Journal Article

An Evaluation of the Canada-U.S. Wheat Agreement of 1994

Colin A. Carter and Donald MacLaren

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 79, issue 3, pages 703-714
Published in print August 1997 | ISSN: 0002-9092
Published online August 1997 | e-ISSN: 1467-8276 | DOI: http://dx.doi.org/10.2307/1244413
An Evaluation of the Canada-U.S. Wheat Agreement of 1994

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The U.S. government notified the GATT in 1994 that it intended to increase tariff rates on wheat and barley imported from Canada. This threat of increased permanent protection resulted in Canada voluntarily agreeing to restrict wheat sales to the United States. Why would Canada agree to this outcome which would lead to a welfare loss? The payoffs to each country associated with alternative trade war outcomes are estimated. We find that welfare, as measured by equivalent variation, falls in both countries, although Canada was better off limiting exports than becoming engaged in a trade war with the United States.

Keywords: bargaining game; Canada; GATT; trade war; United States; wheat; F130; F140; Q170

Journal Article.  0 words. 

Subjects: International Trade ; Agricultural Economics

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