IMF Report Says Internal Trade Barriers Cost Canada $210 Billion

The International Monetary Fund released a report estimating that Canada could increase its real GDP by nearly 7 percent, or approximately $210 billion, by eliminating internal trade barriers between provinces and territories. Economists Federico Diez and Yuanchen Yang found that current regulatory frictions act as a national tariff of about 9 percent, with costs exceeding 40 percent in service sectors like healthcare and education.

The report indicates that this fragmentation impairs productivity and competitiveness, particularly within northern territories and smaller provinces. The IMF suggests that removing barriers in telecommunications, finance, and transportation would stimulate investment in high-productivity industries and improve labor mobility.

Although the federal government passed Bill C-5 in June to recognize approved goods and workers at a federal level, provinces continue to maintain control over procurement and licensing. The IMF emphasizes that these remaining frictions are economically consequential and leave the Canadian economy less integrated than its global footprint would suggest.