NCPA - National Center for Policy Analysis


July 20, 2004

Protectionist measures are threatening the economic progress made since the passage of the Canada-U.S. Free Trade Agreement (FTA) in 1989 and the North American Free Trade Agreement (NAFTA) in 1994.

Though Canada and the U.S. exchange about $1.9 billion in goods and services every day, both countries have implemented tariffs, duties, and quotas that limit foreign imports, as well as domestic subsidies that distort the market.

For example:

  • The United States charges an average of more than 27 percent in countervailing and anti-dumping duties on Canadian softwood lumber imports.
  • In 2003, more than 7 in 10 Canadian exporters were affected by non-tariff trade barriers like domestic content requirements, health regulations, and labeling requirements.
  • More than 20 United States products are subject to Canadian anti-dumping duties.

These duties, tariffs, quotas, and stringent regulations are exacting a heavy toll on consumers and workers in both countries:

  • Tariffs against Canadian softwood lumber imports have increased U.S. home prices by $800 to $1,300, pricing about 300,000 families out of the market.
  • U.S. trade barriers in the 20 most protected industries cost domestic consumers more than $44 billion a year.
  • The United States import quota on cane sugar has distorted sugar prices and has cost 7,500 to 10,000 jobs in sugar-using industries over the last six years.

Canada and the United States (though particularly the latter) still operate under the mercantilist assumption that exports are good and imports are bad for the economy. In order to show that free trade is its own reward and will bring about greater economic prosperity, the United States should unilaterally abandon its protectionist quotas, tariffs, anti-dumping duties and domestic subsidies.

Source: Todd Gabel, Adrienne Simpson, and Pamela Villarreal, "Mr. President, Tear Down This Wall: How Trade Barriers Burden Businesses, Consumers, and the Economy," Fraser Forum, June 2004, Fraser Institute.


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