The contradiction is inescapable. Summer wildfires, intensified by the impacts of climate change, are again raging from BC to Ontario. At the same time, the federal government has introduced legislation - Bill C-5 – The One Canadian Economy Act - widely seen to be intended to facilitate the development of additional fossil fuel extraction and export infrastructures in Canada.
The legislation flows from last week’s first ministers' meeting and has been presented as a central element of Canada’s response to the challenges posed by the Trump administration in the US. The bill actually consists of two parts: The Free Trade and Labour Mobility in Canada Act, intended to remove internal barriers to trade; and the Building Canada Act to facilitate the approval of “nation-building’ projects.
The Free Trade and Labour Mobility in Canada Act
The free trade and labour mobility act element mirrors the approach to removing internal barriers being taken by many provinces. This model has focused on the mutual recognition of standards and requirements, meaning that if a product is approved for use in one province, then other provinces will automatically consider it as complying with any applicable standards in their jurisdiction. The same basic model is being followed for trades and professions in the interests of labour mobility.
Bill C-5 would extend this model to the federal jurisdiction. Any good produced, used or distributed in accordance with a provincial or territorial requirement would be considered to meet any comparable federal requirements (Part 1, s.8 (1)). Similar provisions would be made regarding services (s.9) and occupational qualifications (s.10).
On the surface, this is an appealing way of removing interprovincial trade barriers based on differing requirements and standards between provinces and territories. But it carries a number of significant risks. Simple mutual recognition of standards potentially sets up a lowest common denominator framework for the affected standards.
Products, services, or qualifications meeting the requirements of any province are deemed to meet those of all provinces and via Bill C-5, those of the federal government as well. Within such a mutual recognition framework, a producer or service provider complying with the lowest standard among all of the jurisdictions concerned can demand access to the markets of all jurisdictions participating in the systems.
The problems don’t stop there. In many cases, the primary way in which standards for goods, services, or occupations have been strengthened is by individual, usually subnational, governments (e.g., provinces, states, and cities) moving to higher standards on their own initiative.
Among the strongest examples often cited in this context, has been the US state of California. Over the past half-century, the state has regularly taken the lead on adopting higher standards in areas like energy efficiency and environmental protection. Other states, provinces, and even the Canadian and US federal governments have eventually followed in what has come to be known as the ‘California effect.’
That model of policy innovation would be undermined by a simple mutual recognition framework. Low efficiency light bulbs permitted, for example, in one province would have to be permitted in all, even if other provinces, territories, or even municipalities want to adopt a higher standard to improve energy efficiency and productivity and address climate change. Trying to move these types of standards forward by agreement among multiple jurisdictions can take decades, and typically still leads to a lowest common denominator outcome.
Other multijurisdictional governance structures within which there is mutual recognition of standards among members, most notably the European Union, have extensive institutional and political structures intended to prevent the lowest common denominator problem. They seek to push standards harmonization upwards rather than downward. Such safeguards are so far lacking in Canada’s case.
The Building Canada Act
The second element of Bill C-5 is the Building Canada Act. The legislation is intended to accelerate approvals for projects that are classified by the federal cabinet as being in the “national interest.” Once a project is designated, a range of federal approvals would be “deemed to be in favour of permitting the project to be carried out.” (Part II, s.6(1). The specific approvals references in the legislation include those that might be made under the Impact Assessment Act, Indian Act, and a range of other environmental, water, energy, and transportation-related legislation and regulations (Schedule 2).
In the place of these approvals, a single designated minister under the act would issue a single “document” providing the necessary federal authorization, and outlining any federal conditions, on a project (s.7(1)).
The bill would establish criteria for “national interest projects” projects, including references to the interests of Indigenous Peoples and climate change (s.6). However, these criteria are ultimately discretionary. The cabinet can designate any project it wishes as being in the “national interest.”
The approach being taken through Bill C-5 is already subject to widespread criticism as paralleling the approach of Ontario’s widely criticized Bill 5. Both pieces of legislation are seen to grant enormous discretionary powers to cabinets and designated ministers in ways that are seen to challenge basic principles of the rule of law.
Questions are being raised about the extent to which the legislation undermines requirements for meaningful and substantive consultation with affected Indigenous communities.
The risks of short-circuiting reviews of projects that may embed major economic, environmental, technological, and safety risks have been highlighted as well. Nor can the well-documented potential for ‘accelerated’ processes to intensify the social, political, and legal conflicts over projects, delaying their approval even further, be overlooked.
Is this the best we can do?
Beyond these immediate questions, Bill C-5 raises a range of larger questions around the economic strategies underlying Canadian governments’ responses to the Trump challenge. The legislation highlights the two key themes that seem to be emerging so far – the liberalization of internal trade and an emphasis on new infrastructures for primary resource commodity exports for markets (in theory) other than the US, notably oil sands bitumen, liquified natural gas, and ‘critical’ minerals.
There are ongoing debates about the potential economic gains associated with the removal of interprovincial trade barriers. Some analyses suggest that the likely gains have been greatly exaggerated. Given the often highly technical nature of the barriers involved, much more detailed analyses are required to understand their nature and impact. In the meantime, a simple mutual recognition model runs risks of a lowest common denominator approach to health, safety, labour, environmental, and professional standards, and of potentially blocking policy innovation at the subnational level in these areas.
The risks associated with a primary resource commodity export-based economic model, and the importance of escaping such staples 'traps,' have been central themes in Canadian economic and political history. Canada's Indigenous peoples have borne much of the costs of resource extraction. Their responses to Canadian governments' doubling down on resource extraction and export pathways are informed by long-standing patterns of historical injustice.
In that context, the lack of attention to non-commodity export-based sectors and services, is striking. The long-term success for these types of value-added economic activities will require much finer-grained sectoral strategies than have been seen so far.
The narrow focus on large physical infrastructure megaprojects shows a similar lack of imagination. Nation-building projects could be in fields like health promotion and care or public services. They could be programs of activities distributed across the country, seeking to improve energy productivity and efficiency, and distributed energy systems.
The federal government's failure, so far, to seize the opportunity to attract the brightest minds in the world presented by Trump’s moves to exclude international students from US universities is already remarkable in this context.
The Trump administration is upending longstanding trade and security relationships for Canada. That shift in Canada's relationship with the US is likely structural and long-term. Our responses need to be considered in the same light. The race to the bottom and resource megaproject focus reflected in Bills 5 (Ontario) and C-5 does not meet that test in economic or environmental terms. Better strategies for sustainability, prosperity, reconciliation, and security in a changing world are needed.