Canadian Wheat Board Challenged by Import Duties, WTO Complaint

The U.S. Department of Commerce in March established preliminary counter-vailing duties on imports of Canadian wheat. As well, the U.S. Trade Representative has announced that the U.S. is requesting that the World Trade Organization form a dispute settlement panel to examine practices in the trade of Canadian wheat.

The Commerce Department ruling “substantiates subsidies provided directly or indirectly by the Canadian government,” says Larry Lee, a Velva, N.D., wheat farmer who chairs the NDWC, which spearheaded complaints against the CWB.  However, Lee says “the Commerce Department is still underestimating the breadth and depth of Canada’s subsidies. Some of these subsidies are cleverly hidden in policies regulating grain transportation and marketing in Canada, which go hand in glove with the monopoly Canadian Wheat Board.”

Lee expects final duties to be higher to offset fully the unfair trade and havoc imports have wreaked on American wheat farmers. Commerce’s ruling requires importers of Canadian hard red spring and durum wheat to post bonds equal to the preliminary duty of 3.94%, about 15 to 20 cents per bushel, effective March 10.

The Department of Commerce is still considering claims by U.S. hard red spring and durum wheat growers that Canadian wheat is also dumped on the U.S. market at less than fair value. Dumping duties are added to countervailing duties imposed to offset subsidies. A preliminary antidumping ruling is scheduled for May 1, 2003.

Final decisions on both countervailable subsidies and dumping are expected by July 14, 2003. The trade challenge then shifts back into the hands of the U.S. International Trade Commission for a final ruling expected in September 2003 on the extent of injury to the U.S. industry.

Components of the Canadian trading system under challenge in the WTO are the practices of the monopolistic CWB, requirements to segregate imported grain in the Canadian grain handling system, and a discriminatory policy that prevents U.S. grain from being shipped on Canadian railways. “Having this matter heard by the WTO is extremely important,” says Lee. The countervailing duty and antidumping investigations petitioned for by the state wheat commission pertain only to Canadian wheat sales to the United States.

Lee explains that American wheat farmers contend with Canada’s unfair trading practices in markets throughout the world. “Canadian farmers grow the same classes, the same qualities of wheat that we do in North Dakota. We have to try to sell wheat in the wake of the CWB’s unfair pricing every day, be it in the U.S. market, Venezuela or the Philippines. We believe Canada will be found to be breach of its obligations under the WTO for failing to operate in a commercial and non-discriminatory manner.”

A Section 301 investigation spearheaded by the NDWC and completed in February 2002 was the impetus for all current actions. The investigation detailed CWB non-commercial practices with regard to pricing, quality, acquisition, forward contracting, and transport of Canadian wheat.