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Transparency And Export Subsidies In International Wheat Competition

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  • Wilson, William W.
  • Johnson, D. Demcey
  • Dahl, Bruce L.

Abstract

Export subsidies and price transparency will be areas of critical importance in the forthcoming round of World Trade Organization (WTO) negotiations. This paper provides a review and discussion of issues relating to export subsidies and transparency in international wheat trade. Among other topics, the paper addresses the escalation in U.S. and EU producer subsidy equivalents (PSEs) for wheat since 1996, EU export restitutions, export credit guarantee programs, and price transparency and price discrimination, specifically as they relate to State Trading Enterprises (STEs). As the United States develops its strategy for trade negotiations, several points should be considered. First, the European Union continues to subsidize its wheat much more intensively than other wheat exporters. EU export restitutions overshadow most of the other `policy distortions' which might be drawn into negotiations over wheat trade. Second, there will likely be pressure for new international disciplines on export credit guarantee programs. This is of critical significance for the United States, given the recent importance of sales under GSM programs, and features which may make these programs more effective than those employed by competing exporters. U.S. wheat producers would lose if the United States were forced to curtail its use of export credit guarantees. Conceptually, the topic of price transparency can be understood in the context of bidding games with asymmetric information. As such, it probably is not of great significance to international trade; for example, `lack of transparency' (e.g., by the Canadian Wheat Board) may impute an advantage of less than $1-2/mt in bidding competition. Lack of transparency is also linked to concerns about hidden subsidies and the potential for evading international disciplines. Past investigations of the Canadian Wheat Board have turned up little evidence of unfair pricing, while highlighting the difficulty of defining `cost of acquisition' where Board transactions are concerned. Finally, while an ability to practice price discrimination is an advantage enjoyed by STEs, that is not prohibited under the WTO.

Suggested Citation

  • Wilson, William W. & Johnson, D. Demcey & Dahl, Bruce L., 1999. "Transparency And Export Subsidies In International Wheat Competition," Agricultural Economics Reports 23208, North Dakota State University, Department of Agribusiness and Applied Economics.
    • Handle: RePEc:ags:nddaer:23208
    DOI: 10.22004/ag.econ.23208
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    References listed on IDEAS

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    1. Skully, David W, 1992. "Price Discrimination and State Trading: The Case of U.S. Wheat," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 19(3), pages 313-329.
    2. Satyanarayana, Vidyashankara & Johnson, D. Demcey, 1998. "Credit Guarantee Programs And U.S. Market Share In Selected Wheat Import Markets," Agricultural Economics Reports 23284, North Dakota State University, Department of Agribusiness and Applied Economics.
    3. Wilson, William W. & Dahl, Bruce L., 1999. "Transnational Grain Firms: Evolution And Strategies In North America," Agricultural Economics Reports 23278, North Dakota State University, Department of Agribusiness and Applied Economics.
    4. Dahl, Bruce L. & Wilson, William W. & Gustafson, Cole R., 1999. "Option Values For Provisions In Export Credit Guarantees," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-19, December.
    5. Ryan, Timothy J., 1993. "Marketing Australia's Crop: The Way Ahead," 1993 Conference (37th), February 9-11, 1993, Sydney, Australia 147404, Australian Agricultural and Resource Economics Society.
    6. Preszler, Todd & Wilson, William W. & Johnson, D. Demcey, 1992. "Competitive Bidding, Information and Exporter Competition," Staff Papers 121380, North Dakota State University, Department of Agribusiness and Applied Economics.
    7. Johnson, D. Demcey, 1995. "Export Credit Guarantees: A Welfare and Strategic Analysis," AE Series 231489, North Dakota State University, Department of Agribusiness and Applied Economics.
    8. Wilson, William W. & Dahl, Bruce L., 1999. "Transnational Grain Companies: Evolution And Strategies In North America; Summary," Agricultural Economics Reports 23254, North Dakota State University, Department of Agribusiness and Applied Economics.
    9. Preszler, Todd & Wilson, William W. & Johnson, D. Demcey, 1992. "Competitive Bidding, Information and Exporter Competition," Staff Papers 121380, North Dakota State University, Department of Agribusiness and Applied Economics.
    10. Dahl, Bruce L. & Johnson, D. Demcey & Wilson, William W. & Gustafson, Cole R., 1995. "Credit Guarantee Programs in International Grain Markets: Background and Issues," Agricultural Economics Reports 23331, North Dakota State University, Department of Agribusiness and Applied Economics.
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    Cited by:

    1. Hyun Jin, 2008. "Competitive structure of Canadian wheat exports in the world market," Applied Economics Letters, Taylor & Francis Journals, vol. 15(13), pages 1059-1064.

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