Alberta and british Columbia have inked a sweeping trade agreement that the two provinces say will create, in effect, the second-largest economic region in the country, second only to Ontario. The deal will also have significant implications for the Canadian financial services industry down the line.

In late April, the two western provinces signed the Alberta-British Columbia trade, investment and labour mobility agreement, or TILMA, at the fourth annual joint Alberta-B.C. cabinet meeting held in Edmonton.

The agreement builds upon the existing agreement on internal trade, the current deal covering interprovincial economic activity. The new deal, the provinces say, could mean billions of dollars added to the economy by eliminating duplication and streamlining business.

Alberta premier Ralph Klein and B.C. premier Gordon Campbell will present the benefits of the agreement to the premiers of Manitoba and Saskatchewan at a meeting of western premiers in Gimli, Man., on May 31, in the hopes of extending the agreement to include those provinces.

Under TILMA, a certified professional in one province — be it an architect, an engineer or a funeral director — will be recognized as certified in the other. As well, business registration and reporting will be streamlined so that a business registered in one province is automatically recognized in the other.

Both provinces have also committed themselves to open access for all business-to-government procurement and to a joint, enforceable dispute resolution mechanism.

“I’ll do nothing but congratulate them for getting this out,” says Mike Murphy, senior vice president of policy for the Ottawa-based Canadian Chamber of Commerce. “I like the idea that if we can’t do the whole country, let’s start with what we can. It’s a ‘Who wants to play?’ approach.”

The deal takes effect April 1, 2007, and includes a period of transition to April 2009, during which the provinces, and all provincial bodies that exercise authority delegated by law, will work to bring standards and certifications under provincial regulation to a point of mutual recognition, if not harmonization.

“All of these occupations are compelled to do everything they can to get off the transitional list,” says a rep from the B.C. Ministry of Economic Development.

“This is much more sweeping than the existing agreement,” says Dave Park, an economist with the Vancouver Board of Trade. “It will remove any barriers in terms of professional qualification.”

The agreement does not cover financial services under provincial jurisdiction, but the two provinces have committed to negotiating their inclusion during the two-year transitional period.

So far, stakeholders in the Canadian financial services industries have expressed general approval of any attempt to eliminate trade barriers and cut red tape. But there is confusion over what the possible ramifications are for the industry.

“Part of the problem is this deal is just so new, not much has come out of it yet,” says Marie Iwanow, director of communications for Alberta Finance.

“We’re not sure how this deal will affect credit unions,” says Ian Smith, director of communications for the Credit Union Central of B.C. Smith says that the group has been working to persuade provincial governments — in a discussion separate from the trade agreement — to relax rules barring credit unions from conducting business in more than one province. B.C. is home to two of the three largest credit unions in Canada, but they and other provincial credit unions are unable to tap into the booming economy next door.

Dan Robertson, a spokesman for Advocis, says that group reserves judgment until the two provinces act on financial services. “When they move to extend the agreement in our area, we will be involved and commenting,” he says.

The mortgage brokerage industry, which is booming across the country and especially in the red-hot real estate markets of Alberta and B.C., is very much supportive of this trade agreement and has been working on its own to break down barriers.

“This announcement is a good thing. It should be happening right across the country,” says Jim Murphy, director of communications for the Toronto-based Canadian Institute of Mortgage Brokers and Lenders. “We are very supportive on working with regulators to harmonize. This very proactive approach by B.C. and Alberta is encouraging.”

Ian Russell, president and CEO of the industry association recently hived off from the Investment Dealers Association of Canada, says that the new trade deal, with its commitment to negotiating in financial services before 2009, can only help the financial services industry: “We would support any initiative that would reduce barriers to financial services. It would lead to more efficiency, lower costs for consumers and more liquidity.”

@page_break@Russell says that the trade agreement will build momentum behind the industry’s efforts to achieve something akin to a national securities regulator, first through a proposed passport model that would effectively recognize the lead jurisdiction for brokers and securities dealers, and then possibly by adopting the so-called “Crawford initiative,” which would see a national regulator, organized under provincial jurisdiction with safeguards against domination by any one jurisdiction (see page 10).

“This deal gives the industry more urgency, more momentum to the whole effort to move things further along the road,” Russell says.

For now, and without financial services included, the two provinces are crowing about the potential boon this will be to their economies, citing a Conference Board of Canada report that a combined Alberta-B.C. economy could add $4.8 billion to real GDP.

“This will be quite exciting when it comes together,” Iwanow says. IE