Think tank calls for Canada to unilaterally drop trade restrictions

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OTTAWA — A leading free-market think tank is calling for Canada to unilaterally drop its remaining barriers to international trade, whether or not U.S. President Donald Trump moves forward with threatened tariffs this week.

The Montreal Economic Institute says in a new report that Canada would benefit from opening more sectors to foreign competition, even if these moves aren’t reciprocated by the U.S. and other major trade partners.

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“A commonly held belief is that trade liberalization has to be reciprocal… this is incorrect,” reads the report.

“Studies have shown unilateral reductions to be generally positive—especially for smaller economies such as Canada’s.”

The study estimates that unilaterally liberalizing trade would boost Canada’s GDP by 1.67 per cent and drive prices down by 1.51 per cent.

Vincent Geloso, the study’s author, said several of Canada’s remaining trade barriers are hidden in things like safety regulations, quotas and licensing fees.

“Canada has a lot of strong protectionist measures in place on things like telecoms, airlines, mining, TV broadcasting, etcetera,” said Geloso.

“This basically means that foreigners are being shut out from investing and participating in about 20 per cent of Canada’s economy.”

He noted that Canada currently ranks a dismal 47th worldwide in non-tariff barriers to trade and 28th in barriers to freedom of service provision, according to one global index.

Geloso says he’s not swayed by national-identity based arguments for protecting cultural sectors, such as the Liberals’ recent pitch to redeploy the CBC as a bulwark against foreign misinformation.

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“They’re trying to justify bad policy by waving the flag,” said Geloso.

“Protectionism isn’t going to make a nation stronger or culturally better, just poorer.”

Geloso also rejects the argument that Canada needs these regulations to uphold its domestic food safety standards, which were recently praised by U.S. health czar Robert F. Kennedy Jr.

“The whole reason RFK rose to power on what he’s saying in the U.S., is that people went, yea, do we really need all these additives in our food?”

RFK raised a few eyebrows in November when he falsely claimed that a box of Froot Loops in the U.S. has over a dozen more ingredients than a box of the children’s breakfast cereal in Canada.

While his comments were quickly debunked, they drew attention to the artificial colourings used in the U.S. version, like red 40, blue 1 and yellow 6.

In Canada, where regulators limit the use of these dyes, Froot Loops are coloured with natural ingredients like concentrated carrot, blueberry and watermelon juice.

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Thousands of Americans have petitioned cereal giant Kellog’s to remove the artificial dyes from the U.S. versions of Froot Loops and other popular breakfast cereals, despite no conclusive scientific evidence that these additives are harmful to children.

Geloso says the grassroots movement against such food additives in the U.S. shows how consumers, not regulators, are usually the best arbiters of product safety.

“Most of the problem of product safety are actually solved by having open markets,” said Geloso.

“That way, people can compete, not only on price, but they can compete on product features, which would be inclusive of stuff like, well, you know, our good is safer.”

National Post
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