WINNIPEG – The federal government may appeal a decision by Minnesota state legislators to impose a research and promotion tariff on Canadian wheat and barley.
“We’re not convinced this is quite proper,” said Tom Selinger, with the Canadian Consulate General in Minneapolis. “The Canadian government is looking at this as far as its legal options under NAFTA.”
The Minnesota government now requires grain handlers to collect one cent per bushel from Canadian wheat and barley entering that state. The money is turned over to local wheat and barley councils.
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In Canadian terms, that amounts to about 51 cents per tonne on wheat and 63 cents per tonne on barley.
Grey area
Even though the recent one-year agreement between the two countries contains a “peace clause” saying Canada would suffer no further trade harassment from the U.S., Selinger said whether that applies in this instance is “kind of a grey area.”
The legislation, formerly refundable and applicable only on Minnesota grain, was amended last April into a non-refundable levy on all wheat and barley sold, stored, or delivered in Minnesota.
It took effect in August, shortly after Canada and the U.S. agreed to cap wheat shipments from Western Canada at 1.5 million tonnes.
The change was opposed by the Minneapolis-based Northwest Terminal Elevators Association, which argued it infringes on the U.S. government’s exclusive jurisdiction over foreign trade.
“The NWTEA’s position is also that, through this statute, Minnesota will, in effect, place a tax on wheat and barley grown in Canada,” association president Kurt Harstad said in a letter to the assistant state agriculture commissioner.
The Minnesota legislature developed criteria which exempted grain from states with certain research and promotion checkoffs. Virtually all wheat and barley producing states in the U.S. have qualified for exemption from the tariff.
The Canadian Consulate applied for an exemption based on Canadian Wheat Board market development work, the Canadian International Grains Institute and various producer-supported research efforts.
Merlyn Valan, Minnesota’s assistant agriculture commissioner, said Canada’s application was rejected for two reasons.
Eligible for exemption
In order to get an exemption, producers in the state or country of origin must be contributing towards a producer-controlled organization, and that organization must be working with the Minnesota commodity councils towards a common purpose.
The Canadian Wheat Board is not considered to be a producer-directed organization. And because Canada and the U.S. compete for foreign markets, market development in Canada is not towards a common purpose with Minnesota producers.
A spokesperson for Cargill Ltd., a company active in cross-border trade, said the fee flies in the face of the recent Canada-U.S. wheat agreement.
“This is absolutely, unconditionally a trade barrier directed straight at Canada,” Barb Isman said.
Based on vessel unloads alone, the tariff will cost Canadians a minimum of $700,000, Isman said. That figure could double once rail and truck shipments are taken into account.
But Valan said Minnesota growers, particularly barley producers, feel it’s only fair that Canadians help pay for research from which they benefit.
