International Trade

Canada and Australia, which consider themselves nonsubsidizers of agricultural exports, have criticized U.S. and European Community subsidy programs for lowering world agricultural prices and for reducing their export markets. Some U.S. officials have countered that these countries' grain-marketing systems engage in unfair trade practices by selectively or secretly lowering their export prices. This report examines (1) Canada's and Australia's grain export marketing systems, including their wheat board operations; (2) the two nations' government assistance to wheat producers during the last five years; (3) their export credit systems; and (4) any new export practices established in reaction to the U.S. 1985 Export Enhancement Program and their impact.

GAO found that: (1) Canadian and Australian wheat boards have noncompetitive marketing systems which pool wheat to be exported, and vary prices to maximize the profit of wheat producers; (2) from 1980 to 1990, Canada assisted its agricultural producers by providing income support, crop insurance, and a freight rate subsidy; (3) Australia removed subsidies on export inspection, fertilizer, and interest payments, eliminated the minimum price to growers, and no longer sets the domestic price for wheat at artificially high levels; (4) Canada and Australia offer export credit guarantees for wheat; and (5) Canada and Australia have not changed their export policies in reaction to U.S. export enhancement efforts but have redirected their marketing efforts to riskier markets and countries not covered in U.S. efforts and have focused on grain quality as a marketing strategy.