NEWS RELEASES

March 11, 2005 (9:10 a.m. EST)
No. 43

NAFTA PANEL CRITICIZES U.S. SUBSIDY DECISION ON WHEAT

A North American Free Trade Agreement (NAFTA) panel, reviewing the U.S. Department of Commerce’s countervail determination on Canadian hard red spring wheat, found a key part of the determination inconsistent with U.S. law yesterday.

The NAFTA panel found that the Department of Commerce (DOC) determination that combined several financial guarantee programs was not in accordance with U.S. law, and issued clear instructions in its remand of this issue to the DOC. The determination regarding the guarantee programs accounted for most of the countervailing duty applied to hard red spring wheat. The panel dismissed the appeal regarding the provision of government-owned and leased railcars.

“We welcome the NAFTA panel decision on the guarantee programs,” said International Trade Minister Jim Peterson. “The U.S. countervailing duties are illegal and the panel has told the U.S. to correct a major flaw in its determination.”

The panel instructed the DOC to make its remand determination within 90 days.

“We are pleased that the panel found that the decision of the Department of Commerce to treat three separate Government of Canada guarantee programs as a single program to obtain a countervailable subsidy rate is not in accordance with U.S. law,” said Agriculture and Agri-Food Minister Andy Mitchell. “But we regret that the panel dismissed our appeal of the Department’s findings concerning the provision of government-owned and leased railcars.”

“I look forward to the elimination of the duties on Canadian hard red spring wheat and the resumption of unimpeded trade with the United States in this commodity,” said Reg Alcock, Minister responsible for the Canadian Wheat Board.

“Our position remains that the use of government-owned hopper cars for the movement of grain to the United States does not distort bilateral trade,” said Transport Minister Jean-C. Lapierre.

On August 29, 2003, the DOC determined that imports of certain types of wheat from Canada were subsidized. Following the subsequent affirmative injury decision by the U.S. International Trade Commission (ITC), a countervailing duty order was issued, applying a 5.29 percent countervail rate to hard red spring wheat from Canada. On October 3, 2003, the Government of Canada and other Canadian parties challenged the countervail finding under NAFTA.

In a separate action, on November 24, 2003, the Canadian Wheat Board launched a challenge of the U.S. ITC’s injury determination. That panel’s decision is due in June 2005.

Information regarding the U.S. countervail and anti-dumping investigations of certain types of wheat from Canada is provided in the attached backgrounder.

The NAFTA panel decision is available at http://www.nafta-sec-alena.org

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A backgrounder is attached.

For further information, media representatives may contact:

Jacqueline LaRocque
Director of Communications
Office of the Minister of International Trade
(613) 992-7332

Media Relations Office
Foreign Affairs Canada and International Trade Canada
(613) 995-1874
http://www.international.gc.ca

Elizabeth Whiting
Minister’s Office
Office of the Minister of Agriculture and Agri-Food
(613) 759-1059

Media Relations
Agriculture and Agri-Food Canada
(613) 759-7972

Lise Jolicoeur
Press Secretary
Office of the President of the Treasury Board
and Minister responsible for the Canadian
Wheat Board
(613) 957-2666

Irène Marcheterre
Director of Communications
Office of the Minister of Transport, Ottawa
(613) 991-0700

Backgrounder

KEY DATES:

CURRENT U.S. WHEAT CASES INVOLVING IMPORTS FROM CANADA

September 13, 2002

The North Dakota Wheat Commission and the U.S. Durum Growers Association filed petitions seeking anti-dumping and countervailing duties on imports of both durum and hard red spring wheat from Canada.

October 23, 2002

The U.S. Department of Commerce (DOC) initiated countervailing and anti-dumping investigations of durum and hard red spring wheat from Canada.

November 19, 2002

The U.S. International Trade Commission (ITC) made an affirmative preliminary injury determination on wheat imports from Canada.

March 4, 2003

The DOC announced its preliminary determinations in the countervail investigations. The DOC determined on a preliminary basis that two Canadian programs represented countervailable subsidies: the provision of government railcars and the government guarantee of Canadian Wheat Board borrowing. Provisional duties of 3.94 percent resulted for durum and hard red spring wheat.

May 2, 2003

The DOC announced its preliminary determinations in the anti-dumping investigations. The DOC determined on a preliminary basis that durum and hard red spring wheat from Canada were being sold in the United States at prices lower than those prevailing in Canada or below full cost. Provisional duties of 8.15 percent on durum and 6.12 percent on hard red spring wheat resulted.

August 29, 2003

The DOC announced affirmative final determinations in its countervail and anti-dumping investigations. In the countervail case, the DOC identified what it termed “comprehensive financial risk coverage” and the provision of government railcars as subsidies. The outcome was as follows: a final countervail rate of 5.29 percent for durum and hard red spring wheat; and final anti-dumping rates of 8.26 percent for durum and 8.87 percent for hard red spring wheat.

October 3, 2003

The Government of Canada filed a request for a NAFTA panel review of the DOC’s final determinations in the countervail case. Chapter 19 of NAFTA provides for a binding, binational panel review of final determinations in trade remedy cases. Panels consisting of five persons are established to review the determinations. These panels are required to ascertain whether or not the determinations are consistent with the trade laws of the country conducting the investigation.

October 3, 2003

The ITC determined that imports of durum wheat from Canada were not injuring U.S. producers, but that imports of Canadian hard red spring wheat were injuring the U.S. wheat sector. As a result, countervailing and anti-dumping measures would apply to imports of hard red spring wheat from Canada, but not to imports of Canadian durum wheat.

October 23, 2003

The DOC announced the countervailing and anti-dumping duty orders covering hard red spring wheat from Canada: countervail, 5.29 percent; anti-dumping, 8.86 percent.

November 24, 2003

The Canadian Wheat Board filed a request for a NAFTA panel review of the ITC’s final determination of injury with respect to hard red spring wheat.

July 9, 2004

The NAFTA panel was selected to review the DOC countervail decision.

August 3, 2004

The NAFTA panel was selected to review the ITC injury decision.

March 10, 2005

The NAFTA panel that reviewed the final DOC countervail determination announced its decision. It found that the DOC's determination regarding the financial guarantee programs was not in accordance with U.S. law, and remanded the issue to the DOC. The panel upheld the DOC’s finding on the provision of government-owned and leased railcars.

June 7, 2005

The decision of the NAFTA panel reviewing the ITC final determination on injury is due on June 7, 2005.