Harmonization And Convergence Of Canadian And U.S. Grains And Oilseeds Policies: 1985-1996

The United States and Canada share the longest common border and largest bilateral trading relationship in the world. Recent trading agreements--CUSTA, NAFTA and WTO--have enhanced trade by encouraging elimination of many remaining trade barriers. However, one cause for concern about the effectiveness of these trade agreements has been the frequency of Canadian-U.S. trade disputes over bilateral wheat and barley trade arrangements and trade flows. To some extent, these disputes have arisen because of differences in and lack of harmonization between the domestic and trade policies implemented by the two countries, although other political factors have also clearly been important causes of these disagreements. Since 1986, many dimensions of the agricultural policies of both countries have undergone radical changes, perhaps especially with respect to small grains and oilseeds. Here we provide assessments of whether important aspects of the two countries' domestic and trade grains and oilseeds have converged toward harmonization since implementation of the Canada-U.S. Free Trade Agreement in 1989. It should also be noted that many of the changes in each countries' agricultural policies cannot be attributed to free trade agreements. Rather, they reflect government responses to budgetary pressures, commitments under international trade agreements, changes in the relative political importance of rural and urban voters, and other factors. Changes in General Levels of Support Producer Subsidy Equivalents are indicators of the proportion of total revenues from sales of a crop resulting from government subsidies and other income support policies such as tariffs. U.S. producer subsidy equivalents for wheat and other grains have declined substantially from their 1993-1995 average levels as a result of the decoupling of income support payments under the 1996 FAIR Act. Similarly, the average wheat, other grains and oilseeds producer subsidy equivalents reported for Canada over th(This abstract was borrowed from another version of this item.)