TORONTO — With no resolution to agricultural trade talks between Canada and the United States, Canadians will be watching this week to see if the Americans make good on a threat to impose trade sanctions.
Monday, Canadian agriculture minister Ralph Goodale and U.S. agriculture secretary Mike Espy failed to resolve outstanding disputes in a sometimes-tense five-hour meeting.
They promised to keep talking and Goodale said there were no direct threats of unilateral American action.
But last week in Washington, Espy told a congressional committee that unless outstanding issues were resolved Monday, the U.S. would “come out swinging” this week. Administration officials said the Americans could slap a tariff on durum wheat imports unless Canada agreed to a “voluntary” limit far lower than expected exports this year.
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As he emerged from the Toronto meeting late Monday afternoon, Espy told reporters some “very thorny, very difficult problems” remained between the two countries. “It’s fair to say we’re closer but no cigar.”
Goodale later said much of the meeting was taken up with discussions on the wheat issue. Canadian officials said Canada is refusing to accept the low export cap demanded by the Americans.
The Canadian minister repeated earlier vows not to cave in to American pressure. He said Espy’s “sabre-rattling” comments in Washington had damaged the atmosphere at the meeting, but “I didn’t hear any sabre-rattling around the table.”
Now, Espy has returned to Washington where farmer and congressional pressure to take action against Canada will be intense.
The most immediate issue is American complaints that increased imports of Canadian durum wheat are undermining local markets — the subject of a U.S. International Trade Tribunal investigation already under way.
The administration has suggested it could either set quotas on imports while awaiting the ITC decision later this year, or impose higher tariffs.
American food companies also want more access to Canada’s markets now controlled by supply management and they want a reduction in Canadian exports of sugar, sugar-containing products and peanut butter into the U.S. market.
Officials have said Canada is willing to make some concessions on peanut butter and sugar while the U.S. appears willing to send the dairy and poultry-access issue to an international trade disputes tribunal for a decision.
That makes the wheat issue the most difficult.
Canada has agreed to a “voluntary” cap but has suggested it be set at the current level of grain exports, approximately 2.5 million tonnes. It is high by historical standards.
The Americans have suggested 1.8 million tonnes or less, a level that would severely limit Canadian access to what has become a lucrative foreign grain market.
