U.S. to cut Canadian imports

April 23, 1994|By New York Times News Service

WASHINGTON -- The wheat war brewing between the United States and Canada intensified yesterday when the Clinton administration announced that it was taking the first steps to restrict imports of Canadian wheat and barley into the United States, beginning July 1.

The United States contends that Canada has been unfairly subsidizing its wheat, depriving American farmers of earnings and driving up the cost to the federal government of its farm

supports. Months of talks have failed to resolve the dispute.

What the administration did yesterday was set in motion legal steps that would allow it to limit Canadian imports in 90 days, if Ottawa does not agree to export curbs on its grains.

Canada has threatened to retaliate against American products, such as wine, bourbon, chicken and canned fruit, which are heavily dependent on the Canadian market.

"It is certainly a strange way of proceeding to resolve a dispute between the largest trading partners in the world," the Canadian trade minister, Roy MacLaren, told reporters in Ottawa.

Such a trade dispute is hardly new for the United States and Canada, which have gone to the brink before on other goods, only to forge a solution to their differences at the last minute.

The current dispute arose in the wake of a sharp increase in th sale of Canadian wheat -- particularly durum wheat used in pasta -- to the United States in recent years.

Last year's Midwestern floods, which wiped out some of the U.S. crop, added to demands for Canadian grain. Canadian wheat shipments are expected to hit 2.5 million tons this crop year, compared with an average of about 1 million tons annually over the previous five years.

The United States contends that Canada is seizing more market share in the United States, thanks in part to government railway subsidies. Washington wants to restrict Canadian exports to 1.5 million tons a year, and impose heavy tariffs on anything above that.

The Canadians want the cap to begin at 2 million tons and gradually rise to 2.5 million tons. They contend that the U.S. government's own programs to encourage American farmers to export their wheat is partly responsible for creating a domestic -- shortage, which American grocers are responding to by seeking out Canadian wheat.

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