Canada aims for free internal trade that can offset any US tariffs, Carney says

TORONTO (Reuters) -Prime Minister Mark Carney on Friday said Canada could offset the effects of any U.S. tariffs by removing internal trade barriers and that he aimed for free trade within the country by July 1, after meeting provincial and territorial leaders.

"We are committing to table legislation by the 1st of July for goods to travel across the country... free of federal barriers," Carney told reporters. "We can more than offset the effects of any U.S. tariffs by eliminating internal trade barriers alone."

Carney on his website cites research that found removing internal barriers would reduce trade costs by up to 15% and expend the economy by 4% to 8%.

He said there were three main approaches to do this: harmonizing regulations across provinces, provinces' mutual recognition of rules and creating common national standards.

Business groups have long complained about trade barriers among the 10 provinces and three territories and a drawn-out permitting process that means it can take years to develop and build mines, oil pipelines and other major resource projects.

U.S. President Donald Trump imposed 25% tariffs on Canadian imports of steel and aluminum in March, with further tariffs to follow on April 2.

Canada sends 75% of exports to the United States and a third of all imports come from its southern neighbor, leaving its economy vulnerable to a protracted trade war.

Carney, who recently became prime minister and is reportedly poised to announce on Sunday an election to take place in April, has yet to speak to Trump or lay out detailed plans on how he would deal with the president.

The effort to reduce internal trade barriers would include removing labor mobility restrictions, Carney said.

To speed up approvals of major infrastructure projects, Carney said the government will create a "one-window approval process" that would eliminate duplicative requirements between federal and provincial environmental assessments. He also vowed that an oil and gas cap would limit emissions not production.

Carney said he agreed with provinces that the federal government would provide funds to build transportation links to resource extraction sites and develop a "national trade and energy corridor strategy."

To support workers and businesses affected by the tariffs, Carney said the country would ease access to the employment insurance system for laid-off workers and allow business to defer corporate income tax payments and remittances.

(Reporting by Ryan Patrick Jones and Costas Pitas; Editing by Cynthia Osterman)