Lloyd's List | April 18, 2002
The world's biggest wheat exporters, the US and Australia, traded blows yesterday over an Australian wheat export monopoly caught in the crossfire of free trade talks, Reuters reports.
US Wheat Associates, the top representative body of US wheat growers, told an industry conference it was lobbying the Bush administration not to settle on a free trade agreement with Australia while the monopoly remained. At the centre of the disagreement is AWB Ltd, the former Australian Wheat Board.
Now privatised, it holds a government-granted monopoly on the export of bulk wheat from Australia - around 18m tonnes worth ADollars 4bn (Dollars 2.1bn) a year. "We have a problem with that," US Wheat Associates president Alan Tracy told the Grains Week conference of Australian wheat industry leaders. "Fair export competition requires the removal of the export monopoly of AWB," he said, adding that US Wheat Associates was making this point to the Bush administration.
Mr Tracy argued that the AWB undercut the world market to move stocks at the end of a selling season, and also gave effective credit concessions to growers. However, Australia argues that its wheat export monopoly does not distort world markets, and points to US and EU agricultural subsidies which, it says, do distort global prices.
"These two major grain producers and exporters continue to encourage excessive production by giving their farmers handouts and removing them from the realities and the pricing signals of the international market," AWB chairman Brendan Stewart told the conference.
The US attack on AWB comes as the Australian and US governments open talks about forging a free trade agreement, with full negotiations expected to be launched later this year.
However, the AWB export monopoly, a long-standing thorn in the United States' side, is also sure to become a central issue in Australian-promoted agricultural trade liberalisation negotiations in the upcoming World Trade Organisation round.
"It (the WTO round) could conceivably lead to the elimination of the AWB, or disciplines on the AWB, or it could allow us to keep the AWB in its present form," Allan McKinnon, special negotiator for agriculture in the Office of Negotiations in Australia's department of foreign affairs and trade, said.
Mr McKinnon said the WTO round could also open the way for an international grains trade subsidy war.
"In some of the FTA negotiations, which are being mooted or under way, we could find ourselves under pressure to adjust our quarantine barriers," he said.
Mr McKinnon also attacked the US over its US Dollars 171 bn farm Bill, now passing through the US legislative system, which he said distorted world trade by encouraging over-production.
He was optimistic on the prospect of the Doha round leading to agricultural trade reform, despite the US farm Bill and continued agricultural subsidies in the EU.
But Australia's problem was that trade liberalisation had been linked with AWB's single desk, he said.
The real US target was the Canadian Wheat Board, which conducted an export monopoly from the US border, Mr McKinnon said. But AWB and other government-granted Australian agricultural export monopolies, or State Trading Enterprises, including Queensland Sugar, were in the US firing line.
l The latest ripple of consolidation in Canada's grain industry was felt on Tuesday when futures and options broker Benson Quinn-Growers Marketing Service confirmed it was poised to absorb PCTS, another major futures commission merchant.
"There's been a letter of intent signed and the anticipated transaction is that BQ-GMS will purchase all of the assets of PCTS Inc," Andrew Hiscott, chief operating officer of BQ-GMS, said.
BQ-GMS is half-owned by Agricore United, which became Canada's largest agribusiness last November, when Agricore Cooperative and United Grain Growers officially merged.
Copyright 2002 Lloyd's List InternationalLloyd's List:
