Growth-Boosting Trade Deals Need Better Competition Policy at Home

Commentary Economists generally agree that fewer trade barriers and more foreign trade are the infrequent “win-win” things that make consumers and the economy more prosperous and efficient. Canada’s federal governments, of whatever political persuasion, understanding this, have pursued deals with foreign regimes—to their credit. However, the current way that many sectors in Canada truly operate, rather than economic theory, goes against value-generating trade liberalization. Recently, the chronic protection of the dairy industry in Canada was fingered as a sticking point in negotiations with the United Kingdom on a potential trade barrier-reduction agreement. The current protections afforded this industry are well known, with quotas for raw milk production by dairy farmers fixed by an industry body, Dairy Farmers of Canada.  Prices are also fixed by that body, and output rises only gradually with population and demand growth. This is at odds with nearly all of our closest trading partners: the United States and nations farther afield (Europe and New Zealand)....