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Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.

He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.

In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.

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Two Canadian provinces, British Columbia and Alberta, have decided to create free trade zone within the federation. Another province, the biggest in terms of population and economy, Ontario, is keen to join this zone. This development may sound a fundamental U-turn in the way Canada was developing since the World War II, when more and more powers were going from the center to provinces.

Economic federalism and autarchy in Canadian context

The World War II and the years that followed changed this federal domination. Railroads were not at the center of public debate; finances got global; the economy was diversified and regionalized, requiring completely different economic strategies in different provinces; some provinces using the huge pension funds became main engines of economic growth; direct and indirect business subsidies and regimes of preferences, unheard of during federation's earlier years became main tools for attracting investors, both domestic and foreign.

Markets exist as invisible hand only in the fantasies of some scholars. In fact markets are created as any other social reality by people and can be destroyed or downgraded by people too. The common market in Canada that was created more or less successfully in the second half of 19th c. was gradually eroded by the provinces since the mid-20th c. At some point they preferred playing the card of economic semi-autarchy protecting their corporations and workforce. Something similar occurred in the United States up until the 1970s. This policy found its logical end when the costs of being excluded from other markets became greater than the benefits of excluding the others.

Back to the market, the new trade zone and its consequences

New free trade zone is opened for all other provinces that accept the same founding principles. Manitoba, Saskatchewan, and now Ontario, have expressed interest to study this offer. For Ontario the roadblock may come from the large subsidies that this province provide to automobile industry. The other two provinces have no such problems and will almost certainly join soon. Their economic contribution however won't be as important as having the largest Canadian province embracing the principle of free intra-provincial trade.

What are the consequences for the market? Will this zone increase or decrease the competition? One dimension of competition, corporations looking for best jurisdiction in terms of largest subsidies, will recede. If all provinces part of this zone stick to promises of denying public money to investors then the consequences will be some more market-based distribution of investments and more public money saved for real social policy issues such as education and healthcare. Other dimensions of intra-provincial competition however such as creating better taxation system and more straightforward regulations will actually increase, because without generous public subsidies these will be the only tools remaining for making a difference between more and less interesting jurisdictions.

Can this free trade zone embrace all Canadian provinces? Or even some American states? There are many ideas of opening up the western region of North America for skilled workers and investments between British Columbia, Alberta, and five Pacific states Washington, Oregon, Idaho, Montana, and Alaska. These ideas however remain so far only subject of unofficial conferences. As for the other Canadian provinces there is a good chance that Manitoba and Saskatchewan may join and moderately good chance that Ontario and the Atlantic provinces may join. As to Quebec, the chances are rather slim, almost nil. The public mood there is predominantly against market openness of any kind. The whole social system there relies on restrictions. Cutting public subsidies is considered out of question. The same goes to opening the market for skilled workers. In a sea of openness and more efficiency and even more to come Quebec stands alone within North America as a living example of past economic strategies.

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