Newsroom
2003
U.S. plays politics with western Canadian farmers’ livelihood
August 29, 2003
Winnipeg – The Canadian Wheat Board (CWB) is disappointed by the U.S. Department of Commerce (DOC) final determination released today that increases tariffs for Canadian spring wheat and durum exports into the United States. Tariffs of 5.29 on spring wheat and durum were imposed under the countervailing duty case and 8.87 for spring wheat and 8.26 for durum under the anti-dumping investigation.
“The DOC determination again shows the highly political nature of the whole trade action against Canadian farmers. Our spring wheat and durum exports are not unfairly subsidized or dumped into the U.S. market. The truth is, we produce a high quality product and our American customers are willing to pay more for our wheat and durum,” said CWB Chair and farmer-elected director Ken Ritter.
Today’s tariffs replace preliminary tariffs set by the DOC in the countervailing duty and anti-dumping suits brought against Canadian imports by the North Dakota Wheat Commission and U.S. Durum Growers in 2002.
In March 2003, tariffs of 3.94 per cent were imposed on Canadian spring wheat and durum imported into the United States. These preliminary tariffs were levied under the countervailing duty case that examined the Canadian government’s alleged subsidization of spring wheat and durum.
Additional preliminary tariffs of 6.12 per cent on spring wheat and 8.15 per cent on durum were imposed in May 2003 in a ruling on American charges that Canadian wheat and durum is “dumped” into the United States. Part of the decision on the anti-dumping investigation was based on a cost of production exercise involving 27 western Canadian spring wheat growers.
The International Trade Commission (ITC) is investigating whether or not injury has been caused to U.S. wheat and durum farmers by the importation of Canadian spring wheat and durum. The tariffs imposed by the DOC will be retroactively removed if no injury can be shown.
“It is devastating to western Canadian farmers to see this trade action continue. If the U.S. International Trade Commission bases its ruling on the facts – not on politics, the tariffs will be overturned,” Ritter added.
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.
Facts about the U.S. trade challenge
- The North Dakota Wheat Commission and U.S. Durum Growers launched a petition in September 2002, asking the U.S. government to initiate anti-dumping and countervailing duty investigations against Canadian wheat and durum imports. They allege that that the CWB "dumps" wheat and durum into the U.S. by selling at below "normal" market prices and that the Canadian government unfairly subsidizes Canadian wheat and durum. Both allegations are unfounded.
- Today's Department of Commerce (DOC) final determination concerns the countervailing duty and anti-dumping cases. The U.S. International Trade Commission (ITC) is also investigating whether injury has been caused to the U.S. wheat industry by Canadian wheat/durum imports, with a finding expected this autumn. Tariffs will be retroactively removed if no injury can be shown.
- The countervailing duty case initially focussed on seven areas that were alleged to constitute subsidies: federal government guarantees of CWB borrowings; export credits and initial payments; the free supply of government hopper cars to the railways; the imposition of a revenue cap on the major railways’ western grain traffic; and its support for short line and branch line railways. The DOC has dismissed all but the allegations concerning government hopper cars and guarantees of CWB borrowings.
- Canadian wheat and durum sell in the U.S. market at higher prices than the equivalent American product. This fact has been proven by hard evidence provided through two investigations by the ITC. American millers say they buy Canadian wheat for quality and consistent supply.
- Dumping is defined as selling into the U.S. at prices below "normal" values -- in this case, Canadian market prices. For spring wheat, investigators also decided to factor in western Canadian farmers' cost of production (COP) to determine whether some sales were being made below COP. Their COP estimate was based on per-bushel costs of just 27 farmers during a single year (2001-02).
- In grain farming, low global prices may mean that some sales are made at prices that are unavoidably below farmers' cost of production. Wheat prices are set by global markets and can fluctuate unpredictably in a given year due to factors like weather, exchange rates, and supply and demand. Farmers' costs are sunk long before prices for the crop can be known with any certainty -- meaning that, in some years, not all costs will be recovered even though sellers are always trying to maximize returns. That does not translate into "dumping."
- According to Canadian Grain Commission (CGC) preliminary figures, 211 000 tonnes of wheat and 200 000 tonnes of durum were exported to the U.S. in 2002-03. Both export numbers include all Canadian exports, not just those from Western Canada. The figures reflect the drought-reduced harvest of last year. CGC statistics for 2001-02 show that 1.4 million tonnes of wheat and 368 000 tonnes of durum were exported to the United States.
For more information, please contact:
Rhéal Cenerini
Communications consultant
Winnipeg, MB
tel: (204) 983-4497