NEWS RELEASES

October 3, 2003 (1:50 p.m. EDT) No. 148

CANADA LAUNCHES NAFTA CHALLENGE OF U.S. WHEAT RULING

The Government of Canada today launched a North American Free Trade Agreement (NAFTA) challenge of an August 29, 2003 countervail ruling by the U.S. Department of Commerce that imports of certain types of Canadian wheat are subsidized.

The government is also considering various legal options following a further decision in this dispute by the U.S. International Trade Commission (ITC). Looking at two different kinds of Canadian wheat imports, the ITC ruled today that imports of durum wheat did not injure the U.S. industry. It did, however, find that imports of hard red spring wheat harm the U.S. industry. As a result, the U.S. will impose duties on imports of hard red spring wheat.

"We disagree with both the subsidy finding and the imposition of duties on our shipments of hard red spring wheat to the U.S.," said International Trade Minister Pierre Pettigrew. "We are now asking a NAFTA panel to review this decision and to prove that the U.S. Department of Commerce is wrong."

Canada filed its request for a NAFTA panel review of the U.S. Commerce Department's final subsidy determination today. This NAFTA panel will decide whether or not the subsidy decision is consistent with U.S. trade law. A successful appeal would lead to the removal of countervailing duties.

"Canada follows the established international trade rules and will contest the contrary American decisions along every legal avenue available," said Ralph Goodale, Minister responsible for the Canadian Wheat Board. "The Canadian government will ensure that our trade agreement rights are forcefully represented."

"As I have said many times before, Canada does not subsidize wheat shipments entering the U.S.," said Agriculture and Agri-Food Minister Lyle Vanclief. "The Government of Canada is committed to vigorously defending the interests of Canada's wheat producers."

"The Government of Canada is taking every appropriate step to demonstrate that programs like the provision of rail hopper cars do not distort our wheat trade with the United States," said Transport Minister David Collenette.

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A backgrounder on the history of the current investigations to date is attached.

For further information, media representatives may contact:

Sébastien Théberge

Director of Communications

Office of the Minister for International Trade

(613) 992-7332

sebastien.theberge@dfait-maeci.gc.ca

Media Relations Office

Department of Foreign Affairs and International Trade

(613) 995-1874

Pat Breton

Director of Communications

Office of the Minister of Public Works and Government Services and Minister responsible for the Canadian Wheat Board

(613) 996-4893

Donald Boulanger

Press Secretary

Office of the Minister of Agriculture and Agri-Food

(613) 759-1761

Media Relations

Agriculture and Agri-Food Canada

(613) 759-7972

Amy Butcher

Director of Communications

Office of the Minister of Transport

(613) 991-0700

This document is also available on the Department of Foreign Affairs and International Trade's Internet site: http://www.dfait-maeci.gc.ca

Backgrounder

HISTORY OF CURRENT INVESTIGATIONS

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.

Specifically, they alleged that the Government of Canada and the Canadian Wheat Board (CWB) subsidize both of these products; that the CWB sells these products for less than full market value in the United States; and that, as a result of these imports, U.S. domestic industries are being materially injured.

October 23, 2002

The U.S. Department of Commerce initiated countervailing and anti-dumping investigations on 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.

An affirmative preliminary determination means that, in the view of the ITC, there are some indications that imports of Canadian wheat are causing or threatening to cause material injury to U.S. domestic wheat producers.

March 4, 2003

Preliminary determinations in the countervail investigations were announced.

The Department of Commerce determined on a preliminary basis that two Canadian programs represented countervailable subsidies: the provision of government railcars and the guarantee of Canadian Wheat Board borrowing. Provisional duties of 3.94% resulted for durum and hard red spring wheat.

May 2, 2003

Preliminary determinations in the anti-dumping investigations were announced.

The Department of Commerce determined on a preliminary basis that durum and hard red spring wheat from Canada was being sold in the United States at prices lower than those prevailing in Canada or below full cost. Provisional duties of 8.15% on durum and 6.12% on hard red spring wheat resulted.

August 29, 2003

The Department of Commerce announced affirmative final determinations in its countervail and anti-dumping investigations. The outcome was as follows: final countervail rate of 5.29% for durum and hard red spring wheat; final anti-dumping rates of 8.26% for durum; and 8.87% for hard red spring wheat.

October 3, 2003

The ITC determined that imports of durum wheat from Canada are not injuring U.S. producers, but that imports of Canadian hard red spring wheat are injuring the U.S. wheat sector. As a result, countervailing and anti-dumping duty orders will be implemented shortly on imports of hard red spring wheat from Canada into the United States.

October 3, 2003

The Government of Canada filed a request for a NAFTA panel review of the Department of Commerce 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.