Trade barriers

Why has Canada not joined a customs union with America?

Canada already enjoys low tariffs with the US in many sectors, thanks to the North American Free Trade Agreement (Nafta), which includes Mexico.

However there are a number of industries that Canada keeps closely protected and is reluctant to open up to American competition.

Dairy and chicken farmers, telecom firms, retail banks and domestic airlines are among those Canada protects with trade barriers – meaning there is little incentive to agree common regulations.

In those areas where Canada does integrate closely with the US, such as in the car industry, rules are agreed by sector-led groups and largely work well according to economists.

There is also little appetite for Canada’s hands to be bound from signing new trade deals without America’s approval, as would happen if the EU’S customs union model was replicated.

Canada recently signed its own trade deal with the EU, while America’s version is in stasis since Donald Trump’s election. The two countries also appear to be heading in different directions, with Mr Trump’s push for protectionism not matched by Justin Trudeau, Canada’s leader.