The federal government is racing against an international deadline and some domestic political complications as it tries to bring rules for handling and transporting imported American grain into compliance with World Trade Organization rules.
The WTO ruled last year that Canada illegally discriminates against imports by requiring Canadian Grain Commission prior approval for import and mixing of American grain into the Canadian system, and not including transport of the grain in the railway revenue cap.
It gave Canada until Aug. 1, 2005, to change the rules.
Bill C-40, approved in principle by the House of Commons April 18 and sent to committee for public hearings, is the government’s response. It includes American grain in the rail revenue cap and requires only notification to the CGC when American grain is coming in or will be mixed.
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“If this bill is not on the books by Aug. 1, we’ll be liable for retaliation from the Americans,” said Wayne Easter, parliamentary secretary to agriculture minister Andy Mitchell.
Chances of the bill making it through the legislative process seem remote.
The agriculture committee has scheduled hearings May 4 and May 11 on the bill and the Conservatives on the committee insist they will allow the legislation to proceed only if it is amended to require a full review of the Canada Grains Act and the CGC within a year. Even if it clears committee, it still has to win final approval in the House of Commons and then make it through the Senate.
In recent weeks, parliamentary business has been stalled as parties jockey for pre-election position.
An election call would kill the bill and it is far from certain it would clear parliamentary hoops by June even if there is no early election.
Easter said death of the bill and American tariff retaliation on some Canadian agricultural imports would be the fault of the opposition.
“If the opposition play politics with this, it will hurt the grain industry and Canada’s reputation.”
Saskatchewan Conservative Gerry Ritz, vice-chair of the agriculture committee, countered that the government has had since last year to prepare a bill but dithered until weeks before the deadline.
“They set the agenda on when these things come forward.”
In fact, a trade official at Agriculture Canada said April 25 the chances of American retaliation soon after Aug. 1 are remote and Canada will argue that since the grain import rules did not really impose a penalty on the Americans, the dollar value of retaliation should be minimal.
Todd Hunter from the department’s multilateral trade division said if the Aug. 1 deadline is not met, there will be consultations between Ottawa and Washington, then discussions about Canadian compensation and finally American proposals for tariff retaliation that Canada could appeal.
“We’re talking some months here, into the fall, and we believe by then, Parliament will have resumed and the bill can be passed, although we are optimistic it will be passed before the deadline,” said Hunter.
If the deadline is missed, Canada will point to its legislative proposal as a good faith indication it plans to comply.
It will argue that since the grain commission approved import requests routinely under existing rules, “there has been no real trade damage and therefore no basis for tariff retaliation against Canadian goods,” said Hunter.
