Wheat-importing state trading enterprises: Impacts on the world wheat market

State trading emerged as one of the more contentious issues at the end of t he Uruguay Round of negotiations under the General Agreement on Tariffs and Trade, and U.S. officials have said that state-trading is an important iss ue for further negotiation in the mini-round on agriculture scheduled to be gin in 1999. The prevalence of state trading by wheat-importing countries i s examined, and reasons for reform are explored. This paper investigates tw o hypotheses: whether operation of a stare trading enterprise is associated with a higher level of protection than with private traders and whether decisions made by state traders regarding the source of wheat is ma de on a noncommercial basis. The effective level of protection, net import demand equations and a simple Armington model for U.S. and Canadian wheat exports are estimated to inves tigate these hypotheses. Behavior is compared across countries who differ i n their institutional arrangements for importing wheat. It is also compared over time within countries who have reformed their state trading enterpris e to assess whether reform leads to different market behavior.