The International Monetary Fund published research arguing that policy-driven barriers to goods, services and labour mobility across Canada’s provinces and territories meaningfully fragment the domestic market, and that fully eliminating these non-geographic internal trade barriers could raise Canada’s real GDP by nearly 7 percent over the long run, or about CAD 210 billion in current terms. The analysis estimates that internal barriers average the equivalent of a 9 percent tariff nationally, with costs concentrated in services and with some sectors, including education and healthcare services, exceeding the equivalent of a 40 percent tariff. Trade costs are uneven across regions, with smaller provinces and northern territories facing multiples of the costs seen in larger provinces, particularly in service areas such as retail, health, education and professional services. Model-based simulations attribute around four-fifths of the total GDP gains to liberalising services, and identify finance, transportation and telecommunications as high-impact priorities given their economy-wide input roles. On implementation, the note points to mutual recognition as a default with narrow, transparent exceptions, alongside benchmarking and public reporting of barriers and continued federal use of incentives and conditional funding within provincial jurisdiction.
International Monetary Fund 2026-01-27
International Monetary Fund research estimates removing Canada’s internal trade barriers could lift long-run GDP by nearly 7 percent
The International Monetary Fund's research indicates that removing policy-driven barriers to goods, services, and labor mobility across Canada's provinces could boost real GDP by nearly 7 percent, or about CAD 210 billion. The study highlights that internal trade barriers equate to a 9 percent tariff nationally, with significant costs in services, and suggests mutual recognition and transparent exceptions as key strategies.