Is there any Canadian farm group, business, or government department that likes the one-year U.S.-Canada wheat agreement? Even the agreement’s defenders tend to describe it as an unpalatable necessity.
Clearly, Canada lost in the deal. There is now a one-year limit on Canadian wheat exports to the United States, with the danger that limit could become permanent.
Moreover, the limit is totally unjust and arbitrary, created by a blatant display of U.S. power politics, with no foundation in fair trading laws. Canada had not been trading unfairly in any way, and had not violated any trade agreements.
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As has been pointed out time and time again, the surge in Canadian grain exports to the United States was caused by a bizarre combination of U.S. crop failure and U.S. export subsidies that sucked U.S. grain out of the country.
Having said all that, however, there’s still the most important question to consider: Could Canada have won a better deal? No one may ever know the answer for certain, but the much-flawed agreement is probably the best that could have been achieved in the present circumstances.
The limits are unfair and wrong in principle, but they still provide for a southward flow of wheat that is above the historical average. And they avoid what could have been an economically disastrous trade war.
The raw political reality is that an awkward new U.S. president made a blunder last year in promising a few politicians that he would take action against Canadian wheat if they voted for the North American free-trade treaty. Ironically, in the end he didn’t need to buy those votes for the treaty to pass.
After that promise, and the later agitation by North Dakota and Montana self-serving politicians, the White House probably couldn’t afford to lose face by negotiating an agreement without limits. That’s unpleasant and unfair, but it’s politics.
Over the next year, when the natural forces of supply and demand would have reduced Canadian wheat sales to the U.S. anyway, the issue can fade away from the front pages and ambitious U.S. politicians can go on to other fashionable crusades.
In the meantime, the agreement’s provision for a panel to study wheat marketing systems could do some good, if the panel is honest enough to publicly conclude that the Canadian Wheat Board is a fair trader, while U.S. export subsidies have distorted the marketplace.
Perhaps then, finally, U.S. politicians will be able to screw up the courage to respect the free-trade agreement their country has signed, and to allow the limits to expire.
