With a goal to remove the barriers of interprovincial trade of goods and services, the Free Trade and Labour Mobility in Canada Act was passed in June. However, while the Act eliminates all federal exceptions of the Canadian Free Trade Agreement enacted since its 2017 passage, the finalized regulations, announced in November, for the new Act exempt food regulated under the Safe Food for Canadians Act (SFCA) and collective marketing and supply management for poultry, dairy and egg products subject to the Agricultural Products Marketing Act, Canadian Dairy Commission Act, and Farm Products Agencies Act.
For all other cross-provincial trade, the federal requirement would be considered to be met if comparable provincial or territorial requirements were met, thus reducing the need to follow duplicative rules. But because the SFCA is built on rigorous, science-based food safety and animal welfare standards, it will remain the basis of food trade in Canda, and is strongly supported by industry stakeholders, provinces, and territories. As depicted in the government’s overview of the Act, SFCA is seen as a critical single rule to be followed for all interprovincial trade because it allows the CFIA to:
- know who is trading food in Canada,
- have oversight powers to assess business compliance, inspect, and sample food,
- take enforcement action when non-compliance is found.
The SFCRs are also seen as protecting Canadian exports by enabling a high level of international confidence in Canada’s food safety system, which is critical for the continuation of its food export market of over $64 billion a year.
As it relates to the collective marketing and supply management for poultry, dairy and egg products, the exception prevents unintended consequences for Canada’s supply management system, which relies on complementary provincial and federal measures to balance the country’s supply and demand.
While the primary purpose of the Act is to eliminate internal trade barriers and cut red tape for Canadian businesses to strengthen the country’s economy, it is rooted in the impacts of Canada’s trade war with the US which has significantly impacted the economy. To counter these impacts, Canada is working to increase interprovincial trade which could be worth billions.
The exemption of food has, however, both pros and cons. While it does ensure the strong federal system is maintained, it leaves some provinces with lesser food safety systems able to manufacture and sell food products that don’t meet the requirements of the SFCRs as long as they meet those of their jurisdiction.
On the other hand, with 80% of the food that is produced in Canada being exported to other countries, the Act ensures that these foods meet the stringent SFCRs, helping to continue the country’s international reputation as a safe provider of food.
Additionally, the initiative has been somewhat of a wake-up call for the federal government where intra-provincial trade had not been seen as a very important issue, and the country’s reliance on the export of raw materials and natural resources, rather than in-country production of finished goods was not seen as being of concern. But this was, in fact, the reason for the economic simile of Canada as “hewers of wood and drawers of water,” in which the benefits of the raw materials are passed to other countries rather than being used within Canada for processed goods – which would both create jobs and reduce consumer costs. As an example, Canada imports pasta products from the US and Italy, but it produces most of the durum wheat those countries use to produce the pasta, thus importing products made from its own resources.
While the food exemptions of the Free Trade Act have not changed much for the food industry, we can hope that this wake-up call does help to spur more in-country processing to further strengthen Canada’s food industry and potentially open new doors for international trade.
The Act and regulations will come into force on January 1, 2026. In December, a user guide is to be made available to help businesses and industries better understand the changes.
