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Mr. Moos. Senator Lugar, what you say is the case, to some ex- 

 tent. In defense of our export policy, though, I must say that we 

 have been very aggressive because we felt we needed to be, given 

 the diminished demand that we are facing overseas. And it has 

 been a very competitive market overseas. We have indicated that 

 we are happy to try to maintain reasonable world wheat prices, but 

 if we are going to have to meet the competition, we will meet it. 



The unfortunate side effect of that is to sometimes strengthen 

 prices here in the United States. But I must say that there are 

 other factors which encourage the movement of Canadian wheat 

 into this country, not only because of the effect of the EEP pro- 

 gram. We feel that the Canadians unfairly took advantage of the 

 Canadian Free Trade Agreement to ship good quality wheat into 

 this country under a feed wheat label last year. And so we want 

 to try to make for a level playing field here. 



Secretary Espy. Also, let me add, Senator, that their pricing poli- 

 cies are not at all transparent, and, in addition to that, their rail 

 subsidies have an impact on their marketing of wheat. And so we 

 are conscious of all these things. We have not yet made a decision 

 on this Section 22 matter, but it is being thoroughly discussed. 



Ambassador Kantor. If I might just add one thing to that, I 

 have been through this to some degree. I am not an expert like the 

 three gentlemen to my left, but I certainly can look at numbers. If 

 you look at the Durum wheat imports into this country from Can- 

 ada, starting in 1986-87 where there was zero before that, it went 

 from 59,000 to 508,000 expected in 1992-93. Total wheat, in the 

 same time period, increased from 322,000 to 1,566,000. 



I think that it is clear that the sort of crow's-nest subsidy, the 

 Canadian Wheat Board's lack of transparency, we don't know how 

 much they are subsidizing in wheat, frankly. We have no earthly 

 idea. All I would say is the proof of the pudding is in the eating, 

 and if you look at the Mexican market, they had percent just 3 

 years ago. Then it went to 14 percent, and then 70 percent last 

 year. 



It is a major problem. I think what Secretary Espy has done with 

 the EEP program is commendable. I think it needed to be done, 

 both to Mexico and China. And we hope that it will work. We be- 

 lieve that it will. These folks are experts. I am not. But as the 

 Trade Ambassador, let me just say that I think it is critical that 

 we deal with this problem, we deal with it quickly, because I be- 

 lieve the Canadians have taken unfair advantage of the free trade 

 agreement, both in their exports into this country and into Mexico. 



Senator Lugar. I appreciate your answers. Obviously it is a com- 

 plex problem. We have debated here the virtues of export enhance- 

 ment as a basic concept. By and large, almost all of us have come 

 out in favor of certain expenditures, which add to the deficit. They 

 are a part of our national budget. Consumers in America need to 

 know that to some extent we are inflating the cost of food as we 

 try to throw shots across the bow particularly of the European 

 Community. 



But some of the side effects I think are present in our own mar- 

 kets, and I trust that as you analyze what you do here, you will 

 try to separate those. The credibility of our programs falters if 

 somehow someone writes a story that the Federal Government is 



