Jacob Viner, the Cost of Protection, and Customs Unions: New Light from a Manitoba Consulting Assignment

This paper considers an extraordinary and almost unknown document which came out of a consulting assignment Jacob Viner undertook for the Canadian Province of Manitoba in the late 1930s as part of the Canadian Royal Commission on Dominion-Provincial Relations. Viner analysed the Canadian Federation as a customs union and the evidence points to it having an important influence on his development of the theory of customs unions, in particular providing a concrete example of trade diversion, and developing his understanding of the circumstances which affect the magnitude of trade diversion losses when assessing the overall impact of customs unions. Despite a sophisticated understanding of the role of tariffs on inputs in Viner’s report, and connections to subsequent development of the concept of effective protection, it does not have a place in the story of the concept of effective protection.