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U.S.-Canadian Wheat Import Limit Approved : Commerce: The negotiators avert a trade war with tentative one-year pact. Official cites curb at 1.5 million tons.

August 02, 1994|JEFF LEEDS | TIMES STAFF WRITER

WASHINGTON — U.S. and Canadian trade negotiators, averting a potential trade war between the world's biggest trading partners, tentatively agreed Monday to limit wheat imports from Canada for one year.

U.S. Trade Representative Mickey Kantor said the agreed-to limit will result in "a substantial reduction" in imported grain from last year, but he did not reveal the limit placed on Canadian farmers. A weather-damaged U.S. harvest and a major Canadian sales drive pushed sales of wheat from north of the border to about 2.5 million tons in this country last year.

One official familiar with the agreement said trade negotiators had settled on 1.5 million tons as the limit on wheat imports this year.

Kantor said the two governments will establish a joint commission to study each nation's marketing systems and subsidies for all grains.

After reviewing the two countries' policies, the commission will recommend ways to improve the balance of trade. But neither government will be bound to act on advice from the panel, which will be composed of six to 10 private wheat industry representatives and trade experts, Kantor said.

Restricting imports will not result in any appreciable increases in the prices of wheat products for consumers, he said.

Under the accord, which requires the approval of both governments, the United States will hold off on imposing tariffs on Canadian wheat for 12 months to give the commission enough time to make recommendations to the two governments, Kantor said. Canada has pledged not to retaliate with trade sanctions of its own under a "peace clause" in the agreement.

Announcement of the agreement caps a week of tense negotiations between U.S. and Canadian trade officials. Canadian Trade Minister Roy MacLaren met with Kantor over the weekend and trade negotiators have made several conference calls to hammer out the last-minute accord, U.S. officials said.

Both countries had threatened sanctions after the U.S. International Trade Commission ruled last month that Canadian imports had flooded the American market, forcing U.S. farmers to lower their prices.

U.S. trade negotiators had tried to convince Canada to cap its exports to the United States at 1.5 million tons a year, and industry leaders had asked the Administration to seek a limit of 500,000 tons.

Clinton Administration officials are expected to announce details of the accord this morning.

Officials close to the negotiations said that determining the cap was a difficult issue in the talks. But it was even tougher to persuade the Canadian government to accept that its support of Canadian farmers "is a problem," one U.S. official said.

Under the agreement reached Monday, neither country has to admit wrongdoing, Kantor said. But the joint commission will give trade experts a chance to deal with underlying issues in the dispute, including the pricing practices of the Canadian Wheat Board, which administers Canada's national monopoly and serves as a trade advocate for Canadian farmers.

Reaction to the accord was mixed among wheat industry leaders.

Paul Rosenthal, an international trade attorney representing U.S. pasta producers, said that likely increases in the cost of U.S. and Canadian wheat will "put a real squeeze on producers. We're left with no real alternative."

U.S. farm groups praised the agreement as a first step toward establishing a fair balance of trade.

Canadian Embassy spokesman George Rioux said the agreement is "not perfect" but "it enables us to move forward and not have to face a trade confrontation."

Canadian government officials said they are hoping to negotiate a final limit of imports above 1 million tons a year. If there are sticking points in negotiating a final agreement, Rioux said, "it will be in the numbers."

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