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WTO dispute settlement panel ruling
In 2004, World Trade Organization (WTO) bodies dismissed U.S. complaints about the CWB, both in a dispute settlement panel ruling and again on appeal. Click here to view full decisions.
These decisions exonerated the CWB from American claims of unfair trade practice, affirming that it conducts its business on strictly commercial grounds in compliance with international trade laws. The ruling was a major victory for the CWB in the ongoing wheat trade battle launched by the United States.
The case began after a December 2002 announcement by the United States Trade Representative, as part of a four-pronged attack on the CWB, that he would seek a dispute settlement case at the WTO. In March 2003, the WTO agreed to an American request to convene a panel to hear the dispute. In April 2004, the panel released its report, in which it dismissed the U.S. charges and ruled:
- That the CWB operates in compliance with Article 17 of the General Agreement on Tariffs and Trade (GATT).
- That the CWB has a strong incentive to act in a strictly commercial manner, since it is controlled by farmers who are interested in maximizing their own returns and there is no day-to-day involvement by the Canadian government.
The panel stated: The Board satisfies producers by ensuring that their financial returns from the CWB's sales of wheat or barley are maximized. The mission the CWB's Board has given the CWB confirms this point: the CWB is to "market…quality products and services in order to maximize returns to western Canadian grain producers." Moreover, the CWB Act requires that, in the exercise of their responsibilities, directors and officers of the CWB "act honestly and in good faith with a view to the best interests of the [CWB]." For these reasons, we are not persuaded that the CWB has an incentive, because of its "legal structure" to make its wheat sales on the basis of considerations other than price, quality, availability, marketability etc.
The U.S. appealled this ruling and, in August 2004, the WTO Appellate Body again dismissed its claims.
As part of the same dispute settlement case, the U.S. had also made allegations concerning the Canadian producer car system, Canadian Grain Commission (CGC) requirements and the rail revenue cap for grain. The WTO bodies dismissed the American claim that the producer car system violates trade rules. However, it did request the Canadian government to make some adjustments to the following measures, which have now been completed.
- Give foreign grain moving on Canadian railways eligibility for the revenue cap.
- Remove the CGC requirement for pre-authorization of receipt of foreign grain into a Canadian elevator.
- Remove the requirement that eastern grain in Canadian transfer elevators can only be mixed with other eastern grain.