The Yukon government signed on to the Canadian Free Trade Agreement April 7, alongside its provincial and territorial counterparts.
And while the deal is meant to free market barriers to help grow the Canadian economy, the Yukon government negotiated several clauses to protect the Yukon economy.
From the government’s standpoint, it managed to both protect the local economy while opening opportunities in neighbouring provinces for local businesses.
At the negotiation table, the Yukon said it needs specific protections for its small economy compared to powerhouses like Ontario and Quebec, said Andrea Buckley, the assistant deputy minister of corporate programs and intergovernmental relations, who represented Yukon during the negotiations.
“We didn’t have the same situation (as other provinces) and needed some protections in place so we could continue to have our economy grow and our local companies could survive,” she said.
But the government also had to take into account bigger Yukon companies who wanted better market access to B.C., Alberta and the Northwest Territories.
Under the CFTA provinces and territories have to follow four core principles. They have to treat all Canadian goods, workers and services equally. They can’t restrict movement of goods, restrict market access in their jurisdictions or set performance requirements for investors, for example by requiring to provide local benefits when working in the jurisdiction.
But each province and territory carved out its own list of exceptions.
The Yukon has 26 exceptions, including municipalities, academic institutions, publicly funded schools and hospitals.
Yukon College and the Yukon Hospital Corporation for example are exempt from following the procurements rules set out in the CFTA.
The territory can also keep its business incentives and create new ones, as long as they’re not used to poach outside companies or undercut competition outside the territory.
In the last five years, the government has dolled out $15 million under the territory’s five largest incentive progams.
“It’s a significant tool for increasing employment and developing the economy,” said Shay Kokiw, a senior policy advisor with the department of economic development.
The territory also has 10 “wildcards” it can use to be exempt from CFTA rules for procurement that support small firms or job opportunities, for up to $1 million each time.
It’s not clear how big of an impact the CFTA will have on the territory.
Currently Yukon companies win over three-quarters of territorial government contracts for construction and goods.
“We’re not expecting that to change under this agreement,” said Kokiw. “We also have the flexibility to use incentives and subsidies.”
The CFTA replaces the Agreement on Internal Trade that’s been in place since 1995 and only covered a limited number of sectors of the economy.
It’s expected to add up to $25 billion per year to the Canadian economy.
Economic development minister Ranj Pillai said he’s happy with the new agreement, but said it was completed in principle before he took office.
“We have to thank the previous government for the work they did on negotiating this agreement,” he said. “The implementation will start in July 2017 and the government will be watching this very closely, certainly in the area of procurement, and economic development, as we oversee the business incentive program.”
Despite two and a half years of negotiations, the provinces and territories did not reach agreement on alcohol trade and standards. Booze is the only good the territory got an exemption for.
Among the other exemptions, the territory gets to limit market access to oil and gas development, electricity production, water, forestry and logging products, agricultural land, fisheries and recycling.
“Our oil and gas sector is relatively undeveloped compared to other parts of the country,” said Kokiw. “If it expands hugely, we have the ability to limit authorizations.”
The territory also got an exemption from the non-discrimination clause. That means it can still favour Yukoners in fields like real estate, where agents have to be Yukon residents. The exemption also extends to the agricultural and forestry sectors.
It’s opting out of both the discrimination and market access clauses for wilderness tourism, hunting, trapping, outfitting and recreational and residential land lotteries.
In exchange for supporting other provinces to have supply management of the egg and dairy industries exempted from the CFTA, the three territories obtained a series of working groups to address the challenges of food production in the North.
“We’d like to grow a food industry here,” said Buckley. “What incentives do companies have up here if they can’t get in that egg or dairy market because the quotas are all being held by southern companies?”
With a report from CP
Contact Pierre Chauvin at pierre.chauvin@yukon-news.com