Ag Trade Compact With Canada
Pleases Most U.S. Observers

PHOENIX —(AP)— Grainbelt state governors, including some who had slowed border crossings of Canadian grain shipments, hailed a new trade pact between the United States and Canada.

Describing the agreement to other governors at the Western Governors' Association winter meeting here, North Dakota Gov. Ed Schafer said Friday the terms of the pact announced in Washington were "really good first steps."

"I couldn't be more pleased," said South Dakota Gov. Bill Janklow. "This is a hell of an accomplishment."

The agreement calls for the United States to collect more information on imported Canadian wheat to determine whether it is being sold below cost — as claimed by U.S. farmers but denied by Canada. Other provisions include having Canada provide quarterly forecasts of its wheat shipments, and taking steps to ease U.S. shipments of hogs and grain into Canada.

To pressure the two countries into moving on trade, the governors of South Dakota, North Dakota and Montana had slowed border crossings by stepping up inspections of Canadian trucks.

Janklow said a big remaining hindrance to U.S. agricultural exports is the weak Canadian dollar. "That's not something that these folks (trade negotiators) could work out."

Nebraska Gov. Ben Nelson welcomed the agreement but said U.S. negotiators should keep pressing to remove trade barriers.

NAFTA, the North American Free Trade Agreement, he said, "should have had two 'F's' in it. It should have been 'free' and 'fair.'

"There's more to do, obviously," Schafer said. "The Canadians have committed to negotiating more."

As part of the agreement, the Clinton administration said Friday it would start requiring Canada to divulge the price and quality of wheat it is shipping to U.S. markets so it can be determined whether the grain was sold under its cost of production.

The moves "put us on the path toward eliminating a lot of the trade irritants that have plagued our trading relationship for far too long," said Agriculture Secretary Dan Glickman. His Canadian counterpart, Lyle Vanclief, said the deal ensures that the huge farm trade between the two countries, now worth about $15 billion a year, keeps flowing.

The agreement also found qualified support among other border state officials and ag leaders.

Montana agriculture leaders joined some elected officials in praising the agreement, but cautioned the pact is only a first step toward improved relations between the two countries.

While the agreement promises to reduce red tape for U.S. exports, it will not necessarily mean a big increase in the quantity of products moving north into Canadian markets, the farm leaders said.

"Just because the border is open, it doesn't mean we're going to move a lot of wheat in there," said Randy Johnson, executive vice president of the Montana Grain Growers Association. "It's just a marketing preference of theirs."

State Agriculture Director Ralph Peck applauded the accord's provision that will make Canadian rail lines available to transport U.S. wheat to the West Coast. That will provide the kind of competition that should bring lower shipping rates, Peck said.

Sen. Conrad Burns, R-Mont., also likes the railroad provision but said that at best, the overall agreement "is a small first step in improving the situation Montana's farmers currently face.

"We may be able to ship more grain to Canada, but the truth is, they produce more grain than they need already," Burns said. "While more of our grain will trickle up north under the new agreement, our farmers will still face a blizzard of subsidized Canadian grain dropping on the American market."

Burns said he is concerned Canada will view the agreement "as an end rather than a beginning."

Herb Karst of Sunburst, Mont., president of the National Barley Growers Association, said Canadian rail rates often are about half of what Montana farmers pay to ship in this country.

Gov. Marc Racicot, who joined with other northern states' governors to pressure the Clinton administration for trade talks earlier this year, said he was pleased with the initial product of those negotiations.

He called the agreement "a very important first step in what will be an ongoing process of improving trade and relations with our Canadian neighbors."

Sen. Max Baucus, D-Mont., said the agreement represents progress, but he would have preferred it contain some specific limits on Canadian grain and livestock shipments to the United States. He said he will push for import limits as long as Canada continues to send more agricultural products to Montana than the state sends north.

Peck said the Canadians' willingness to standardize licensing and regulation of pesticides will make it easier for Montana producers to buy such chemicals north of the border where the price is lower.

The agreement also eliminates a Canadian requirement that Montana wheat be tested for three diseases, a logical step since Canada has recognized the state's grain is free of disease, he said.

Peck said the agreement still leaves unresolved the issue of creating systems for monitoring grain shipments from Canada and getting more information on Canadian Wheat Board subsidies.

Yet, the agreement is satisfactory, Peck said.

"We aren't going to get everything in the first phase of negotiations," he said. "We've gained some things. We have actually got the two governments talking to each other and resolving these issues."

Karst predicted the agreement will make it easier for U.S. barley to find its way to Canadian feedlots.

While the agreement does not address important pricing issues, he said, "They went about as far as they could go on issues they can address in these kind of bilateral talks."

Major details of the agreement, according to USDA, the U.S. Trade Representative, and Agri-Food Canada:

Grain:

— Canada will provide quarterly forecasts of its U.S. wheat sales.

— Farmers from Montana and North Dakota will be allowed to ship directly to 27 grain elevators in Canada, most within 60 miles of the border.

— Testing requirements for karnal bunt, a wheat disease, would be eliminated for 14 states that ship to or through Canada.

— By Jan. 1, grain from Minnesota, North Dakota and Montana can be shipped via Canadian railroads to U.S. Pacific ports. After six months, other states would be allowed to ship through Canada as well.

In a separate move, the United States will start requiring Canada to disclose the price and quality of grain it is shipping across the border so that U.S. officials can determine whether the grain is being sold at less than the cost of production.

Livestock:

— Canada will end its 30-day quarantine requirement for U.S. hogs.

— Restrictions will be relaxed to permit producers in 26 states to ship cattle to Canada for fattening.

— Canada has 2½ years to revise health regulations for U.S. livestock.

U.S. actions:

— The United States will end inspection requirements for Canadian horses by August 2000 and will work on relaxing import restrictions for horse semen.

— Allow Canada to "maximize" its exports to the United States of products containing sugar.