Wheat ruling puzzles all

The final ruling in the latest wheat trade battle between Canada and the United States seems to have raised as many questions as it answered.

What is known is that Canadian durum will once again have free access to the U.S. market, while hard red spring wheat will continue to be blocked by prohibitive import taxes.

What isn’t known is why.

Officials on both sides of the border were scratching their heads last week following the ITC’s split decision on whether Canadian imports were injuring or could injure the U.S. wheat industry.

In the case of durum, the four ITC commissioners voted 4-0 that there was no injury, meaning the 13.55 percent combined anti-dumping and countervailing duty on durum is revoked and the border will be reopened.

For spring wheat, the commissioners voted 2-2 on the question of injury, meaning the 14.15 percent duty remains in place and the border will stay closed for the next several years.

As a result, the Canadian Wheat Board will have to find another home for the one million tonnes of hard red spring that it would normally sell into the lucrative U.S. market.

That wheat will fetch about $30 million less revenue in those other markets than it would in the premium-priced U.S., says the board.

The ITC, whose commissioners are appointed by the U.S. president, won’t release the reasons for its decision until later this month.

In the meantime, those directly involved in the case were wondering how it could issue different rulings for durum and spring wheat when the evidence it heard was almost identical for both.

“It will be very interesting to see how the two commissioners who voted to uphold the tariff on spring wheat can justify that decision,” said CWB general counsel Jim McLandress.

“I suspect it will take some very interesting mental and legal gymnastics for them to get to that position.”

Federal wheat board minister Ralph Goodale said the split ruling flies in the face of logic.

“It doesn’t appear to make sense,” he said, noting many of the arguments presented to the ITC were identical for spring wheat and durum.

“There are a lot of inconsistencies and contradictions here.”

Canada’s confusion over the ruling was shared by the North Dakota Wheat Commission, which initiated the trade challenge in December 2002.

“We’re very pleased with the decision on spring wheat and disappointed and maybe a little stunned on the durum,” said administrator Neal Fisher, adding the commission had assumed there would be one ruling for both.

“We thought that the two cases were operating pretty well in parallel,” he said. “The fact that injury was found on one and not the other is kind of a puzzle to us too.”

The allegation of injury for both spring wheat and durum centred on the commission’s arguments that Canadian wheat imports were driving down prices to U.S. farmers and forcing them to switch to other more profitable crops.

The board rejected those arguments, saying Canadian wheat and durum accounts for a small percentage of the U.S. market and has a negligible effect on prices, which are determined by the world supply and demand situation.

The ITC unanimously accepted the wheat board’s arguments for durum but not for spring wheat.

The federal government, the CWB and the governments of Saskatchewan and Alberta all will appeal the tariffs to a panel under the North American Free Trade Agreement.

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