THE WHEAT WAR OF 1994

Following the signing of the 1989 Canada-United States Free Trade Agre ement, sales of Canadian wheat to the United States grew rapidly. This resulted in a series of trade disputes, culminating in an investigati on 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 U SITC finding of ''material interference'' would have led to a recommen dation to implement tariffs or quantitative restrictions against Canad ian wheat under Section 22 of the U.S. farm program legislation. The U .S. Department of Agriculture (USDA) claimed such material interferenc e, but the U.S. flour millers, pasta makers and grain handlers, along with Canadian grain industry interests, testified that the true effect s of imports are in the order of one-tenth of the effects claimed by t he USDA. USITC staff analysis led to intermediate estimates of effects . This study explores the impacts of Canada-U.S. wheat trade on U.S. w heat prices and program costs, explains some of the differences in mea sured effects, and reports the outcome of the dispute.