It all started three years ago with a sandwich that wanted to be free.
In the Western Canadian town of Lloydminster, a business learned that it would break the law by making sandwiches at a supermarket and selling them a few blocks away. A ham and cheese, a BLT or a club, it didn’t matter.
“If it involved meat, this is where it became an issue,” said Gerald Aalbers, the mayor of Lloydminster. “Everything from a chub of bologna to a piece of roast beef.”
In Canada, meat and other food products cross provincial lines with great difficulty. Even after being inspected in one province, they must get federal certification before being shipped to another province — an insurmountable financial hurdle for many small businesses and part of a wider system of trade rules that Prime Minister Mark Carney says hobble the country’s growth.
Ordinarily, any goods would move freely inside the same city. But because of a twist of history, Lloydminster happens to straddle the border between two provinces — Alberta and Saskatchewan — and must answer to two sets of regulations. A sandwich prepared on the Alberta side of Lloydminster could not be sold legally across the street in the Saskatchewan side without a federal seal of approval, and vice versa.
When the issue made it to Lloydminster’s City Council three years ago, it became known as “sandwich-gate.” Council members decried the bureaucratic absurdity by brandishing sandwiches in the air.
But Lloydminster’s biprovincial nature also made it the crucible of a deeply rooted problem in Canada: internal trade barriers that prevent the free flow of goods and certain workers across the country’s 10 provinces and three territories, discourage businesses from expanding and contribute to Canada’s lagging economic productivity.
Even as Mr. Carney has fought back against President Trump’s trade tariffs and threats to annex Canada, he is also contending with protectionism at home. He is pushing legislation that would dismantle federal barriers before Canada Day on July 1, vowing to forge “one Canadian economy out of 13” — to make Canada less dependent on the United States and help kick off the nation’s biggest economic transformation since World War II.
Provinces will have to remove their own trade roadblocks, considered even more significant to creating a strong national economy. But the case of Lloydminster — where restrictions on the flow of food inside the city were permanently dropped half a year ago, though other barriers remain — could provide clues for the rest of the country.
Other goods subject to internal barriers include alcohol, whose trade was restricted in a landmark Supreme Court case involving a New Brunswick man who went on an unsuccessful beer run to Quebec. Regulations also restrict services like trucking and the mobility of skilled workers, whose certification can vary across the country.
Internal barriers in Canada are considered stricter than in other federal systems like the United States, economists say.
In the early 1980s, trade within Canada and with foreign nations each equaled about a quarter of Canada’s economy, said Trevor Tombe, an economist at the University of Calgary. But today, years after Canada struck agreements with the United States and other countries, foreign trade is the equivalent of about a third of Canada’s economy — while internal trade has shrunk to 18 percent.
“Since the 1980s, it has become easier over time to trade with the United States and not so much to trade internally,” Mr. Tombe said.
Over the long run, if all barriers on goods and services were dismantled, Canada’s economy could grow between 4.4 and 7.9 percent, Mr. Tombe has estimated. Other economists, including at the University of Montreal, say the benefits would be lower because Canada suffers from other barriers, including the long distances between urban areas and a relatively small market of 40 million people.
The federal and provincial governments have tried to eliminate barriers before, though not with the sense of urgency fueled by Mr. Trump’s protectionist policies.
“I don’t like how it came about, with Trump picking a trade war,” said Chris Hassall, a real estate agent in Lloydminster. “But we at least got to do some self-examination. There’s a level of protectionism that in this day and age is horribly outdated.”
“We should be trading within our own country way, way more, whether it’s bringing bottles of wine from B.C. or sending Saskatchewan beef,” he added.
Lloydminster — one of Canada’s two biprovincial cities, along with the much smaller Flin Flon — became a microcosm of this protectionism by accident. British colonists established Lloydminster in 1903, two years before the creation of the provinces of Alberta and Saskatchewan and a new boundary line that ran north and south along 50th Avenue in Lloydminster.
Cleaved into two, Lloydminster was incorporated as a single city in 1958, falling under the jurisdiction of both provinces. About a third of the city’s 31,500 residents live on the Saskatchewan side, and the rest are in the Alberta section. Though most people are used to biprovincial life, they sometimes trip over the city’s interprovincial barriers.
The results of blood work done on the Alberta side are unavailable at the hospital on the Saskatchewan side a few blocks away, because the provinces’ health systems do not communicate with each other, Mr. Aalbers said.
“We had a former councilor who had some health issues,” he said. “His wife carried his health file with him everywhere they went to ensure the doctor had the information.”
Lloydminster, with an economy based on oil and agriculture, lost some businesses because of internal barriers, Mr. Aalbers said.
In 2020, Sondra Pearn began making prepackaged mixes for the Caesar, an alcoholic drink similar to Bloody Marys. Because the commercial kitchen she used in Lloydminster fell under the jurisdiction of the Saskatchewan health authorities, she had to use a second commercial kitchen in a town in Alberta to be able to sell her products there.
“I wanted our business to grow, but operating in two places wasn’t going to be long-term sustainable,” said Ms. Pearn, the co-founder of Lake Life Caesar, adding that she eventually moved her business to a federally certified commercial kitchen in Saskatoon, Saskatchewan’s economic center, about 170 miles southeast of Lloydminster.
Three years ago, the Lloydminster Co-op applied to sell sandwiches it made at its supermarket on the Alberta side at its two gas stations on the Saskatchewan side — unsuccessfully, of course, because interprovincial restrictions made Saskatchewan a no-go zone.
“You could put that sandwich in a refrigerated van and drive to Grand Prairie, Alberta, and be totally in compliance, which is kind of an odd thought, right?” Peter Brown, the Co-op’s chief executive, said, referring to a city about 400 miles northwest of Lloydminster.
The local chamber of commerce reached out to the Canadian Food Inspection Agency, and City Hall got the two provincial governments on board for a two-year pilot project to turn Lloydminster into a free-trade zone for food products. The change became permanent last November.
“It started with the sandwich, and it just snowballed from there,” said Teri-Lynn MacKie, executive director of the Lloydminster Chamber of Commerce.
Diamond 7 Meats, a meat processor in Lloydminster’s Saskatchewan side, can now sell its products to restaurants or caterers on the Alberta side. That could bring in $150,000 a year in new business, a significant sum for a company with 30 employees, said Aron Lundquist, a co-owner.
“If we could eliminate that border, gosh, that number would grow exponentially,” Mr. Lundquist said of the possibility that interprovincial barriers could be lowered across Canada. Mr. Lundquist once looked into getting federal certification that would have allowed him to export across Canada. But the costs — millions to build a facility to satisfy federal criteria and the need to grow his business enough to make it profitable — were too onerous.
Three Trees, a restaurant in Lloydminster’s Alberta side, now advertises Diamond 7 Meats on its menu. Jim Spenrath, the owner, said local meat was a draw for customers in a region that takes its beef seriously.
In Lloydminster’s Saskatchewan side on a recent afternoon, a Co-op gas station was awaiting a fresh supply of handmade sandwiches from the Co-op supermarket on the Alberta side. The store had already run out of its most popular sandwiches.
“The roast beef sandwich comes from the Alberta side,” said Jessica Gustavson, the store manager, “so we wouldn’t have been able to sell it on this side in the past.”
Norimitsu Onishi reports on life, society and culture in Canada. He is based in Montreal.
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