Canada to sell U.S. less wheat

August 02, 1994|By New York Times News Service

WASHINGTON -- Embracing the kind of trade restrictions it has sought to eliminate in foreign markets, the Clinton administration yesterday struck a deal with Ottawa to sharply reduce Canadian wheat shipments to the United States for one year.

The reduction fulfills a promise the Clinton administration made in November to help win votes for the North American Free Trade Agreement from wheat-state lawmakers, who said that Canadian imports held down wheat prices.

Mickey Kantor, the U.S. trade representative, said yesterday's agreement would not mean higher prices for American consumers. "We don't believe there will be any appreciable cost to consumers, although the limitation of wheat imports will have a positive effect on the competitiveness of American wheat farmers," he said in a telephone conference call with reporters.

But grain trade lobbyists and consumer advocates criticized the deal. "Clearly this is something that is bad for consumers, and to say otherwise is to try to pull a fast one on the American people," said Bryan G. Riley, trade policy director at Citizens for a Sound Economy, a conservative consumer group in Washington.

American wheat farmers have contended for years that Canada subsidizes its wheat farmers with a government marketing assistance program and low railroad freight rates.

Yesterday's pact does not address whether any Canadian wrongdoing took place, Mr. Kantor said, but it calls for a panel of six to 10 U.S. and Canadian farm experts to review the evidence and make a report a year from now. U.S. and Canadian officials will then use the report to decide what to do next, he said.

Canadian wheat exports to the United States have doubled in the last four years, reaching an estimated 2.7 million metric tons over the last 12 months, including 816,000 tons of durum wheat, used in making pasta.

The shipments have slowed the rise in durum wheat prices in the United States, holding down the average price for all wheat and thereby leading to the payment of extra federal government subsidies to wheat farmers totaling $680 million over the last four years, according to the International Trade Commission.

Mr. Kantor refused to give the precise level of the new limits on wheat shipments, saying that the pact, negotiated by two Canadian ministers, was still subject to formal approval today by the Cabinet in Ottawa; approval is considered likely.

An American official briefed on the deal said the United States would limit Canadian wheat shipments to 1.5 million tons, including 450,000 tons of durum wheat. The limit on durum is important because the United States depends on Canada for 40 percent of its durum wheat but only 6 percent of all wheat imports.

Any shipments beyond the limit would face a tax of $50 a ton. With Canadian wheat prices only slightly below the current U.S. price of $121.50 a ton, the $50 tax would price any extra shipments out of the American market.

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