The Canadian Wheat Board: Government Guarantees and Hidden Subsidies
The operations of the Canadian Wheat Board (CWB), a state trading enterprise, have generated controversy over the years, partly because of an alleged lack of transparency in its operations. This study examines one aspect of operations that is not well understood – the government guarantee of CWB borrowing and export credit sales. The CWB is able to take advantage of this special privilege to generate a “financial cushion,” or non-market based revenue, that it can use to enhance returns to producers, discount export prices, or pay administrative expenses. Current WTO negotiations should build on U.S. and EU proposals on STEs and export credit guarantees to address potential trade-distorting practices of STEs such as the CWB.
Policy Paper 2: The Canadian Wheat Board: Government Guarantees and Hidden Subsidies, Carol Goodloe, Office of the Chief Economist (U.S. Department of Agriculture), reviewed by Vincent H. Smith, July 2004