The Toronto Star | By Warren Giles | April 7, 2004
The World Trade Organization has ruled the Canadian Wheat Board, the single largest grain seller, is a legal trading entity and doesn't harm markets, undermining a U.S. attempt to dismantle the body.
The WTO ruled in favour of the United States on its three other claims, finding Canada failed to treat all grain products alike, according to a 231-page decision published on the WTO's Web site. That may force Canada to change how the wheat board runs.
The case was the first to examine a state trading monopoly at the WTO, and follows a U.S. International Trade Commission finding in October that Canadian wheat imports undermine U.S. prices. The United States challenged the wheat board's mandate, arguing the organization illegally subsidizes grain shipments. The board has a government-granted monopoly on the export of Canadian wheat, durum wheat and barley, and on domestic sales for food.
"There's disappointment here," said Charles Hunnicutt, an attorney for the North Dakota Wheat Commission, which initiated the U.S. complaint. Still, Hunnicutt said the WTO language describing the board as violating trade rules is a "moral victory."
The U.S. has won separate WTO cases finding Canadian support for dairy producers and lumber exports illegal.
In this case, the WTO said, "the U.S. has not established that foreign grain cannot benefit from" the act establishing the Winnipeg-based wheat board, and the U.S. "failed to establish" that the board's exports violate WTO rules, the arbitrators wrote.
Still, the panel did find that by treating imported grain differently, Canada had violated commitments at the WTO to treat all products alike, once on the domestic market. The WTO found Canada made mandatory authorization requirements for foreign grain, prohibited the mixing of foreign grain with Eastern Canadian grain, and had a system that may have given the wheat board cheaper rail transportation rates.
Those findings lay the groundwork for a U.S. appeal of the board's legality or the drafting of new rules in the current round of global trade talks, Hunnicutt said. Canada also has the right to appeal the rulings it lost.
The U.S. vowed to "aggressively pursue" new WTO rules that would "address the unfair monopolistic practices of state trading enterprises, like the Canadian Wheat Board," U.S. Trade Representative Robert Zoellick said.
Ken Ritter, chairman of the CWB's farmer-controlled board of directors, said: "This report provides ample evidence that the charges levelled against the CWB were baseless."
The decision was first reported after a confidential report was leaked to the media on Feb. 10, but it wasn't publicly announced until yesterday.The Toronto Star:
