CTA Urges Premiers to Take Action on Interprovincial Trade Barriers in Trucking

July deadline is fast approaching

(Ottawa, March 13, 2008) -- Last August, Canada’s Premiers announced they were moving forward to strengthen domestic trade between provinces and territories by reducing barriers to trade flows. A key part of the announcement was an agreement to harmonize transportation regulatory codes and eliminate those standards and regulations that are unjustifiable barriers to trade in the transportation sector. The Premiers instructed ministers responsible to do this work by July 2008.

This was welcome news to the Canadian Trucking Alliance, a federation of provincial trucking associations representing over 4,500 trucking companies. CTA has long argued that because trucking is primarily regulated by the provinces, the industry is subject to a patchwork quilt of provincial regulations and standards. And, with the July deadline fast approaching, CTA is keen to see some progress and has written to the Council of the Federation (whose membership is made up of the provincial premiers).

At the same time, CTA recognizes there will be difficulties. For starters, the alliance is not sure whether the hodge-podge of trucking regulations meets governments’ definition of a “trade barrier.” Even the directive given by the Premiers to the ministers responsible for transportation regulation adds the proviso that action only be taken on those regulations and standards that are “unjustifiable” barriers to trade. Regardless CTA says that the differences in regulations that truckers must contend with as they travel across the country can create artificial competitive imbalances.

In CTA’s letter to the Council, Chief Executive Officer David Bradley says: “Let me be clear, in some cases, differing regulations are appropriate given the different conditions that exist in each jurisdiction, and we would not suggest that harmonization is the right course in all cases and at all times. But certainly in other areas these differences do constitute barriers to fair competition and barriers to effective trade and in these cases harmonization is not only desirable it is essential.”

CTA says that the lack of harmonization in trucking regulations is most harmful in three key areas. First is the National Safety Code (NSC) for Trucks which was introduced 20 years ago as an antidote for deterioration of truck safety from economic deregulation. It contains 16 supposedly national standards – everything from truck driver hours of service, to carrier safety ratings, to driver medicals, to trip inspections. However, after two decades, not one of the NSC standards has been uniformly adopted and/or enforced by the provincial governments. And, you don’t have to look far to find a recent and glaring example of the problem. It took over a decade for all the provinces to agree on a new federal regulation governing the hours a truck driver must work and rest. The new national standard was to be adopted by all jurisdictions by January 1, 2007. But, few have followed through and CTA says that some provincial governments even seem prepared to disregard their commitment to the federal regulation altogether. After numerous similar examples over the years, CTA believes that its time for everyone to admit that the current forum for most of the development and oversight of truck safety standards, the Canadian Council of Motor Transport Administrators, has proven ineffective in developing truly national standards or where there has been agreement on a national standard, in ensuring adherence to them by all provinces.

Truck weights and dimensions standards also fall under provincial jurisdiction. The current “national” heavy truck standards are really a set of minimum standards developed in the mid-1980’s and contained in a national MOU in February 1988. So, at the very least, a vehicle that meets the minimum MOU requirements can operate from coast-to-coast while provinces retain the authority to allow other truck configurations in their jurisdictions if they wish. CTA says that on balance this has been positive for industry productivity, but it has also created differences between jurisdictions and at times carriers may view these differences as barriers to trade or at the very least add to the complexity of spec’ing a fleet. Moreover, obtaining consensus from all jurisdictions to examine and develop standards for new, or special configurations is extremely difficult. CTA is also concerned that the current MOU standards did not contemplate and therefore often do not accommodate new technologies and add-on devices that are proven to reduce air contaminant and GHG emissions.

Finally, CTA argues that more than any other industry, interprovincial motor carriers face a plethora of provincial regimes for taxing business inputs when they invest in new tractors and trailers. Depending on where a trucking company is located and where its trucks go, their equipment can be slapped with an array of provincial levies – provincial retail sales taxes, harmonized sales taxes and Multi-Jurisdictional Vehicle Taxes (MJVT). And, the rules are not always applied fairly. MJVTs which exist in four provinces, are designed to prorate provincial sales taxes on truck purchases based on distances traveled in each jurisdiction. But depending on where a company is domiciled, it might be subject to inconsistent treatment in the handling of refunds for unused portions of the MVJT, for example. The regressive nature of business input taxation and the costs of administering all the separate systems impact directly on Canadian carriers’ ability to compete and act as disincentives to investment in new equipment.

Bradley says he hopes there will be progress on modernizing some of the rules that govern the industry, but he says, “it will take the political commitment of the Premiers, the development of new models for consensus building and decision-making, and a re-energizing of existing ones.”

“We are under no illusions as to the difficulties associated with this task,” he says. “But we must move forward to ensure that Canada has the efficient, productive, reliable and predictable supply chain it needs to compete and win now and in the future.”