Only in the era of President Donald Trump can two protectionist jurisdictions be celebrated as crusaders of free trade. Despite championing open trade and slamming tariffs in recent months, Canada and the European Union have installed their own series of protectionist policies aimed at shielding certain industries from foreign competition. Yet, the likes of Prime Minister Justin Trudeau and President Jean-Claude Juncker have the temerity to lament President Trump’s 19th century mercantilist measures.
For years, Ottawa and Brussels have subsidized exports, engaged in trade disputes, and adopted import restrictions. These initiatives have not garnered as much publicity as Washington’s latest efforts, but they do highlight the hypocrisy that other heads of state are displaying in today’s contentious environment.
While it is true that global trade flows have touched double digits in the years following the economic collapse, most international leaders aren’t exactly disciples of Milton Friedman or Ludwig von Mises.
Whether it is supply management of the dairy industry or anti-dumping duties related to steel, nations around the world have acted in a similar manner as President Trump. The only difference is that the left-leaning media, which have generally supported mercantilism in the past, lambast Trump for everything he does – even policies they agree with, like paid family leave.
So, are Canada and the E.U. genuine advocates for free trade? Or are they protectionists like Trump?
Canada Protects Farmers
Supply management, in its current form, has been public policy since 1971, when Prime Minister Pierre Elliot Trudeau enacted the legislation. Shared between the federal and provincial governments, it is based on three socialist concepts: setting prices, controlling supplies, and protecting industry from foreign competition.
Just to understand how immense this destructive policy is, the federal government maintains a 270% tariff on milk, a 245% tax on cheese, and a 298% levy on butter to keep out foreign products.
Because of this, Canadian consumers pay as much as 40% more for a whole host of products, ranging from dairy to meat to grain. At the same time, cash-strapped shoppers witness fewer options than their American or European counterparts, enabling the major farming associations to do whatever they want.
Whenever politicians are asked about these types of statistics, they dismiss it by explaining how they are helping the little guy. As anyone with a set of eyes, all their limbs, and an inherent distrust of the state knows, government intervention only benefits a small cartel of big guys, not the farm that has been family-owned for several decades. In fact, for example, there are fewer dairy farmers today than there were prior to supply management – from 100,000 nearly 50 years ago to a little more than 11,000 today.
Policymakers refrain from touching supply management because they know they’ll lose votes and risk committing political suicide. Just ask Maxime Bernier, a Conservative Member of Parliament who made dismantling supply management the centrepiece of his leadership campaign in 2016. Despite being the favorite to win, he lost his bid to helm the Conservative Party because an organized campaign of unions and farmers bought party memberships and then voted for Bernier’s rivals, including Andrew Scheer.
Why were they so scared of the libertarian “Mad Max”? Here’s what he wrote a couple of years ago:
“All farmers need to be treated fairly. 90% of Canadian farmers derive no benefit from supply management. It protects a small cartel of dairy, poultry and egg farmers at the expense of everyone else. It also creates massive barriers to entry for new farmers. The cost of purchasing quotas is so high that it makes entry into supply managed sectors nearly impossible. It also drives up the grocery bills of farmers trying to feed their families. Phasing out supply management, and ensuring that those in supply managed sectors can transition is the right thing to do. I would follow the Australian model, with a gradual phase-out and compensation for farmers.”
No wonder why they wanted anyone but the “Ron Paul of the North.”
So, when Prime Minister Trudeau hops onto his soapbox and chastises his counterpart south of the border, he should realize that Canada has done a lot worse than the U.S. for quite a few decades.
Hypocrisy Thy Name is EU
In April, Pierre Moscovici, E.U. commissioner for Economic and Financial Affairs, Taxation and Customs, warned that protectionism threatens global economic growth. He told CNBC:
“My feeling is that the American administration is conscious that protectionism is not the way forward for the world economy. They want to defend their own interests. This can be understood but we need to show that we are open economies, that we are trading properly, that we are cooperating together.”
This is laughable coming from an E.U. official.
From automobiles to agriculture to aluminum, the trade bloc has instituted thousands of import taxes, imposed numerous bilateral agreements, and upheld the common agricultural policy for years. Whether it is a 28.5% duty on Chinese steel or tariff rate quotas on sugar, it is evident that E.U. officials do not have a fervor for free trade, but rather government-managed trade.
Whenever the likes of Juncker or German Chancellor Angela Merkel talk of the single market, you must never be fooled into thinking it equates to a free market.
By criticizing Trump for his approach to trade, the E.U. is spotlighting its own hypocrisy. Since the body has been protectionist since its inception, these bureaucrats are just inflicted with Trump Derangement Syndrome. If they were really opposed to Trump’s efforts, they would eliminate tariffs, abolish quotas, and commit to genuine free trade.
Throwing Stones at Glass Houses
If Trudeau and Juncker were students of Murray Rothbard, then any true free market advocate would run to their defense and join them in advocating government-free trade that would make the “Enemy of the State” proud. But this isn’t what’s been going on. They’re only engaging in anti-Trumpism, and this disease will only harm businesses and consumers worldwide. When Trump issues an executive order to apply a new tariff, Ottawa and Brussels should just keep quiet. Any opposition would be hypocritical.
What are your thoughts on the global trade war? Let us know in the comments section!