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Friday September 1 5:50 a.m. EDT

U.S., Canada Open Trade Talks

WASHINGTON (Reuter) - The United States and Canada are at it again -- squabbling over everything from wheat and chickens to sugar and peanut butter.

U.S. and Canadian officials meet Friday in Washington to try to sort out the most pressing of the disputes -- a year-old argument over Canadian durum wheat shipments coming into the upper midwestern United States that wheat growers in the region say unfairly cut into their markets and that Washington says hurt U.S. farm programs.

``Agriculture trade policy has always been sort of a mess worldwide, and, to a lesser extent, also between the U.S. and Canada,'' said former U.S. deputy trade representative Jules Katz.

But Katz, the Canadian official and other sanguine trade experts said the sniping is not likely to slow the huge $250 billion worth of products crossing the U.S.-Canada border.

``These issues are noisy, and people make a big deal out of them, but they don't really amount to a whole lot in the context of the total cross-border trade,'' said Katz.

Washington and Ottawa avoided a full-blown trade war over the wheat fight last fall by agreeing to a Memorandum of Understanding under which Canadian durum wheat shipments were limited to 1.5 million metric tons for 12 months.

The agreement also established a non-government binational commission to study each country's grain trading system and to make recommendations on how to settle the fight.

The agreement ends in less then two weeks on Sept. 12.

After talking tough for months -- Washington has threatened to extend the import quota, and Ottawa has insisted it would not agree to such a move -- both sides appear closer to coming up with a workable solution.

Reflecting a dramatic change in the global market, where wheat is now selling for high prices because of low stocks, and a political unwillingness to take the issue to the brink again, the idea of setting up some sort of monitoring system of cross-border grain trade seems to be gaining favor.

Officials meeting Friday are expected to discuss the monitoring idea. Trade experts said the option would enable each country to retreat gracefully from a confrontation.

But once the wheat dispute is settled, negotiators will be busy dealing with other problems involving sales of poultry, dairy products, sugar and peanut butter.

Washington last month filed a formal protest against high Canadian duties on U.S. poultry and dairy shipments, and a trade panel is being formed to look at the issue.



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