Hog producers are about to be hit with another duty but this time the shoe is on the other hoof.
Canada will impose a 15 percent surtax on U.S. live swine starting May 1.
The tariff is part of a retaliatory measure against the United States in light of its failure to comply with the World Trade Organization ruling on the Byrd Amendment.
The amendment is U.S. legislation enabling companies that launch trade remedy actions to receive whatever duties are collected instead of the money going into government coffers.
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“It creates an incentive for the U.S. industry to initiate trade challenges,” said Bob Friesen, president of the Canadian Federation of Agriculture.
In January 2003, a WTO arbitrator ruled the amendment violated international trade rules and gave the U.S. 11 months to repeal the legislation.
That didn’t happen so the WTO granted eight of the 11 countries that initiated the complaint the right to retaliate against the U.S. by up to 72 percent of Byrd Amendment disbursements on their respective exports.
Canada intends to use its entire $14 million allotment. In addition to the swine duty, it is imposing a 15 percent surtax on cigarettes, oysters and certain specialty fish.
“Retaliation is not our preferred option, but it is a necessary action. International trade rules must be respected,” said trade minister Jim Peterson.
But some agricultural exporters say the message is more akin to a joke than a lecture.
“Don’t you think it would simply just make them smile? I mean they wouldn’t take that seriously,” said Neil Ketilson, general manager of Sask Pork.
Over the last five years, the value of U.S. swine imports has averaged $1.3 million. If 2005 is an average year that would amount to duties of $195,000.
The value of hogs flowing north of the border is a pittance compared to Canadian pigs going the other way, which have averaged $549 million over the past five years.
The Canadian duty was announced one week before the U.S. International Trade Commission ruled against maintaining a 10.63 percent antidumping duty on those Canadian imports.
“Quite frankly we thought it was very inappropriate timing given what was happening in the U.S. and the challenges on us,” said Ketilson.
“It seemed to be relatively minor relative to the big picture situation. It’s unfortunate that those who develop these kinds of policies don’t seem to see the bigger picture.” Carrie Goodge, spokesperson for International Trade Canada, said industry groups had ample opportunity to express their concerns about the hundreds of products put forward for possible retaliatory action, which included everything from beer to plywood.
The federal government reviewed more than 800 submissions, trying to choose products with sources of alternative supply and ones that were not inputs for the Canadian manufacturing sector.
Sask Pork wasn’t the only farm group that wanted no part of the retaliatory action. Pulse Canada told Ottawa a duty on pulses had the potential to significantly increase input costs for Canadian farmers who secure most of their bean seed from south of the border.
Friesen said it is a shame that agriculture groups seem to have little interest in this type of response.
“If we are not going to utilize the rules that are developed at the WTO, then one would wonder why Canada would be involved in developing fair and equitable rules.”
Canada’s level of retaliation is expected to rise every year and could increase significantly if the $4.3 billion in softwood lumber duties now tied up in the courts is ever distributed to U.S. companies through the Byrd Amendment.
