The Canadian Free Trade Agreement (CFTA) is a domestic trade agreement amongst all the federal, provincial, and territorial governments, which came into effect on July 1, 2017. The main goal of the CFTA is to reduce trade barriers and facilitate the free movement of people, goods, services and investments throughout Canada. The CFTA functions within a “negative list” approach, meaning that the agreement applies broadly across the economy unless specific exceptions are listed.

Who is responsible for the implementation of the CFTA?

The Committee on Internal Trade (CIT) is the main body responsible for overseeing the implementation of the CFTA. It is made up of ministers from the federal, provincial, and territorial governments who are responsible for internal trade matters. The CIT’s responsibilities include:

• Supervising CFTA working groups
• Helping to resolve trade disputes
• Approving the annual budget for the Internal Trade Secretariat (ITS)
• Addressing other issues that may impact how the CFTA functions

Federal exceptions under the CFTA and the recent removal of exceptions

Under the CFTA’s negative list approach, the agreement applies by default to nearly all areas of economic activity, except for those things listed as exceptions. These exceptions allow the government to retain certain policies, regulations, or programs that may otherwise conflict with the CFTA’s open market principles.

Since the launch of the CFTA in 2017, the Government of Canada has regularly reviewed its list of federal exceptions. As a result of these reviews, it has either removed or narrowed about 68% of the original exceptions to this date. Many removed exceptions were related to government procurement, which encourages businesses to compete for public contracts.

Current initiatives and development

As indicated by the Government of Canada, while progress has been made, more work is still needed to improve the domestic trade system. There are some initiatives being taken:

• In summer 2023, the Regulatory Reconciliation and Cooperation Table (RCT) introduced an online portal where Canadians can flag regulatory barriers and suggest areas for improvement.
• In 2024, the federal government has launched the Canadian Internal Trade Data and Information Hub to centralize internal trade and labour mobility data.
• Budget 2024 also announced the removal of 14 procurement-related exceptions under the CFTA—a significant step forward.

Enhancing the CFTA: Latest update on February 28, 2025 announcement

On February 28, 2025, all levels of government agreed to conduct a rapid review of the remaining trade exceptions under the CFTA. They also pledged to conclude negotiations to integrate the financial services sector into the Agreement. This will serve as an important step toward creating a more open and unified internal market for Canadian businesses and workers.

For more information, refer to the Canadian Free Trade Agreement website.

								
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