NEWS RELEASES
CANADA READY TO DEFEND ITS WHEAT POLICIES AGAINST U.S. CHALLENGE
October 24, 2002 (1:20 p.m. EDT) No. 127
CANADA READY TO DEFEND ITS WHEAT POLICIES
AGAINST U.S. CHALLENGE
The Government of Canada today expressed its disappointment with the decision of the U.S. Department of Commerce to
pursue investigations into Canadian wheat trade policies and the practices of the Canadian Wheat Board (CWB).
"I relayed Canada's concerns regarding the requested investigations directly to U.S. Commerce Secretary Don Evans. I
reiterated that Canada's wheat policies are fully consistent with our international agreements," said International Trade
Minister Pierre Pettigrew. "We will work closely with our provincial colleagues and the Canadian Wheat Board to do what
it takes to defend our wheat sector."
On September 13, petitions were filed with U.S. authorities by U.S. wheat producers alleging that the Government of
Canada provides subsidies with respect to the production and export of Canadian durum and hard red spring wheat.
"Trade is a two-way street," said Ralph Goodale, Public Works and
Government Services Minister and Minister Responsible for the Canadian Wheat
Board. "We will never relent from our defence of Canada's trade policies and
practices, because we know they are consistent with our wheat trading
agreement rights and obligations."
The United States has investigated the operations of the CWB nine times since 1990. These investigations have confirmed
that Canada and the CWB operate within international trading rules.
"The American agriculture sector must not be paying attention," said Agriculture and Agri-Food Minister Lyle Vanclief.
"Canada has turned back each and every U.S. investigation into the Canadian Wheat Board for alleged unfair subsidies or
violations of trade agreements. Another investigation now is outrageous, especially as American producers are reaping the
benefits of colossal government support."
Canadian wheat exports respond to U.S. customer needs for the consistently high quality products that Canada offers.
Annual wheat shipments to the U.S. have ranged between $360 million and $460 million for the past three years.
- 30 -
A backgrounder is attached.
For further information, media representatives may contact:
Sébastien Théberge
Director of Communications
Office of the Minister for International Trade
(613) 992-7332
Media Relations Office
Department of Foreign Affairs and International Trade
(613) 995-1874
Pat Breton
Press Secretary
Office of the Minister of Public Works and Government
Services and Minister Responsible for the Canadian
Wheat Board
(613) 996-6708
Donald Boulanger
Press Secretary
Office of the Minister of Agriculture and Agri-Food
(613) 759-1761
Media Relations Office
Agriculture and Agri-Food Canada
(613) 759-7972
This document is also available on the Department of Foreign Affairs and International Trade's Internet site:
http://www.dfait-maeci.gc.ca
Backgrounder
PREVIOUS U.S. INVESTIGATIONS INTO THE CANADIAN
WHEAT BOARD
There have been nine U.S.-instigated investigations since 1990, none of which have concluded that any practices of the
Canadian Wheat Board (CWB) constitute unfair subsidies or violate international trade agreements.
• In February 2002, the U.S. International Trade Commission (ITC) Section 332 investigation (as part of U.S. Trade
Representative's Section 301) examined the Canadian and American wheat sectors and found that Canadian wheat was
being sold at prices comparable to U.S. wheat prices in the U.S. market. Canadian durum wheat was found to be priced
generally higher than U.S. durum wheat.
• In October 1999, the U.S. Department of Commerce concluded that CWB pricing policies for feed barley to Canadian
cattle for export did not constitute a subsidy. The petition had been filed by a U.S. lobby group, R-CALF, in December
1998.
• In October 1998, a U.S. General Accounting Office (GAO) report entitled, U.S. Agricultural Trade, Canadian Wheat
Issues, found no evidence that Canada or the CWB had violated any international agreement. It noted that the CWB
operated like other private-sector grain companies, which are not obligated to reveal their sales prices as this would violate
confidentiality agreements with customers.
• In June 1996, a GAO report entitled The Potential Ability of Agricultural State Trading Enterprises to Distort Trade
reviewed the Canadian Wheat Board, the Australian Wheat Board and the New Zealand Dairy Board, and did not allege
that the CWB or Canada violated international trade rules. The GAO also recognized that the CWB was unlikely to cross-subsidize wheat export sales from domestic sales due to the relatively small domestic market. The report had been
requested by 18 U.S. congressmen.
• In July 1994, an ITC Section 22 investigation found that some harm to U.S. programs was attributed to imports of
Canadian wheat and the U.S. decided to initiate action under the General Agreement on Tariffs and Trade (GATT)
Article XXVIII. This GATT action, after a 90-day consultation period, would have allowed the U.S. to impose a tariff rate
quota for wheat and barley imports; however, binational discussions led to the Memorandum of Understanding on Wheat,
which limited Canadian exports of wheat to 1.5 million tonnes in the 1994-1995 fiscal year.
• In January 1994, an independent auditor found that the CWB complied with its Canada-United States Trade Agreement
obligations on durum wheat sales on 102 of 105 contracts in the 43-month period between January 1, 1989, and July 31,
1992. The three violations occurred during the six-month period after January 1, 1989, when the Canada-U.S. Free Trade
Agreement (FTA) was being implemented.
• In February 1993, a binational dispute settlement panel agreed with Canada's interpretation of FTA Article 701.3
regarding the definition of "acquisition price" for durum wheat and the costs to be included in determining this price. The
panel concluded that the acquisition price includes only the initial payment; or, in the event of an upward adjustment, the
acquisition price for goods sold after the adjustment is the initial payment plus such adjustment.
• In June 1992, a GAO report on marketing boards, Canada and Australia Rely Heavily on Wheat Boards to Market Grain,
failed to find evidence of unfair trade practices as alleged by some U.S. trade officials.
• In June 1990, an ITC Section 332 investigation, Durum Wheat: Conditions of Competition Between the U.S. and
Canadian Industries, found that the prices paid for Canadian durum were not significantly different from those paid for U.S.
durum. The ITC also found that the subsidized portion of Canadian freight rates, while reflecting a decreased cost to the
producer shipping the grain, did not appear to have a significant effect on the delivered price of Canadian durum in the
United States. Subsidized freight rates were subsequently eliminated in 1995.
Source: Agriculture and Agri-Food Canada.
| 
