Canadian Press | October 3, 2003
WASHINGTON (CP) - Canada scored a partial victory Friday with a U.S. trade ruling that durum wheat can enter duty-free but spring wheat will be subject to about $30 a tonne in anti-dumping duties.
Canada immediately announced an appeal of the negative ruling on red spring wheat - used for milling into bread flour - to a panel set up under the North American Free Trade Agreement. "We are now asking a NAFTA panel to review this decision and to prove that the U.S. Department of Commerce is wrong," said International Trade Minister Pierre Pettigrew.
"The decision on wheat is wrong, and we're going to do everything we can to ensure our farmers have access to this important market," agreed Ken Ritter, chairman of the Canadian Wheat Board's largely farmer-elected board of directors.
In August, the U.S. Commerce Department had issued a preliminary ruling that both kinds of wheat were being subsidized and dumped on the U.S. market, saying penalties of 14.16 per cent should be imposed on spring wheat and 13.55 per cent on durum.
In an average year, Canada might export 1.5 million tonnes or $400 million worth of spring wheat and durum into the United States, with spring wheat accounting for about $250 million.
That's only about 10 per cent of total Canadian exports, but because the United States pays high prices for high-quality grain, farmers stand to lose about $30 million because of the remaining duties.
Wheat board president Adrian Measner still can't say how much business, if any, they can do in the United States with a duty of more than 14 per cent in place.
American farmers who launched the challenge of Canadian exports weren't happy they lost half the battle after scoring a preliminary victory on both durum and spring wheat earlier this year. Importers had to post bonds equal to the duties on both while they awaited a final ruling.
"It is a bittersweet victory of sorts," said Larry Lee, chairman of the North Dakota Wheat Commission, in his response to the ruling.
"These same unfair trade practices, the same subsidies, and nearly the same dumping margins apply to Canadian durum wheat, so there is no way these imports are not injurious to U.S. farmers who raise durum."
The U.S. International Trade Commission didn't agree. It ruled 4-0 there was no harm to U.S. durum growers. Durum is primarily used by pasta makers.
The ITC panel only barely supported the duty on spring wheat with a 2-2 vote.
The wheat board has denied charges it dumps wheat on the U.S. market at discount prices. It says the reason it likes to export south is the fact that it can make more money, not less.
"As I have said many times before, Canada does not subsidize wheat shipments entering the U.S.," Agriculture Minister Lyle Vanclief said Friday.
Exports to the U.S. have all but stopped since March. Added to the uncertainty over duties, back-to-back prairie droughts have sharply reduced stocks and left the board with little to sell.
Statistics Canada reported Friday all that is about to change, with a wheat crop of around 22 million tonnes expected this year, almost 15 million of that in the form of red spring wheat alone.
The board is likely to turn to markets in South America, Southeast Asia and the Middle East to take up the slack, said Measner.
The ITC's split decision raised some eyebrows.
Canadian Wheat Board Minister Ralph Goodale said he was baffled and a little suspicious.
"I hope the ITC has not become a partisan instrument - that would damage its reputation internationally - but we will be watching it very closely," he said.
Saskatchewan Premier Lorne Calvert was even more forthright.
"On first blush it is inexplicable - simply inexplicable," Calvert said.
"I fear that many times, many of the decisions that get made in the United States get made based more on the need to get re-elected in North Dakota than an appropriate review of what's fair under trade."
The appeal will have to await receipt of the written ruling, but even when it is filed, it could take a year.
One of the biggest thorns in the side for American farmers - and some in Western Canada - is the wheat board's legislated monopoly over western wheat and barley exports.
That monopoly gives it huge market clout. It ranks as the single largest wheat and barley exporter in the world. The larger production of the United States is handled by a number of private grain companies.
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