What has the CWB done to upset the USA?

[ianben]

This article appeared on www.farmgate.co.uk last week.

The US International Trade Commission is to investigate wheat industry competition between the United States and Canada over the past five years.

The US ITC investigation was requested by the US trade representative, which launched its own investigation into the Canadian wheat trade last October.

The ITC said in a statement it would look into trade involving hard red spring wheat and durum wheat, including competition for key foreign markets in Latin America and the Philippines.

The ITC will hold a hearing on the matter on June 6 and will submit a report to USTR by Sept 24.

The US wheat industry has accused the Canadian Wheat Board and the government of Canada of engaging in trade distorting practices, which Canada has denied.

The United States and Canada are also engaged in trade disputes over softwood timber and potatoes from Canada's Prince Edward Island.

What are these supposed trade distorting practices??

Have they lead to higher or lower wheat prices worldwide??

The CWB must be having some affect in the market place if it has caused a reaction from US.

Is this good for world prices, which as I am sure you all know by now is my main concern???

Higher world prices must be the anwser to our problems whatever system we farm under.
Even after all this discussion I am still not sure if the CWB helps or hinders us achieve this.
Perhaps your answers to these questions
will help!!!

Regards Ian

[charliep]

Ianben

With apologies for being cynical, the short answer is that the US is taking another crack at us because we exist. There have been 8 unsucessfull challenges and this will be #9. It is interesting that this action was launched before the very weekend that all the western hemisphere nations were getting together in Quebec City talking about a Free Trade Agreement of the Americas. How much of the coverage of this event made it over to Europe?

I don't think it makes any difference for prices on the world scene - there will be discenting opinions.

Charlie P.

[AdamSmith]

To Ianben, it's still to wet in the fields to do any field work here in Manitoba. So while I'm finishing up my winter office work and before I trade in my office chair for a tractor seat, I'll take a crack at your questions.

You asked "What are these supposed trade distorting practices?"

Here's a copy of a North Dakota Wheat Commission News release.

N.D. Wheat Commission Proposes Remedies to U.S.-Canada Wheat Dispute
12/22/2000


The North Dakota Wheat Commission submitted comments to the Office of the U.S. Trade Representative this week in response to a Federal Register notice seeking public input on the Section 301 investigation of the trade practices of the Canadian Wheat Board.

As the petitioner in the case, the North Dakota Wheat Commission is urging a interrelated combination of fundamental reforms and disciplines to the Canadian Wheat Board that would prevent further trade distortion in U.S. and third-country export markets. Among the NDWC's requests of the U.S. Trade Representative are the following:

· Elimination of both the supply and export monopolies of the Canadian Wheat Board. If there is a transition period leading up to full elimination of these monopolies, the NDWC is also urging that the definition of the CWB's acquisition costs under the U.S.-Canada Free Trade Agreement be changed. The current definition does not include the CWB's interim and final payments to producers nor costs for grading, inspection or CWB administration. Sales below a new and more accurate cost of acquisition should lead to automatic sanctions.

· Full transparency of Canadian Wheat Board operations such as the notification of acquisition costs, disaggragated export pricing, and other sales information unique to single-desk exporters including the terms and conditions of long-term sales agreements, forward pricing contracts, and quality over-delivery; and

· National treatment for any U.S. wheat entering Canada including full and equal access to Canada's grain marketing and transportation system.

· Tariff rate quotas on imports of Canadian durum and non-durum wheat into the United States. If the unreasonable, discriminatory and burdensome practices that are the subject of the 301 petition are not immediately resolved by the investigation, the NDWC urges that a TRQ be established for two crop years and then adjusted or eliminated in subsequent years as fundamental reforms of the CWB are implemented. The NDWC is recommending tariffs of $50 per metric ton ($1.36 per bushel) for imports of durum exceeding 300,000 tons (11 million bushels) annually and for imports of non-durum wheat exceeding 500,000 tons (18 million bushels) annually.

NDWC Chairman Alan Lee says, "The actions we're requesting are consistent with the U.S. government's stated objectives for the World Trade Organization negotiations." He says the NDWC continues to gather evidence of unreasonable activities on the part of the CWB.

A consulting economist assisting with the 301 case estimates that the CWB is single-handedly depressing wheat prices in U.S. and foreign markets by at least 8 percent due to its inappropriate state-owned enterprise activities. This translates into losses to U.S. wheat farmers of more than half a billion dollars in each of the last four years, including well in excess of $100 million annually to just the growers of durum and hard red spring wheat. "Coming on top of declining wheat prices and plummeting returns, the CWB stands out as one problem that the U.S. government can do something about right now," Lee notes.

After nearly a decade of the Canadian Wheat Board evading and refusing to release documentation regarding its activities and policies, the NDWC is urging the U.S. Trade Representative to aggressively pursue the case against the board by once and for all demanding that it release the necessary pricing and marketing information.

For background information on the NDWC's concerns with the policies and practices of the Government of Canada and the Canadian Wheat Board, visit the Industry News section, included posted news releases, on this web site.

This is the American position.

As a Manitoba farmer, I share similar concerns.

AdamSmith

[ianben]

Thanks for the replies
Tom
We have had similar experience with the US on certain issues. They do have a bit of an attitude regarding other peoples policies, and a convenient blind eye to their own.
However they must have some basis for these accusations and if Adams 8% figure is acurate I feel some sort of reform must be needed.
The meeting in Quebec made it on the news reports over here, but for the riots, police using water cannon on poor protesters, polititians unable to leave the building, you know what makes news. I do believe they did mention in passing they agreed a new free trade area for N S America.
Is this good news for Canada and wheat prices?
Adam
The weather is wet here too!!!
We finished seeding last Saturday. The first time it was dry enough since 20 March, crops seeded then have come very patchy due to frequent water logging, and we have had another 25mm since Sat.
The trade is suggesting we may be net importers of grain for the first time since the 70s.
We had a 4.5 million tonnes to export this year.
I admit I have always thought your CWB gave you an advantage in the market and therfore a better price.
I had not realised there was so little control or accountability to anyone.
This must be wrong if they are to acheive the best prices.
We have some very burdensome government regulations but they are all accountable
, this is often why they are so petty.
What are the chances of the US action having some sucess in reformimg the CWB??
I could use that extra 8% too.

Regards Ian

[ianben]

Of course the nature of this 'dispute' prevents me from saying too much, however, I will venture that there are many reasons why US farm groups would like to put pressure on single desk selling agencies. The biggest reason being that they are effective competitive models.

I think Charlie's observation that there has been 9 challenges in the last 10 years (the previous 8 were dismissed as I'm sure this one will be) likely says it all.

If you stop to think logically about this, everyone who has an interest in international trade has experienced that the US is protectionist in all areas - lumber, autos,cattle, entertainment,etc.- so this action is not surprising. Rumor has it North Dakota is looking at strict guidelines regarding chemical residues and other phytosanitary restrictions on Canadain wheat again.

Tom