Welcome back. It's a busy time for trade negotiators. Countries are trying to bargain with the White House to convince U.S. President Donald Trump to downplay his “reciprocal” tariff plan. They also entered into deals with third countries to mitigate any blow to U.S. duties.

However, I believe that all the concerns about international trade barriers and internal trade barriers should not be ignored.

In many major powers and trade groups, barriers to goods, services, people and capital between provinces and member states are like external import tariffs, a brake on economic growth.

"The tariff wall is visible and has caused headlines. But because most economic activity is internal, obstacles at home may be more important," said Simon Fistett, a professor at IMD Business School. "Domestic regulations quietly stifle business."

Internal restrictions range from narrow taxes, patchwork required by regulations and licensing to poor regional connectivity through physical and digital infrastructure. Just like tariff barriers in other countries, they also inhibit productivity and competitiveness.

Canada is the second largest country in the world and is a good example. Its decentralized federal system gives its provinces important autonomy to regulate and supervise trade within its borders. But over the years, bureaucratic obstacles have accumulated, limiting the movement of goods across the country.

"Many trade barriers are imposed on protecting local industries, maintaining regulatory standards, generating revenue and retaining jurisdictional autonomy," wrote Salim Zanzana, an economist at RBC economics.

For example, the latest report from the MacDonald-Laurier Institute estimates that differences in trucking regulations, including differences in eligibility requirements and changes during the period of the trailer registration, increase freight rates by 8.3%.

Overall, the IMF estimates that Canada's non-geographic trade barriers may be equivalent to the average tariffs on goods and services.

As for the United States, although Trump is fixed on the deficit with foreign trade partners, it also has significant internal obstacles in its interstate operations.

“We often see the United States as a single unified market, but that’s not true,” said Scott Lincicome, vice chairman of the Cato Institute. He cites career licensing, tax differences and zoning laws, as well as other country-specific rules as it hinders the movement of goods, services and people across statewide. “Workers cannot get to where they need it most, and businesses face friction to expand, especially to other states.”

Quantgov scratched federal regulations show that even neighboring U.S. states have a very different traditional tape savings. Lincicome estimates that given the level of domestic freight flows, currently around $20 per year, state-level frictions could lose “billions of dollars, or even trillions of dollars” in the U.S. each year.

Internal trade barriers are also problems for developing countries.

In China, examples of local protectionism include preferential treatment for provincial champions through procurement, permits and lighter fees. And, despite the country's huge labor force, workers lack full mobility. Welfare rights related to a person’s family registration under the country’s “household registration” system make it more difficult for rural immigrants to obtain public services in urban areas. (Study shows that migrant workers have gained greater precautions as a result.

Rhodium Group Deputy Director Camille Boullenois said intense provincial and provincial competition to attract induced business and investment could boost private sector activity. “However, this often leads to fiscal competitions and ultimately overcapacity”.

India's multilingual nation alliance also brings many bureaucratic obstacles. A large number of local taxes, permits and restrictions on agricultural supplies and energy allocations, such as slowing down commercial activities.

Its logistics costs are estimated to be about 14% of its GDP. In advanced economies, this number is close to 10%. Research shows that one-third of India’s logistics spending comes from infrastructure inefficiency.

Barriers to trade within any country will also exacerbate income disparities by consolidating geographical barriers. The states in India have experienced particularly obvious differences in their economic destiny. Regional business friction is a factor.

Of course, obstacles within trading groups are also important. Under the measures, the International Monetary Fund estimates that trade barriers within the EU, including differences in banking and capital market regulations, may be equivalent to 44% of tariffs on goods and an average of 110% of services.

If the internal regulatory barriers in the ASEAN trade zone (including customs surcharges and technical standards) are not that heavy, then the dependence of the ASEAN trade zone on external trading partners may be less dependent on external trading partners. Only about one-fifth of the group exports to the internal market.

Eliminating internal barriers reduces costs and enables producers, service providers, workers and investors to access the wider domestic market. This promotes economies of scale and allows people to move to the right jobs. Overall, it can improve productivity and export competitiveness.

For the Measures, a 2016 study by Eva Van Leemput, an economist at the Federal Reserve Committee, estimated that India's internal trade barriers account for 40% of its average total trade cost. It could fall since the reform. Nevertheless, it emphasizes that tariffs are only part of the total transaction cost.

A Canadian BDO survey found that nearly 60% of Canadian businesses engaged in cross-border trade were blocked from expanding to other provinces due to obstacles. The estimated average annual good compliance cost per business is $274,000.

The global tariff war has also raised concerns about foreign direct investment. While trade openness is a key factor in determining where a business is, a systematic review of FDI research shows that market size is the first driver.

Indeed, large, integrated internal economies offer a broader consumption base and have higher potential for sales, profits and liquidity.

The IMF estimates that removing only Canada's inter-provincial trade barriers in commodities could increase its per capita GDP by about 4%. In the EU, it believes that regulatory coordination could halve the productivity gap between senior European economies and the United States.

Where reforms are carried out, economic benefits are obvious. Australia's mutual recognition law in 1992 allows goods sold in one state or region to be sold in another state or region without further requirements. (It also establishes occupational equivalence.) This helps improve domestic freight and productivity growth.

India has also made progress in alleviating the traditional Chinese tape festival. In 2017, it introduced a unified regional VAT GST. Recent analysis of satellite data and trucking logs found that reforms help cut average national border transit time by more than one-third.

It is not easy to balance regional autonomy with national economic unity. Decentralization allows policy development based on local economic needs rather than a certain size of the center. This can support growth.

But over time, excessive internal bureaucratic barriers limit competition, undermine the ability of businesses to expand and make it more difficult to match the right workers to the job. This is neither a regional interest.

The current risk of high external trade barriers makes it more important to eliminate internal trade barriers. In Canada, there is almost unanimous support now to remove inter-provincial barriers. EU policymakers are more inclined to drive stronger capital alliances. In China, increasing demand for employment and consumption also raises the importance of eliminating internal barriers.

Policymakers should leverage at this moment and ensure that attention to tariff wars does not harm the political bandwidth and resources needed to simplify internal regulations and promote mutual recognition agreements between regions.

With the rise of trade protectionism outside, domestic supply chains can at least make up for some of their competitiveness in the global market by reducing domestic inefficiency. If tariffs do drop in the future, they will have a greater advantage.

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