Shift in American trade policy could affect our grain sales
The United States has long connected trade policy with foreign policy.
But that stance appears to be waning and it has implications for Canada’s grain exports.
Canada has long traded with almost anyone, regardless of how disreputable the regime’s government, on the argument that it is easier to convince a foreign power to end human rights abuses and terrorist ways through dialogue than through isolation.
Although far from consistent, the U.S. often punishes countries whose governments it
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doesn’t like by cutting them off from the benefits of trade with the world’s largest economy.
The highest profile residents of the doghouse now are Cuba, Iran and Iraq.
The U.S. trades with China, but there is always friction.
However, the Clinton administration has been manoeuvring to bring the Asian giant into the World Trade Organization. Last fall, the blueprint for entry was agreed upon, with China committing to reduce or eliminate many of its trade barriers.
The American congress is now considering a law that would give China a permanent “normal trading relationship” with the U.S.
In an apparent gesture of goodwill, China said last month it would buy 50,000 tonnes of wheat from the Pacific Northwest – the first such shipment in more than two decades because of China’s contention that the grain contained excessive amounts of TCK fungus.
The U.S. is also gradually warming toward Iran. Last year it eased sanctions to allow the sale of U.S. food and medicine.
It has sold some corn, but Iran still won’t buy its wheat, turning instead to Canada and Australia.
In the first six months of this crop year, Iran has been the largest buyer of Canadian wheat, purchasing 1.7 million tonnes. It is the main reason on the demand side for increased Canadian exports this year.
But recently, Iranians elected a slate of reform minded politicians who are lobbying Washington to ease sanctions on Iranian carpets, pistachios and caviar, in return for access for American wheat.
It wouldn’t be surprising for the U.S. to try to support Iran’s reformers through better trade access.
These moves suggest that Canada will soon face more competition in some of the world’s largest wheat markets.
The Canadian Wheat Board will be under pressure to maintain sales, but it has successfully faced similar challenges before, such as when the Russians stopped buying grain.
The board will probably do so again.
