From the Frontier Centre for Public Policy

By Ian Madsen

From telecom ownership limits to convoluted regulations, these hidden obstacles drive up prices, choke innovation, and shield domestic industries from global competition. Canada ranks among the worst offenders. If Ottawa is serious about free trade, it’s time to tackle the red tape, not just the tariffs.

Governments claim to support free trade, but use hidden rules to shut out foreign competition

Tariffs levied by governments on imports are a well-known impediment to trade. They raise costs for consumers and businesses alike. But tariffs are no longer the main obstacle to the elusive goal of “free and fair trade.” A more significant—and often overlooked—threat comes from non-tariff barriers: the behind-the-scenes rules, subsidies and restrictions that quietly block competition from foreign exporters.

These barriers can take many forms, including import licences, quotas, discriminatory regulations and state subsidies. The result is often higher prices, limited product choices and reduced innovation, since foreign competitors are effectively shut out of the market before they can enter.

This hidden protectionism harms both consumers and Canadian firms that rely on imported goods or global supply chains.

To understand the global scope of these barriers, a recent analysis by the Tholos Foundation sheds light on their prevalence and impact. Its 2023 Non-Tariff Barriers Index Report examined the policies, laws and trade practices of 88 countries, representing 96 per cent of the world’s population and GDP.

The results are surprising: the United States, with some of the lowest official tariffs, ranked 65th on non-tariff barriers. Canada, by contrast, ranked fourth.

These barriers are often formalized and tracked under the term “non-tariff measures” by international organizations such as the United Nations Conference on Trade and Development (UNCTAD) and the World Trade Organization.

UNCTAD notes that while some serve legitimate non-trade objectives like public health or environmental protection, they still raise trade costs through procedural hurdles that can disproportionately affect small exporters or developing nations.

Other barriers include embargoes, import deposits, subsidies to favoured companies, state procurement preferences, technical standards designed to exclude foreign goods, restrictions on foreign investment, discriminatory taxes and forced technology transfers.

Many of these are detailed in a study by the Leibniz Institute for Economic Research at the University of Munich.

Sanctions and politically motivated trade restrictions also fall under this umbrella, complicating efforts to build reliable global trade networks.

Among the most opaque forms of trade distortion is currency manipulation. Countries like Japan have historically used ultra-low interest rates to stimulate growth, which also weakens their currencies.

Others may unintentionally devalue their currency through excessive, debt-financed spending. Regardless of motive, the effect is often the same: foreign goods become more expensive, and domestic exports become artificially competitive.

Canada is no stranger to non-tariff barriers. Labelling laws, technical standards and foreign ownership restrictions, particularly in telecommunications and digital media, are clear examples. Longstanding rules prevent foreign companies from owning Canadian telecom providers, limiting competition in an industry where Canadians already pay among the highest cellphone bills in the world. Similar restrictions on investment in broadcasting and interactive digital media also curtail innovation and investment.

Other nations use these barriers just as liberally. The U.S. has expanded its use of the “national security” exemption to justify restrictions in nearly any industry it sees as threatened. The European Union employs a wide range of non-tariff measures that affect sectors from agriculture to digital services. So while China is frequently criticized for abusing trade rules, it is far from the only offender.

If governments are serious about pursuing freer, fairer global trade, they must confront these less visible but more potent barriers. Tariffs may be declining, but protectionism is alive and well, just hidden behind layers of red tape.

For Canada to remain competitive and protect consumers, we must look beyond tariffs and scrutinize the subtler ways the federal government is restricting trade.

Ian Madsen is a senior policy analyst at the Frontier Centre for Public Policy.

From the Frontier Centre for Public Policy

By David Leis

Canada’s economy is stagnating. The Carney government must act fast or risk yet another lost decade

Now that the election is behind us and Mark Carney has been handed the reins of government, it’s time to focus on what matters most: fixing the policy failures that have held Canada back for the past decade.

I recently had the privilege of speaking with three thoughtful policy experts—economist and Financial Post editor William Watson, Frontier Centre’s Vice President of Research and Policy Dr. Marco Navarro-Génie, and Catherine Swift, president of the Coalition of Concerned Manufacturers and Businesses of Canada. Our wide-ranging discussion focused on the economic and institutional challenges that threaten Canada’s long-term prosperity. The insights they shared—grounded in experience, data and a deep concern for the country—made one thing clear: the new government faces an urgent to-do list.

Canadians didn’t vote for more political theatre—they voted for results. But the economic problems haven’t gone away. Weak growth, declining productivity and investor flight are all signs of a country adrift. The new government must course-correct, starting with the economy.

Canada’s growth problem is real

Canada’s economic performance over the past 10 years has been dismal. It’s no wonder many are calling it “the Lost Decade.” GDP per capita—a key measure of how much economic output is created per person—has barely budged while our international peers have surged ahead. This isn’t just an abstract economic metric. It means Canadians are falling behind in real terms—earning less, struggling more and seeing fewer opportunities for themselves and their children.

A key cause is poor policy: excessive regulation, unpredictable tax frameworks and government-heavy industrial strategies that have failed to produce meaningful results. Capital is fleeing the country, productivity is slumping and even Canadian firms are investing elsewhere. The solution is not more central planning. It’s restoring the conditions for Canadians to thrive through work, innovation and enterprise.

Energy ambition must meet energy reality

Canada has what the world wants: abundant natural resources, a highly educated workforce and some of the highest environmental standards on the planet. But unclear energy policy—and an aversion to critical infrastructure like pipelines—has stalled progress.

If the Carney government is serious about turning Canada into an “energy and clean energy superpower,” it must acknowledge the role of oil and gas alongside renewables and nuclear power. Anything less is wishful thinking. We need investment certainty, streamlined permitting and a commitment to responsible development. Environmental posturing should not come at the cost of economic reality.

We must fix internal trade before preaching to the world

Canadians may be surprised to learn it’s often harder to do business between provinces than with other countries. While we champion free trade on the global stage, Canadians remain blocked from trading freely with each other. Interprovincial trade barriers inflate costs, suppress innovation and discourage business expansion. A licensed hairdresser in Ontario can’t easily work in Nova Scotia. Quebec beer can’t be freely sold in New Brunswick. These aren’t quirks of Confederation—they’re self-inflicted economic damage.

Three provinces—Ontario, Nova Scotia and New Brunswick—have recently pledged to dismantle some of these barriers. That’s encouraging. But national leadership is needed. A country that can’t trade within itself has no business lecturing others about open markets.

Don’t alienate our most important ally

The Canada–U.S. relationship is our most vital economic partnership. We can’t diversify away from a neighbour that buys three-quarters of our exports. That requires strategy, not showmanship—and a government that understands diplomacy, defence and economic interdependence go hand in hand.

Offhand statements suggesting the relationship is “over,” as Carney put it, aren’t just melodramatic. They’re reckless. Canada must show it’s a capable partner, not a reactive one.

Rebuild confidence at home

The election wasn’t a reset—it was a warning. Canadians are anxious, investors are wary and the country is fractured. Rebuilding confidence starts with governing transparently, delivering results and confronting the policy failures too long ignored.

The campaign may be over, but Canada’s challenges are not. Now the real work must begin.

David Leis is President and CEO of the Frontier Centre for Public Policy and host of the Leaders on the Frontier podcast.