Canadian Pizza Eateries in Bind as Cheese-Import Loophole Closes

Trade barriers protect industries only briefly. Canada has a 200-plus percent tariff on imported cheeses, designed to protect its diary industry. Restaurants took advantage of a loophole to purchase special cheese-and-pepperoni kits from the United States, but the government revised rules; packages with fresh cheese now include the tariff. “Restaurants have long chafed at special Canadian rules that allow McCain Foods Ltd. and other frozen pizza makers to buy mozzarella at the much lower world price,” reports Barrie McKenna for the Globe and Mail. “Strict price and production controls in Canada mean that wholesale cheese prices are 30-per-cent higher in Canada than in the United States.” Some restaurants smuggle illegal cheese across the US border. The tariff pits the restaurant industry against the dairy industry. Quebec has threatened to withhold support on a EU trade deal unless dairy farmers are compensated. Meanwhile ice cream and yogurt makers turn to dried milk as a substitute, allowed under NAFTA. Blame for reduced flavor or high prices could hit the dairy industry. – YaleGlobal