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The federal government is acting on its promise to eliminate remaining federal-level barriers to internal trade by July 1. The Carney government fast-tracked Bill C-5 – a key part of this effort – through the legislation process. This is a principal component of a broader effort to create a more seamless economic union within Canada – or what Ottawa calls “one Canadian economy.”

While these are promising signs, given the economic potential, it’s important to recognize that most internal trade barriers exist at the provincial level. Different regulations and requirements among provinces add friction to the sales of products, services and the mobility of labour. Ultimately, the actions of provincial governments will determine how liberalized Canada’s internal market becomes.

Seizing this momentum, some provinces such as Nova Scotia and Quebec have introduced legislation to eliminate some barriers. Others, including Ontario, have also signed bilateral memorandum of understanding with other provinces, embracing the idea that what is good enough for one province is good enough for the other.

But amid this shift, it’s worth recalling that many of the barriers now being dismantled were put in place under the framework of the existing Canadian Free Trade Agreement (CFTA), which came into effect on July 1, 2017. The CFTA still allows considerable leeway for provinces to protect local industries and carve out exceptions. Until recently, provincial protectionism was often seen as politically advantageous – a way for premiers to be seen defending local jobs and businesses.

And while today’s context – defined in part by U.S. tariffs, geopolitical uncertainty, and a renewed focus on economic resilience – may have made the public more receptive to internal trade liberalization, we would be mistaken to think this support is deep and durable.

Canadians’ views on barriers haven’t really changed since 2019

Indeed, new data from the Confederation of Tomorrow survey suggests that public attitudes on one key aspect of internal trade have remained strikingly consistent – even with the latest push to remove barriers. When asked whether provincial and territorial governments should be allowed to favour local businesses by preventing businesses from elsewhere in Canada from selling their products, the responses in 2025 look almost identical to those in 2019 (see Figure 1). A significant share of Canadians still believe that local favouritism is acceptable – or they are at least ambivalent, depending on the product or sector.

Twenty-two per cent of Canadians say that their provincial government should be able to prevent businesses from elsewhere in Canada to favour local businesses, almost identical to 23 per cent in 2019. The most common answer, “It depends,” might seem like a cop-out. At the very least, it’s certainly not a ringing endorsement of free trade among provinces. Fewer than one in four Canadians – both today and in 2019 – firmly oppose allowing provinces to block goods from others.

Opinion in the provinces

By many measures, Quebec is the province with the most trade barriers – and also the most “protectionist” public opinion. Thirty-seven per cent of Quebecers say their provincial government should be allowed to block business from other provinces while only 14 per cent say it should not.

The same pattern – with more people in favour of barriers than opposed – is found in all provinces except three: British Columbia, Alberta and Nova Scotia. British Columbia and Alberta are also the two provinces where we see the largest proportion saying government should not be allowed to block businesses from other provinces.

On trade, opinion is malleable

On internal trade, public opinion will be highly susceptible to framing. If the issue is presented as lowering costs for consumers and increasing national economic growth, support for liberalization grows. If it is framed as protecting local businesses and jobs, it diminishes.

For instance,  research on support for supply management – a barrier to free trade – has shown that support for supply management “increases when respondents are primed to think of the policy as a way of protecting farmers and decreases when they are primed to think of its costs to consumers.”

Right now, Canadians are primed to think of freer internal trade as a way to counter dependence on the U.S. and bolster the Canadian economy. But this framing won’t stick forever, especially during elections when premiers and local candidates search for local and regional votes.

In fact, one reason for binding free trade agreements, such as the ones that governed the flow of goods and services between Canada and the U.S. until recently, is that they immunize both countries from the protectionist urges of local voters and legislators. But Canada’s internal trade agreements are not nearly as binding.

With only one in four Canadians firmly opposed to interprovincial trade barriers, it is likely only a matter of time before commitments are watered down.

Lessons from the 1980s

Two lessons from the free trade debates of the 1980s are worth recalling. First, the economists who championed Canada-U.S. free trade were generally up front about short-term pain; some industries in Canada would fail with U.S. competition. (Many economists considered this a feature of the doctrine of comparative advantage, and not a bug.)

Breaking down interprovincial barriers can tackle the housing crisis, too

One Canadian economy needs one competition policy

Today, it’s unclear that provincial premiers are willing to engage voters in a similar “short-term pain” discussion.

Second, although the incumbent government won the 1988 free trade election, a majority of Canadians opposed free trade itself. Public opinion is not generally free trade’s friend.

Guardrails against backsliding

This is why provinces and the federal government should be thinking seriously about institutional reforms. Liberalization can be reversed as quickly as it started without mechanisms to ensure lasting progress.

Others have outlined some options that have received less government attention amid the current climate in favour of quick liberalization.

One area of focus is the governance structure of the Canadian Free Trade Agreement itself. Strengthening the dispute resolution mechanisms, introducing more transparency in exemptions and tightening the criteria for justifying trade barriers could help provinces resist protectionism.

The federal government could offer fiscal incentives to encourage liberalization – rewarding provinces that implement mutual recognition of credentials or streamline regulatory processes. Federal transfers could be tied to specific benchmarks, like past health or infrastructure funding agreements.

Together, these steps could serve as guardrails – ensuring that today’s progress is not lost to political shifts or economic pressures. Internal trade liberalization is not a one-time achievement; it is a governance challenge that requires durable solutions.