EFFECTS OF THE CANADIAN WHEAT BOARD ON THE U.S. WHEAT INDUSTRY

The practices of the Canadian Wheat Board (CWB) are an important issue in U.S. - Canada trade disputes and WTO negotiations. This study analyzes the CWB?s effect on U.S. producers by reviewing findings from previous research and developing models to analyze CWB wheat exports to the United States and the competitive structure of Canadian wheat exports in the world market. U.S. grain producers could benefit from the removal of the CWB as the United States could become more competitive in export markets. However, elimination of the CWB could also result in an increase in Canadian wheat exports to the United States as Canadian producers near the border could sell directly to the United States to take advantage of market opportunities. The net effect is difficult to quantify. The net benefits may be significant in the short run, but reduced significantly in the long run. Similarly, if Canada reforms its wheat board by eliminating trade-distorting subsidies, the United States may increase its exports and Canadian exports to the United States may increase. The net benefits from reforming the CWB could be greater than those from eliminating it. However, the United States could benefit the most from complete elimination of state trading enterprises (STEs), since they have elements distorting trade flows and the United States competes with several STEs in the world wheat market.