Newsroom
2005
Cut to American wheat duties not enough for Prairie farmers
Aug. 9, 2005
Winnipeg - A cut of 2.75 percentage points to the U.S. tariff on Canadian wheat falls short of giving Prairie farmers the access they deserve to the American market, the CWB stated today.
In response to an order by a North American Free Trade Agreement (NAFTA) panel, the U.S. Department of Commerce yesterday announced it will lower the level of countervailing duties on imports of Canadian hard red spring wheat to 2.54 per cent from 5.29 per cent. The duties are part of an overall 14.15-per-cent tariff that has essentially closed the border to Canada's largest crop since mid-2003.
The NAFTA ruling resulted from an appeal of the duties by the CWB. Two separate NAFTA panels have agreed with CWB arguments against the tariff. The CWB is considering another appeal due to this unsatisfactory U.S. response.
"We remain adamant that there is no basis for this tariff at all," said CWB board of directors chair Ken Ritter, a farmer from Kindersley, Saskatchewan. "By our calculations, this countervailing duty should be at zero. The U.S. government has done some pretty creative accounting to keep it in place at all."
"It seems that as soon as a commodity is successful in the American market, up come the tariff walls. Under free trade, we have the right to sell wheat into that market."
Fighting U.S. trade harassment has cost western Canadian farmers more than $15 million in legal fees since free trade began. American customers are interested in the high-quality wheat from Western Canada, because they value its consistent grade and supply. Before the tariff was imposed, about one million tonnes of Canada Western Red Spring (CWRS) wheat was sold into the U.S. each year, worth about $250 million. Ongoing loss of the American market will lower returns for western Canadian wheat by about $50 million a year.
"We will keep fighting on behalf of western Canadian farmers until this tariff is completely removed," said Ritter. "We are very hopeful that the outcome of our other NAFTA appeal will see that happen before the year is out."
In the other NAFTA ruling, released June 7, the panel said it could find "no substantial evidence" to support the wheat tariff. The U.S. International Trade Commission has been given until October to respond.
Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. As one of Canada's biggest exporters, the Winnipeg-based organization sells grain to more than 70 countries and returns all sales revenue, less
marketing costs, to Prairie farmers.
For more information, please contact:
Maureen Fitzhenry
CWB communications consultant
Tel: (204) 984-7747
Cell: (204) 479-2451
Backgrounder
Chronology of events
September 13, 2002: The North Dakota Wheat Commission and the U.S. Durum Growers Association file petitions seeking anti-dumping and countervailing duties on imports of durum and hard red spring wheat from Canada.
October 23, 2002: The U.S. Department of Commerce (DOC) initiates countervailing and anti-dumping investigations.
March 4, 2003: The DOC determines on a preliminary basis that two Canadian programs represent countervailable subsidies: the provision of government railcars and the government guarantees to the Canadian Wheat Board. Provisional duties of 3.94 per cent are imposed on durum and hard red spring wheat.
May 2, 2003: The DOC makes a preliminary determination in the anti-dumping case, resulting in provisional duties of 8.15 per cent on durum and 6.12 per cent on imports of Canadian hard red spring wheat.
August 29, 2003: The DOC announces affirmative final determinations in its countervail and anti-dumping investigations. In the countervail case, the DOC identifies what it terms "comprehensive financial risk coverage", as well as the provision of government railcars, as subsidies. The outcome: a countervail rate of 5.29 per cent for durum and hard red spring wheat; final anti-dumping rates of 8.26 per cent for durum; and 8.87 per cent for hard red spring wheat.
October 3, 2003: The ITC determines that imports of durum wheat from Canada are not injuring U.S. durum producers, but is split on whether imports of Canadian hard red spring wheat are injuring the U.S. wheat sector. Under U.S. trade law, a split decision favours the plaintiff and as a result, the 14.15-per-cent tariff applies to imports of hard red spring wheat from Canada, while the tariff on durum is lifted.
July 9, 2004: The NAFTA panel is selected to review the DOC countervail decision, following appeals by the CWB and governments of Canada, Saskatchewan and Alberta.
July 30, 2004: The U.S. Court of International Trade dismisses an appeal by the North Dakota Wheat Commission of the ITC determination that Canadian durum imports are not injuring the U.S. durum industry.
August 3, 2004: The NAFTA panel is selected to review the ITC injury decision, after an appeal by the CWB.
March 10, 2005: The NAFTA panel reviewing the DOC countervail determination announces its decision. The panel ordered the U.S. Department of Commerce (DOC) to reconsider duties on spring wheat imports from Canada. This case concerned countervailing duties (related to the CWB guarantees), which at this point account for 4.94 per cent of the overall 14.15-per-cent tariff on imports of Canadian hard red spring wheat to the United States. The DOC is given until Aug. 8 to respond, after a making a successful request to extend the response period beyond 90 days.
March 9, 2005: The CWB argues at a NAFTA panel hearing against the U.S. ITC ruling that imports of Canadian hard red spring wheat cause injury to U.S. wheat farmers.
June 7, 2005: The NAFTA panel reviewing the ITC injury ruling determines there is "no substantial evidence" to support it. The panel orders the ITC to reconsider the ruling, keeping nine specific points in mind. The ITC has been asked to respond by early October.
August 8, 2005: The DOC responds to the directive of the first NAFTA panel by lowering the CVD rate to 2.54 per cent from 5.29 per cent.