THE WHEAT WAR OF 1994

Following the signing of the 1989 Canada-United States Free Trade Agreement, sales of Canadian wheat to the United States grew rapidly. This resulted in a series of trade disputes, culminating in an investigation by the U.S. International Trade Commission (USITC) into the impacts of U.S. imports of Canadian wheat on the U.S. wheat farm program. A USITC finding of ''material interference'' would have led to a recommendation to implement tariffs or quantitative restrictions against Canadian wheat under Section 22 of the U.S. farm program legislation. The U.S. Department of Agriculture (USDA) claimed such material interference, but the U.S. flour millers, pasta makers and grain handlers, along with Canadian grain industry interests, testified that the true effects of imports are in the order of one-tenth of the effects claimed by the USDA. USITC staff analysis led to intermediate estimates of effects. This study explores the impacts of Canada-U.S. wheat trade on U.S. wheat prices and program costs, explains some of the differences in measured effects, and reports the outcome of the dispute.