While U.S. subsidies are a highly charged issue in Canada, the
issue is not entirely one-sided. Last December the Canadian govern-
ment authorized $1 billion in Canadian dollars for the special Cana-
dian Grains Program to use as a subsidy for the country’s grain and
oilseed producers. That is certainly a step in the wrong direction as
far as our free trade talks are concerned.
As part of the free trade talks, we also have formed a working
group on access issues. This group is concentrating on nontariff bar-
riers such as various U.S. import restrictions and Canadian provin-
cial wine regulations and marketing board import licensing
requirements.
The wine and beer access problem exemplifies how a nontariff
trade barrier can be every bit as damaging as a tariff. Under Cana-
dian law, complete control over sales and distribution of alcoholic
beverages is given to the provinces. Although Canada is currently
the largest market for U.S. wines, discriminatory price mark-ups,
lack of listing opportunities and restrictive provincial marketing and
distribution practices are serious impediments to expansion of U.S.
wine exports.
With respect to beer, U.S. brewers have had little or no success in
obtaining provincial liquor board listings allowing them to sell their
products in Canada. However, in most provinces beer produced there
may be sold outside of the provincial liquor board system. That gives
domestic production a large advantage over imported beer. As a
result, U.S. brewers have had to license Canadian brewers to produce
U.S. brands. This at a time when Canadian beer exporters have
ready access to a large U.S. market.
Will U.S. and Canadian negotiators be able to come up with an
agreement by the October deadline? More to the point, will we be
able to draft an agreement in which both sides will come out
winners—an agreement that stands a chance of being approved in
both the United States and Canada?
One thing that suggests success is that there are strong pressures
for a free trade agreement in both countries. While oftentimes the
opponents seem to get most of the publicity, there are many, many
businesses on both sides of the border for which freer trade is essen-
tial for continued economic growth.
There are also pressures on both of our nations from outside
sources—in particular from the EC, which is becoming more and
more protectionist, and from Pacific Rim countries, which are becom-
ing more and more aggressive exporters. European and Pacific Rim
trade policies have heightened the importance of the U.S. market for
Canada and the Canadian market for the United States.
The United States and Canada already enjoy the largest bilateral
trade relationship in the world. For agriculture, Canada is both a
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