U.S. Agricultural Trade

U.S.-Canadian grain trade has been a source of contentious debate between the two countries during the past dozen years as Canadian wheat exports to the United States have increased. Some U.S. grain industry participants and observers have been concerned about this increase, partly because grain sales are handled differently in the two countries. In the United States, private grain companies compete to buy and sell grain. In Canada, most of the grain trade is handled by the Canadian Wheat Board, a government-backed entity, to which western Canadian farmers must sell their wheat and barley for domestic human consumption or export. Some critics charge that the Canadian Wheat Board engages in unfair trade practices. This report discusses (1) the Board's operations, government assistance to the Board and the Canadian farmer, and ongoing changes to the environment in which the Board operates; (2) the availability of data to ascertain the Board's pricing practices and efforts to increase the amount of data available; and (3) the nature of trade remedies available to address the operations of state trading enterprises and the frequency with which these remedies have been applied to state trading enterprises. GAO also provides information on the Board's role in the commodities and futures markets, a summary of studies on the Board's effect on the Canadian farmer, and the applicability of U.S. antitrust laws to the Board.

GAO noted that: (1) the CWB is a STE with a monopoly on certain Canadian grain sales and receives Canadian government subsidies in a number of direct and indirect ways; (2) the Canadian government also provides other assistance to its wheat and barley farmers; (3) the CWB's operating environment is undergoing changes, some of which are expected to make the United States a more attractive market for Canadian grain; (4) at the same time, there is a greater presence of U.S. grain companies operating in Canada, and the CWB is dealing more frequently with private companies in the sale of Canadian grain; (5) little information on actual CWB contracts is publicly available; (6) although U.S. Customs Service and the Department of Agriculture collect a great deal of information on imports of Canadian grain into the United States, these data cannot be used to ascertain CWB export prices; (7) the format that countries use to report on their STEs' activities to the World Trade Organization has recently been revised; (8) however, U.S. officials are concerned that it does not go far enough to increase the openness of the pricing practices of certain STEs, such as the CWB; (9) trade remedies to combat disruptive or trade-distorting imports under U.S. trade laws do not treat STEs any differently from other entities involved in international trade; (10) these U.S. trade laws can address trade issues such as dumping, actionable subsidies, and surges in imports; (11) in addition, STE activities may be subject to dispute settlement provisions under international trade agreements if the activities are inconsistent with an obligation agreed to by the government of the STE; and (12) relatively few trade remedy actions have been taken involving STEs.