The International Politics of Agricultural Trade: Canadian-American Relations in a Global Agricultural Context

By Theodore H. Cohn | Go to book overview
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Despite its acknowledged success, the Blended Credit Program was suspended in February 1985 for an unexpected reason. In that year, a U.S. court decided that the Cargo Preference Act applied to blended credit. The CCC then discontinued the program because the impact of increased costs for transport in U.S.-registered vessels made it less competitive. Nevertheless, an end to blended credit did not signify that U.S. efforts to increase its credit offerings were abating. Indeed, the 1985 Food Security Act required the CCC to make available no less than $ 5.5 billion in short- and intermediate-term credit guarantees a year. 61

As price competition intensified in the 1980s, it became evident that credit programs alone could not prevent the erosion of the U.S. market share. In fact, the CCC was not able to allocate the full $ 5.5 billion in credit guarantees to importing countries because U.S. agricultural prices were not competitive in the world market. Credit and credit guarantees were also being offered by other exporters, and the CCC would not provide guarantees to some countries that were high credit risks. 62 The United States therefore began to focus its efforts on export subsidies through the Export Enhancement Program. While the EEP does not involve the provision of credit, the two export promotion techniques are interrelated. For example, export credit guarantees have been made available in many of the EEP initiatives, and "the credit guarantee has been extremely important in consummating some EEP sales."63

In contrast to the United States, Canada's agricultural export assistance in the 1980s has not thus far led to any significant innovations. The financing facilities of the Credit Grain Sales Program were considered "reasonably adequate" for CWB exports and relied on the private financial sector without calling on the existing authority for government credit guarantees. The EDC could offer mixed credits (concessional loans combined with commercial EDC export credits) from 1981"to help otherwise competitive Canadian exporters obtain financing that at least matched foreign concessional offers."64 The Canadian government did create a new agricultural export promotion mechanism in January 1984, the controversial crown corporation Canagrex, but it was described as duplicating other facilities and was dissolved in March 1985. Finally, plans for an "aid-trade facility" were abandoned in early 1986 as a result of budgetary constraints.


CONCLUSIONS

In conclusion, Canada was often able to compete with the United States in providing agricultural export credit. Canada was therefore willing to adopt unilateral strategies and frequently led the way in such areas as extending

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