The federal government says it will consider trade action against imports of subsidized American corn if it receives such a request from the Canadian corn industry.
“There have been preliminary discussions with the industry and they’re looking at various alternatives and they have not come back to us with a final proposal yet,” trade minister Jim Peterson said in a Regina interview last week. “They want more time.”
Ontario Corn Producers’ Association president Doug Eadie confirmed Aug. 28 that the industry is pressing Ottawa to get tough with the Americans over imports of low-priced corn that are depressing domestic corn prices in Canada.
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Eadie’s comments come amid growing trade tensions between Canada and the United States involving wheat, lumber and beef.
“We’ve been pushing the federal government to use the tools that are at their disposal,” Eadie said from his farm at Ripley, Ont. “At this point, we have not come to conclusions about the best way to go but I think their subsidies should be challenged.”
He said producers are tired of losing money because of competition from subsidized American product.
“They (the government) are doing a lot of posturing and our message is that it is time to consider acting,” said Eadie.
Imports of American corn are valued at approximately $100 million a year and a report from the U.S. embassy in Ottawa predicts a 12 percent increase in imports this year to 2.7 million tonnes. Lower production in Manitoba because of flooding is part of the explanation for the import forecast.
Peterson said consideration of hearings into the impact of American corn imports would not be tied to Canadian threats of retaliation against the U.S. over its refusal to refund $5 billion in softwood lumber duties. A trade panel set up under the North American Free Trade Agreement ruled the lumber duties were collected illegally.
“Absolutely not, there is no linkage between the two,” the minister said in Regina. It was because of industry entreaties, he insisted.
The OCPA position represents a turn around in recent years.
Between 1986 and 1991, it fought a long and costly campaign against subsidized imports that at first resulted in Canadian import duties. Those duties were rescinded in 1991 after a panel ruling from the General Agreement on Tariffs and Trade said they were inappropriate.
Almost a decade later when Manitoba corn producers went after the same target, they initially won imposition of an anti-dumping duty of $1.58 per bushel in late 2000. It was overturned by the Canadian International Trade Tribunal in 2001.
At the time, the Ontario industry refused to get involved.
Terry Daynard, OCPA executive vice-president at the time, said circumstances were different then and Ontario was not interested in a trade challenge.
Many companies had invested in ethanol plants in Ontario after promises of a steady supply of corn feedstock, he said in a 2000 interview. “We would not want to do or support anything that jeopardized their ability to source corn.”
Since then, low grain prices have helped produce some of the lowest farm incomes on record, including those of corn producers. Because the federal government has refused to pay compensation to farmers for trade injury estimated by Ottawa at more than $1.3 billion annually for the grain industry, many producer groups are arguing the government should challenge the American subsidy policies that lead to those low market prices.
Meanwhile, although Peterson insists there is no connection between potential corn duties and retaliation over softwood lumber, the discussions in Ottawa are taking place at a time when agricultural products are very much part of the increasing talk about trade retaliation.
New American ambassador to Canada David Wilkins has speculated that if Canada launches retaliation, it could find itself facing American retaliation or pressure over tariff barriers that restrict imports of dairy and poultry products.
