While efforts to protect manufacture have not resulted in significant barriers to imports of manufactures, objections in some specific sectors of the economy seem to be effective worldwide. One sector that stands out is the agriculture. Not only does Canada have very steep barriers to imports of dairy products such as milk and cheese, the US and the European Union have policies that limit imports and subsidize their domestic producers. Europe has had its ‘wine lakes’ and ‘butter mountains’ due to excessive government intervention in these sectors; the US has subsidies to sugar producers and Canada has a system of quotas on the domestic supply of dairy products and corresponding limits on imports.
Evidently, in the case of agriculture, political conditions are conducive to the continuance of protection and what is called ‘supply management’ – domestic production quotas. The reason for ‘successful’ supply limitation appears to rest in the geographic concentration of potential beneficiaries of such protection and the scattered beneficiaries of freer trade on the one hand, and the costs and benefits of political organization on the other: Farmers tend to be concentrated in a limited number of rural electoral ridings and hence they can collectively have a major impact on electoral outcomes. Second, the benefits that accrue to trade restriction are heavily concentrated in the economy – keep in mind that about three percent of the population lives on farms, or relies on farming for its income. The benefits on a per person scale are small, and are spread over the whole population. Thus, in terms of the costs of political organization, the incentives for consumers are small, but the incentives for producers are high.
In addition to the differing patterns of costs and benefits, rural communities tend to be more successful in pushing trade restrictions based on a ‘way of life’ argument. By permitting imports that might displace local supply, lobbyists are frequently successful in convincing politicians that longstanding way-of-life traditions would be endangered, even if such ‘traditions’ are accompanied by monopoly purchase – as was the case under the Canadian Wheat Board until 2012, or tariffs as high as 250% - as is the case on cheese above a specific import quota.
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