, five years ago we were talking about internal trade barriers as booze. It is not just booze, it's about electrical codes, it's about construction codes, it's about fall safety training programs and compatible across the provinces. And that's what this this day, this summit was meant to bring out and highlight. And so across those five verticals,
Very very specific, substantive next steps. One of them having been the Ontario joining passport, and then obviously Minister beat us to the punch last week just as the report was coming out. So it was very impressive. so very, very exciting. and really, really deepening this because we have the Council of the Federation meets this week in Charlottetown, and then the Committee on Internal Trade, Canada's senior most internal trade ministers, meets next month in a Calouet. so like this is a an incredible moment to see, and I I
Will be reading the communiques coming out of both. What are they talking about? Internal trade, because it really has waned. It really has waned. Like, I and you know, you've got a minister in Ottawa, the Minister of LeBlanc, great deal of respect for him, but he's got a ton of portfolios, one of which is USMCA, versus last year when internal trade was its own standalone portfolio for a particular minister, which allowed for unbridled time and attention on it. and so it it's really re-emphasizing it. Because you know, Erin, you know the status, two-way trade with the US.
one point two trillion dollars, that's goods and services. Internal trade, five hundred billion in goods and services within Canada. So it's it's something that deserves continued time and support to deepen our internal market.
Erin O'Toole (37:14.38)
Well said. as you said, I'm on the Dominic is very busy, Minister Leblanc, particularly given the challenges of the US relationship at present. I'm fortunate to sit on the Canada US Economic Council that the Prime Minister put together, that Dominic chairs alongside our chief negotiator Janice Schrett and our ambassador Mark Wiseman.
Ryan Manucha (37:19.257)
Mm-hmm.
Erin O'Toole (37:38.88)
industry, former politicians and policy advisors and and sector labor unions. We're all there to really give the word we're hearing on the street. but you're right, the internal trade
economically very important but doesn't get you know a tenth of the coverage. So you're on Blue Skies, which I know, well I hope Prime Minister Kearney listens to regularly on his long runs, right? I like podcasts on some of my long runs or or bike rides. So you being the leading policy ad light in this sector, you're you have an exclusive chance now to speak directly to Dominic and the Prime Minister.
Ryan Manucha (38:05.721)
Ha ha ha.
Erin O'Toole (38:24.304)
In the next year, if we were to kick start out of this lull, you already gave them an A-, so they've gotta they've gotta like you. What are one or two things that the federal government should really do in the next 12 months to kick these barriers down once and for all? So we had the act last year, the One Canadian Economy Act, we had all that momentum, it's waning a bit. What's one or two things, Ryan, that you would recommend the Prime Minister, Minister LeBlanc, and the federal government to do?
Ryan Manucha (38:57.595)
One, support Senator Marty Klein's initiative to get the Competition Bureau to be our standing internal trade police force, if you will. Give them greater and concrete and specific advisory power, stock powers over internal trade and and sort of
They are the best in policing anti-competitive conduct and anti-uh business pra you know the the business practices that we want to disincentivize. They should be re- they should have the tooling and then wherewithal to tackle internal trade. Number two is get stronger and using the power of the purse and using knowing that you have the backstop of the trade and commerce clause to bring together.
provinces where there is deadlock and there's atrophying momentum and be that central government, be that convening force, and don't simply see yourself as this entity to r you know, eliminate exceptions and pull yourself out and say, Hey, we've done our best. No, no, you've you've got to jump head first. You've got to be in there the deepest. because that's what the constitutional setup has led to in this situation.
Erin O'Toole (40:00.972)
Yeah, great two points. Did you have Professor Sunstein when you were at Harvard? did you have a class with him, the the famous nudge philosophy? These are nudges the federal government can do
on a policy level or to use the the spending and the the economic partnership to to nudge in the right direction. Okay, you've talked federal. Now I'm gonna flip this to a couple of provincial premiers. What are one or two things that you think the provinces, and I'm actually looking at my own here because I do think construction, labor mobility, Ontario and Quebec could actually take take a lesson from from Western Canada here. What's one or two things provincial premiers could do to play the
Ryan Manucha (40:46.199)
Yeah, labor mobility and services mobility across the country. We want if we have all these major projects, right, we need firms to be able to competitively bid on aspects of them to get them going to get people to where they are needed. you want the best to be bidding on these projects, to be supporting the infrastructure build out of Canada. And if you're hammered because of a a provincial frontier and sort of needless, unreasonable discrimination, that's gonna harm all of our common interests. So it's making it easier.
So when it comes to the 30-day labor 30-day service standard for getting people across borders, like Ontario's gone farther than that, some other provinces have gone farther. There's no reason for it to get to close to zero days, but at minimum we need to be held accountable and we need to see that this is actually happening. So one thing is getting people quickly credentialed across the border, unless there's truly an unreasonable reason to do so, in which case let's see some writing and some justification for it.
