BACKSTAGE

Will Tories’ shouting protect our wheat from the Americans' “giveaway” program?

BLAIR FRASER August 31 1957
BACKSTAGE

Will Tories’ shouting protect our wheat from the Americans' “giveaway” program?

BLAIR FRASER August 31 1957

Will Tories’ shouting protect our wheat from the Americans' “giveaway” program?

BACKSTAGE

AT OTTAWA

BLAIR FRASER

An interesting contrast between the old government and the new, and one to watch in the months ahead, is their handling of a major difference of opinion between Ottawa and Washington, one that is sure to be discussed at every high-level meeting of the two countries: that is the U. S. program for unloading its mammoth agricultural surpluses, including a billion-bushel mountain of wheat.

Liberal and Conservative ministers do not disagree about the merits of the U. S. program. They unite in detesting it, and in private they have both said so in virtually identical terms. U. S. ambassador Livingston Merchant heard and said the same things aí his first interview with Prime Minister John Diefenbaker as at his last interview with C. D. Howe as minister of trade and commerce.

Where the Liberals and Conservatives differ is in method. The Liberals made their protests mainly in secret, only once in a while blurting out in public what they were continually shouting into the ears of American officials. The Conservatives do their shouting from the housetops. Already they have said more of their complaint in the press and on the platform, and have got more public notice in both countries, than the Liberals did in all three years the U. S. program has been in operation.

The Canadian case is simple. Our governments have accused the United States of spoiling the international market for wheat by “selling” it to about two dozen countries on terms that can-

not possibly be met by ordinary commercial competition. Some countries are allowed to pay for it in their own blocked currencies, payment that is then turned back as a long-term, low-interest "loan” by the U. S. government. Others get wheat in exchange for strategic materials of various kinds. To Canadian officials struggling to find markets for our own six hundred million bushels of surplus wheat, these are “giveaway programs” that make commercial sale practically impossible.

They knew they had an unpopular case, though, and could not say too much, so long as the United States was merely giving food to hungry and impoverished countries. Rich and prosperous Canada could hardly make it a major grievance that American wheat was being given to the half-starved millions in India and Pakistan or to stout but hard-pressed allies like Turkey. All we could do was ask that the U. S. distribute its aid with some care for the markets that are Canada's livelihood.

What turned this anxiety into anger and outrage was the discovery of the tie-in sale provision in front of the U. S. disposal contract. Some countries receiving wheat for other surpluses had to stipulate that they would also buy for cash a stated amount of the same products from the United States. In Canada’s view this was no longer a foreignaid program, it was a colossal example of that ancient merchandising trick, the loss leader. Americans deny the charge with considerable indignation. They say the ill effect of other surplus-disposal

programs has been vastly exaggerated, and that Canadians are hollering before they’re hurt.

Of all the twenty-three countries that had got wheat under the U. S. surplus program only one, Japan, has been a substantial buyer of wheat from Canada. This is no coincidence, say the Americans. Far from dumping huge quantities of food on the world market without thought for the interests of friendly countries, they say they have taken great care to do exactly the opposite to avoid disturbing established commerce and to operate only where their allies’ trade will not be affected. They have sold for soft currencies, true, but at prevailing prices, so that the bottom has not been knocked out of the commercial market. Canadians admit that the giveaway program has not directly invaded Canada’s established markets. Even the indirect effects have been slight, and some have been corrected. For instance, when it appeared that some cut-price wheat was leaking into the British market, Washington took steps to prevent this.

But Canada has a wheat surplus too, and merely to maintain the sales of yesteryear is not enough. Canada must find, and has been trying desperately to find, new customers for wheat. It is these new customers who have already been cut off by U. S. disposal deals, and bound by tie-in sales clauses to spend their dollars for U. S. and not Canadian wheat.

So Canada cannot expand her sales, and this is Canada’s grievance. Candid

Americans admit that to this extent, at least, their program really has injured their neighbor, and there the argument rests.

Liberals will contend that their technique, of battling in private but keeping mum in public, has done the Canadian farmer good. In several important ways, they say, the American program has been modified by Canadian protests. Canada could not take credit for these changes because that would leave the U. S. government open to attack at home for having yielded to foreign representations, but the charges were made —one example was the above-mentioned leakage of U. S. wheat into Britain, which was stopped after Ottawa had brought it to Washington’s attention.

Of course, if the public accusations by Conservatives have the effect of making the U. S. abandon its surplusdisposal policy, there will be no further arguments about which method works better. The present indications are, though, that the U. S. will do no such thing. Observers in both Ottawa and Washington are glumly certain that the Eisenhower administration is determined to press on with unloading its surpluses, and that the protest of allies will evoke apologies and regret but no action.

Instead, new proposals are being put forward in a sunny official way. It is a variant on the old slogan. “If you can't lick them, join them.” Since Canada cannot prevail on the U. S. to stop giving away wheat, why not get together and co-operate? Why not both have a disposal program and both have tie-in sales?

To the man who worked under C. D. Howe this suggestion is rank heresy. Howe always maintained that Canada couldn’t afford to give away wheat to anybody. Only in cases of actual famine did he relax that view. He thought it would be impossible to keep on selling for cash to some customers while giving to others, that the U. S. would find this out but could get along anyway, but Canada would be ruined by trying to play the same game.

Howe’s successor, Gordon Churchill, may end by agreeing with Howe. Meanwhile, though, he is in a mood to look hard at any scheme that offers a chance of shrinking our wheat surplus. He has been heard to wonder, for example, why Canada’s contribution to the Colombo Plan couldn't simply be bushels of wheat. He will certainly argue that any increase, at least, in Colombo Plan aid should take that form.

The catch is, of course, that wheat given away to foreign lands would still be paid for in cash—by the Canadian taxpayers to the Canadian farmer. It would take something over a billion dollars to buy the present surplus.

There is also the unresolved question: which nations are to be rated as “needy” and deserving of special help? Japan in the U. S. program is a needy nation and has already got fifteen million dollars’ worth of wheat from the disposal program. Japan, in Canadian statistics, is our third largest cash customer for wheat.

Maybe these obstacles will turn out to be insuperable. But if they do it will not be for lack of trying. Ironic as it seems, the Conservatives, who began by bringing our quarrel with the U. S. into the open, might end by co-operating with Washington in a way the Liberals never dared to do. If the result is to sell some more wheat, the prairies’ farmer won't worry about consistency.