By Tracy Sayler

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Prairie Grains is the official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain Growers Association,
South Dakota Wheat, Inc., and the Minnesota Barley Growers Association.

ow important are exports to the U.S. wheat price, or for that matter, net

Every 100-million bushel gain or loss in U.S. wheat exports has a 60-cent effect on the U.S. wheat price, according to estimates by Gardner, based on USDA information and current year market statistics. Over the long run, taking producers’ supply response to increased wheat demand into account, every million tons of wheat exported mean about five cents to the per-bushel price of wheat in the U.S., he says.

In the aggregate, based on USDA’s assessment of market conditions now and in the near future, every dollar in additional exports of all U.S. farm commodities generates an additional 44 cents in U.S. net farm income.

Given that Americans consume less than half of the wheat U.S. farmers produce, and that the U.S. population accounts for less than 5% of the world’s potential wheat consumers, it stands to reason, then, why U.S. wheat producers should have a vested interest in building their market share in the global market. "There’s a lot at stake in stopping wheat exports from continuing to shrink," said Gardner.

U.S. wheat producers not only have a lot at stake in the global export market, but also in the policy that shapes the global export market. That’s why U.S. Wheat Associates, the Washington, D.C.-based export market development organization funded in part by the Minnesota wheat checkoff, devoted much of its spring board meeting in Washington recently to developing goals and strategies for the next round of global trade talks.

"It’s an extremely important issue, and (USW) is well advised to pay close attention to it," says Gardner, who was among several of the nation’s leading trade policy minds and movers invited to the USW spring meeting, to provide context and background information for USW leaders— producers of 19 state wheat organizations that support USW, including the Minnesota Wheat Research and Promotion Council— as they began to establish priorities for the next global trade round.

You’ll recall the last round of the General Agreement on Tariffs and Trade: It was called the Uruguay Round, because it started in Punta del Este, Uruguay, in September 1986. It concluded at Marrakech, Morocco, in April 1994, and implementing legislation was approved by the U.S. Congress in late 1994. The purpose of the GATT was to develop multilateral protocol for fairer global trade.

The Uruguay Round was actually the eighth round of talks: The GATT began in late 1947 with 23 countries, and has been an evolving code of principles and rules for the conduct of world trade ever since. After the Uruguay Round concluded, the GATT was renamed the World Trade Organization.

You can find a backgrounder on GATT, the WTO, and an overview of the agricultural provisions of the Uruguay Round (including effects of the agreement, and commodity fact sheets, including wheat) at the USDA Foreign Ag Service web site: http://www.fas.usda.gov/itp/policy/gatt/gatt.html

No previous round has been as important to U.S. agriculture as the last. Many view the Uruguay Round not as the end-all global trade agreement for agriculture; but as a starting point. The ag trade liberalization in the Uruguary Round indeed was modest at best: State Trading Enterprises (STEs, such as the Canadian Wheat Board) were largely unaffected by GATT. Developed countries cut expenditures for export subsidies by 36% and subsidized quantities by 21%.

Put another way, countries can still subsidize up to 79% of wheat export shipments at up to two-thirds the pre-GATT subsidy payment price when the agreement is fully phased in. By the year 2000, the European Union is still allowed to outspend the U.S. on export subsidies by more than 10 to 1 ($8 billion vs. $600 million).

Thus, the importance of the next round of WTO negotiations for agriculture. The next round will begin in November 1999 in Seattle, Wash. The wheat producer members of USW, the National Association of Wheat Growers, and the Wheat Export Trade Education Committee have elected Christopher Shaffer, a Walla Walla, Wash., wheat producer, to represent U.S. wheat interests on trade at the WTO and on other trade forums.

Major issues identified for U.S. wheat: domestic support programs, export subsidies, state trading enterprises, phytosani-tary barriers, and import barriers. Among USW’s preliminary recommendations for the talks:

Domestic Support Programs: WTO signatories should move toward "green box" or domestic support programs and policies allowable by the WTO. Further, the WTO Committee on Agriculture should further clarify and tighten allowable criteria, and be mandated to rule on green box eligibility. Levels of allowable domestic support programs should be subject to ongoing review to address distorting levels.

Export Subsidies/Restriction/Credit Sales: The WTO should establish clear rules to prohibit all export subsidies; disciplines governing export credit sales; eliminate all export restrictions on ag products; and that the Free Trade Agreement of the Americas prohibit export subsidies on all trade in the Western Hemisphere.

Market Access: WTO signatories should pursue elimination of all tariffs and non-tariff barriers, as well as export subsidies and export restrictions.

State Trading Enterprises (STEs): STEs, whether importer or exporter, should not require participation, but operate on a voluntary basis.

Biotechnology: Establish a time-defined, science-based review and approval process for genetically enhanced (GMO) products; that WTO signatories, particularly Canada, the U.S., EU and Japan, promote effective communication and coordination amongst regulatory authorities for GMOs, and consult and provide full information to producers and marketers on regulatory processes involving GMOs.

The WTO should establish clear rules based on sound science with respect to trade in genetically enhanced products, and ensure that biotechnology regulations do not act as disguised barriers to trade.

USW will review and finalize its recommendations this summer.