Erin O'Toole (41:44.908)
Yeah, and l let's break this down a little bit more. So
Credentialed, approved from one border to another. We're all talking in Canada. So if you're talking an electrician or a pipe fitter or or a a construction site manager in Ontario, you would think that we'd be satisfied for them to go to Quebec to do this. Is this the type of mini barriers that we're talking about? Or is there something more detailed from a safety or regulatory standpoint that they're relying on to slow the mobility of these workers?
Ryan Manucha (42:16.291)
That's what like it's like turning an aircraft carrier. So the big thing last year, it's the closest thing we have in internal trade to a silver bullet, which is mutual recognition. Which is saying if you're gonna say no to that inbound credentialed worker, why? Why? Is it justifiable? Is it defensible? If you can write out the reasoning and we can all see it, maybe we can say, okay, there's g there's good reason for it. But right now we don't have regimes where that's that's you know sort of
the de facto standard. and in Australia they saw an abundant twenty occupations escalated to national licensing standards after doing what we're trying to do here within five years, because these regulators were in such common communication with another they realized we're actually not all that different than we thought we were.
and so it was just so much easier after all that friction to just come to national licensing standards. within the first two years of them implementing the regime that we're all dreaming of here for Canada, 15,000 Australians got to the other side of a an Australian frontier within two years. Like there were real economic benefits. It's about the competitive intensity of the of of Canada, is what we're really driving towards. and then the final I mean the thing is like think about things in terms of verticals, right? So I could say the definition of a of a first aid kit is 30.
Or 26 bandages. And you might say, okay, what difference is that really gonna make? But let's talk about like home construction and building. There's a whole bunch of barriers and patchworks that conflict to create much more expensive housing for Canadians. So it comes to first occupational health safety standards, it goes to electrical codes, the definition of high visibility, high visibility safety apparel, the portability of workers' comp across borders. Like all of these intersect with the vertical Canadians actually care about. So my urging would be think about priorities.
Canadian priorities and then think about the intervening barriers in terms of that priority rather than stand alone twenty versus thirty s bandages in a first aid kit.
Erin O'Toole (44:06.636)
You need to be at that Council of the Federation meeting in Charlottown. When is it? In a couple of weeks? I I I I'm gonna make some calls. I think you need to you need to light a fire. so you've given the grade to the federal government. You've mentioned Premier Holt a couple of times, Premier Houston. Who are one or two premiers that get an A or an A minus for advancing this to give them shout outs from your point of view?
Ryan Manucha (44:11.308)
I think it's this week or next week,
Ryan Manucha (44:32.025)
Mm-hmm.
Houston, certainly kicking off a lot of the momentum. Ford, certainly credit where credit is due, creating the momentum and could see more leadership out of out of Ford. he runs Canada's largest province. And you know, the fact that in May twenty twenty six they had sell f all the provinces pretty much, save for th two territories in the in Newfoundland the territories of Newfoundland, said we're gonna have direct to consumer for booze. And they did they br that was it that was like in my mind, that's like a trade barrier we can deal with. Like you were all clo
Used to one-click Amazon shopping. Like you should be able to do that for Canadian booze to your doorstep. And they had all said all the Canada's premiers, save for three, said we're gonna do it by May 2026. Well, it's June 2026. And Erin, I don't know about you, but I can't order to my doorstep. they breached that, and that's on booze. We're not talking about anything more sophisticated than booze here. It's always about the booze. So we could see a little bit more leadership in Canada's largest province.
Erin O'Toole (45:27.668)
Absolutely. And technically it's July, but I won't you're a Harvard guy, I won't I won't challenge you on that. so a Donner Prize in your first book,
Ryan Manucha (45:32.951)
All right.
Erin O'Toole (45:39.884)
What's on the agenda for Ryan next? Because your first book made and is continuing to make quite an impact on Canadian public policy, on Canada in this moment. What are you working on now in your research capacity at the CD? How what do you see as being an another important issue that you'd like to contribute to the national dialogue on?
Ryan Manucha (45:59.479)
Really continuously pushing on this Ontario Chamber Summit where we got the direct feedback from businesses and creating that loop so that we can prioritize where to focus efforts. I think there's a lot of internal trade bears when it comes to government procurement, which I know is an important issue that you you're very well conversant on, but at the provincial level, how procurement should happen in a way that again creates domestic competitive intensity. And then number three is labor mobility, and how can we move the needle on making
making it easier for firms to bid on projects and send their teams to opportunities in another province, all driving towards growth and competitiveness.
Erin O'Toole (46:38.274)
Booze, cigarettes, and constitutional dust ups should be mandatory reading for every elected official in Canada. We need fewer dust ups and more collaboration. We need less elbow ups elbows up rhetoric and more roll up your sleeves, get stuff done.
on this mandate. So I can't think of a better way for us to kick start the national conversation on reducing internal trade barriers than having you, Ryan Minutia, on Blue Skies to talk about it today. Thank you very much.
Ryan Manucha (47:12.963)
Thank you so much, Erin. This was a great conversation.
Erin O'Toole (47:15.916)
And thank you for tuning in to Blue Skies. This was a great conversation focused on building a strong, united, single Canadian economy. Let me know what you think. I'm Erin O'Toole. Thank you.