Bill C-5, known as the “One Canadian Economy” initiative, is a bold and strategic move championed by Mark Carney to address one of Canada’s longstanding economic inefficiencies: the fragmentation of its internal market. With escalating risks from U.S. tariff measures, the bill is a timely proposal that aims to boost economic resilience by fostering greater labour mobility and trade integration across provinces and territories.
Canada, despite its developed economy status, remains remarkably disjointed in terms of regulatory standards, infrastructure, capital movement, and policy alignment. Unlike the United States—where economic and regulatory integration across states has been a key driver of scale and productivity—Canada’s provinces often operate in silos. Bill C-5 directly tackles this issue by proposing to harmonize federal and provincial standards for goods and services. Under the bill, any good or service that complies with a province’s regulatory requirements would be recognized as meeting equivalent federal standards for the purposes of interprovincial trade. This change will allow businesses to bypass redundant federal regulations without compromising compliance at the provincial level.
The need for such a reform is not merely theoretical. A 2019 IMF working paper by Alvarez et al. highlights that, beyond physical distance, Canada’s interprovincial trade is hindered by administrative red tape and regulatory burdens. Historically, Canada has made significant progress in expanding international free trade agreements, but has fallen short in facilitating the same freedom within its own borders. Ironically, the ease with which Canadian exporters can trade internationally has reduced the incentive to trade domestically. Now, with the United States threatening its position as Canada’s most accessible trade partner, there is a renewed urgency to fortify the domestic trade landscape.
Economic estimates further strengthen the case. Albrecht and Tombe (2016) projected that eliminating internal trade costs could lift Canada’s GDP by 3–7%. A 2016 Bank of Canada study suggested that even a 10% reduction in internal trade barriers could increase potential GDP growth by 0.2 percentage points annually. Alvarez et al. estimated a 4% increase in GDP per capita with full liberalization. More recent projections peg the potential GDP boost at nearly $200 billion. A simplified analysis I conducted using trade and GDP data from 2017 to 2021 indicated that a $1 increase in interprovincial trade could correspond with an $8 increase in real GDP. While rudimentary, these findings underscore the potential economic gains from deepening internal trade.
Beyond these macroeconomic gains, the “One Canada” initiative promises practical, structural benefits. It aims to drive greater integration between manufacturers and service providers, enabling more efficient input sourcing and market access. Emphasis on interprovincial infrastructure could also unlock economic value in underdeveloped regions by improving connectivity, spurring investment, and tapping into rural innovation and resources. One often overlooked benefit is the policy’s impact on labour mobility. By simplifying cross-provincial credential recognition and eliminating duplicative certification requirements, workers would gain broader access to job markets, thereby enhancing income mobility and national productivity.
However, this vision is not without significant obstacles. Canada’s interprovincial dynamics are complex. Political tensions—such as Alberta’s secessionist sentiments and Indigenous opposition—present formidable challenges to national integration efforts. Resistance from trade unions and regional interest groups may also hamper full-scale implementation. On the fiscal side, the ambitious infrastructure outlays required to support this vision could exacerbate public debt, especially when paired with other major spending initiatives such as increased defense budgets. Furthermore, there is a risk that benefits from the policy may be unevenly distributed, with more affluent regions potentially absorbing a disproportionate share of the economic gains.
Despite the risks and challenges, Bill C-5 represents a necessary leap toward a more cohesive and competitive Canadian economy. In an era where external trade relationships are becoming less reliable, internal economic strength and integration are paramount. The “One Canadian Economy” policy offers a practical, data-backed pathway to improve productivity, encourage equitable growth, and insulate the national economy from global uncertainties. The question is no longer whether Canada can afford to implement this policy—but whether it can afford not to.
Written by Michael Ogunremi
