Posted: Wednesday, 21 March 2007

Executive Summary

Proponents of the BC-Alberta Trade, Investment, and Labour Mobility Agreement (TILMA) claim that it will provide large economic benefits through the elimination of inter-provincial trade barriers.

In fact, there are very few obstacles to trade and investment among provinces, and no evidence that such obstacles entail significant economic costs:

• Research conducted for the 1985 Macdonald Commission concluded that inter-provincial barriers cost no more than 0.05% of Gross Domestic Product.
• Relative to distance and market size, Canadian provinces are far more likely to trade with each other than with American states.
• Since 2000, inter-provincial trade has been growing much faster than Canada's international trade.

A Conference Board of Canada study commissioned by the BC government claims that TILMA will add $4.8 billion to the province's economy. However, this study is deeply flawed:

• It makes no attempt to list, or estimate the cost of, trade barriers between provinces.
• Rather than using standard economic techniques, the Conference Board infers huge benefits from a tiny survey of business organizations and government ministries.
• The Conference Board doubles its estimate of TILMA’s benefits through a simple arithmetic error. Even after correcting this error, most of the projected gains are from industries exempt from the final agreement or from industries that barely engage in inter-provincial trade.

This paper was released by the Canadian Centre for Policy Alternatives on February 15, 2007.

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