A new wide-ranging trade agreement is about to change the way business is done in Alberta and British Columbia.

The trade, investment and labour mobility agreement (TILMA), which comes into effect in April 2007, is initially focused on cutting down trade and mobility barriers between Alberta and B.C.

But within the next year, it could grow to include a number of other provinces.

TILMA might be best described as interprovincial free trade, an effort to reduce red tape and regulations that hamper business transactions between the two provinces.

"Between B.C. and Alberta we just decided, 'let's get on with it,' " said B.C. Economic Development Minister Colin Hansen, who along with Gary Mar, Alberta's minister of international and intergovernmental relations, recently spoke about TILMA to the Edmonton Chamber of Commerce.

Hansen says a Conference Board of Canada analysis of the impact of the agreement on British Columbia showed TILMA could add up to $4.8 billion to the province's gross domestic product annually.

Up to 78,000 new jobs could also be created in B.C., "so we know that there would be comparable numbers for Alberta," he added.

Mar said the cost of internal trade barriers is in the $2-billion range. "We think that $2 billion is better spent on reinvestment in people and in businesses in the province of Alberta."

TILMA has a two-year phase-in period to allow business, professional organizations and governments to harmonize their standards and regulations.

It will remove duplicate registration and reporting requirements to make it easier for businesses to operate in both provinces; eliminates the business residency requirement; improves labour mobility; removes duplicate requirements for registration and permits; and should mean that more government procurement opportunities will be available while a wider array of services will be opened up for competition in both provinces.

Since TILMA's signing ceremony in April - overshadowed by the softwood lumber deal - work has proceeded with licensing bodies in both provinces.

"We met with them before the agreement was signed and now we're working with each of them individually to look at what they have to do with their counterpart organization in the other province to ensure that their standards are reconciled and harmonized," said Hansen. "Some people have said this means that everyone is going to lower their standard to the lowest common denominator, (but) that is not the case.

"We want to make sure that we pick the appropriate standard for both provinces. In some cases, that may mean one province is going to have to strengthen their standard in order to be harmonized with the other province."

There's also a dispute-settlement process that can be triggered by either jurisdiction or a private company. It gives TILMA enforceability and could result in penalties of up to $5 million per occurrence.

For his part, Mar believes TILMA presents a tremendous opportunity for Alberta businesses and labour to participate without barriers in B.C., and noted that it also establishes a western economic powerhouse. "It creates a marketplace of 7.5 million people with a $400-billion combined gross domestic product."

Jackson von der Ohe, COO of Edmonton-based Pace Industrial Inc. and chair of the Edmonton Chamber of Commerce's board of directors, says TILMA means more opportunity in neighbouring B.C.

"I'm an ice builder. I manufacture ice (refrigeration) plants to run skating rinks and I export them all around the world and all across Canada," said von der Ohe. "We have licensed contractors in many, many American states and until TILMA, it was actually easier for us to do work in places like Colorado than it was in B.C."

Other provinces are now eyeing the agreement, including Saskatchewan, Manitoba and Ontario, and the Yukon Territory.

(Laura Severs can be reached at laura@businessedge.ca)