Introduction and Scope For at least a decade, there have been pressures to evolve toward a more integrated grain-marketing system in North America. (1) This process has been fraught, however, with difficulties apparently related to incompatible institutional and policy regimes possessed by the two countries. Such differences have resulted in very difficult political situations, and these difficulties have evolved through commercially led pressures to harmonize the two countries' systems. But, due to the drastically different grain-marketing systems, commercial harmonization has been difficult as well--policy harmonization is also needed. Given these frictions, the purpose of this paper is to detail some of the pressures and to treat their likely evolution. Reciprocal trade issues between the United States and Canada have been the topic of numerous previous inquiries and studies. (2) Of particular importance have been the U.S.-Canada Joint Commission on Grains, which had contributing papers by Gray and Gardner; Furtan and Abel; Wilson, Johnson, and Dahl; and Loyns and Kraut. Subsequently, and in response, Canada initiated its own internal inquiry to identify important changes for the future, particularly given changes within the North American marketing system. The Western Grains Marketing Panel's (WGMP) report examined all aspects of the marketing of western Canadian grains, oilseeds, and specialty crops. Other studies include those by Young, Kraft, et al. and The Exchange Group. Johnson and Wilson and Young addressed some of these issues, but in a broader context of policy differences, and Alston, Gray, and Sumner and Marsh and Johnson have analyzed price impacts of imports. Grain Flows Trade in wheat, barley, and oats between the United States and Canada largely flowed from Canada to the United States from 1990 to 1996 (Canada Grains Council 1996). These data are summarized in Figures 1-5. Canadian exports of wheat to the United States increased from 290 thousand metric tonnes (tmt) in 1990 to 2,172 tmt in 1993. Since 1993, wheat exports declined to near 564 tmt in 1995 and were up to 955 tmt in the first ten months of 1996. In contrast, U.S. exports of wheat to Canada have been less than 35 tmt per year, but were 62 tmt in the first ten months of 1996. Durum exports to the United States behave similarly, increasing from 370 tmt in 1990 to a high of 466 tmt in 1993, and declining to 182 tmt in 1995. Exports of Canadian barley to the United States follow a similar pattern, increasing from 389 tmt in 1990 to 1791 tmt in 1993, and then declining to 782 tmt in 1995. Although exports of malting barley were higher in 1993 than in 1990, most of the large volume of barley exports to the United States in 1993 was due to exports of feed barley. (3) U.S. exports of barley to Canada have been limited, but increased to 8.9 tmt in 1995. Canadian exports of oats have steadily increased from 171 tmt in 1990 to 1400 tmt in 1995, while U.S. exports of oats have been less than 3.1 tmt. Wheat flour exports from Canada to the United States, similarly, have increased from 19 tmt in 1990 to 164 tmt in 1995 (Figure 6). (4) Much of this has been in spring wheat flour. Canadian exports of malt to the United States declined from 20 tmt in 1990 to 7.1 tmt in 1992. Since then, Canadian malt exports increased to 32 tmt in 1995. U.S. exports of malt to Canada were limited up to 1993, but increased to 11.8 tmt in 1995 (Figure 7). Canadian exports of wheat gluten to the United States declined from 9,619 metric tonnes (mt) in 1991 to 3,176 mt in 1995. Imports of gluten from the United States have ranged from a high of 1,000 mt in 1992 to a low of 109 mt in 1995 (Figure 8). Canadian and U.S. export trade of starch for food use has fluctuated with one country's exporting more than the other in different years. Canada has dominated export trade of starch for industrial use. U.S. exports of industrial-use starch have been less than 55 mt, while Canadian exports have ranged from a high of 19,234 mt in 1993 to a low of 9,255 mt in 1995 (Figure 9). …