Canada will be transformed into a free-trade area under an agreement reached by the country's premiers on Friday that would sweep away a two-decades-old internal trade pact criticized for creating too many trade barriers between provinces.

The new agreement would do away with many of the thousands of rules that currently govern provincial economies, from what shape a milk carton can have to how long a trucker can drive between breaks.

Conversations about such a deal have been at the centre of national conferences for decades. Yukon Premier Darrell Pasloski said it was "a historic day" as Canada's premiers ended their summer conference in the northern territory by announcing the plan, known as the Canadian Free Trade Agreement.

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While most of the national economy will be covered by the plan, provinces will be able to create exemptions that allow them to maintain barriers or create programs meant to help local businesses. Those exemptions were not specified Friday.

"Very few would have predicted that we'd get here, but we got here," Quebec Premier Philippe Couillard said. "It's a massive change, the entire Canadian economy is now open to internal trade, except for the elements identified for exemption."

Some premiers had been skeptical that an agreement could be reached over the two-day conference. Before heading to Whitehorse, Alberta Premier Rachel Notley said it was unlikely that the provinces could bridge their differences. However, the premiers engaged in a marathon session on Friday, with the agreement reached only a little more than an hour before some were scheduled to fly out of the Yukon capital.

"The Canadian Free Trade Agreement is an ambitious and comprehensive trade and economic growth agreement that will help expand businesses, create jobs, and grow our local and national economies," Ontario Premier Kathleen Wynne said in a statement.

Unlike the 21-year-old Agreement on Internal Trade, which names the areas of the economy covered by its rules, the proposed trade deal covers all goods and services unless they are specifically excluded – a mechanism known as a negative list.

Part of the agreement was inspired by a pending free-trade deal with Europe.

The new trade agreement would also create a regulatory body to cut down on red tape between provinces, including government procurement rules, business regulations and labour mobility.

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"While this agreement doesn't complete the job, it is a huge step forward in creating the transparency that will help us push for even freer trade and less red tape between provinces over time. It is worth celebrating," Canadian Federation of Independent Business vice-president Laura Jones said in a statement.

Mr. Pasloski said the deal would cut down substantially on existing barriers and would open up government procurement to more bidders, but he did not go into more detail.

The final agreement still requires negotiations before it's presented to the federal government, and some experts caution that they won't celebrate until they see the details. A spokeswoman for the Yukon government said the final details would be released when the deal is finalized and ratified by all parties.

"We'll give them the benefit of the doubt, but our suspicion is that we'll be disappointed," said Sean Speer, the Munk senior fellow for fiscal policy at the non-partisan Macdonald-Laurier Institute. "As long as these barriers remain in place our Confederation project remains a work-in-progress. We were promised a historic deal and what's coming out of Whitehorse suggests that someone was engaged in hyperbole," he added.

While the premiers have directed their trade ministers to finalize remaining technical issues, they also announced the creation of a working group on alcoholic beverages to explore how to improve the trade of beer, wine and spirits within Canada.

Earlier in the day the premiers of B.C., Ontario and Quebec announced plans to make it easier to buy Canadian wines in each province. The agreement would allow consumers to order wine from outside of their province online. However, the system would still be regulated by each province's liquor board.

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"We have not freed the grapes completely but they are freer," B.C. Premier Christy Clark said.