The North Dakota Wheat Commission may have been expecting a small windfall as it watched hundreds of thousands of dollars pile up from a tariff placed on imports of Canadian spring wheat since last year.
Under an American law passed in October 2000, producers who instigate successful countervail or anti-dumping complaints can have the money that is raised.
But a World Trade Organization ruling last week may dampen the appetite of the U.S. government to distribute that money if the tariff, now under appeal by Canada, is ultimately ruled legal.
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The WTO already had ruled that the Byrd amendment, which allows the distribution of tariff revenues to the affected industry, is illegal under international trade law.
On Aug. 31, it ruled that affected countries can retaliate against the U.S. if the money collected from their products is sent to industry.
The ruling says that trade retaliation can total up to 72 percent of the annual amount of money sent to U.S. industry.
Canada, while praising the decision, said it has no immediate plan to use it. Two of the biggest tariff cases affecting Canadian exports – softwood lumber and spring wheat – are under appeal by Canada and the law says money cannot be sent until all appeals are complete.
It means the Byrd amendment has had little effect on Canadian exporters so far but large payments could happen in future. The government estimates that total disbursements of collected tariff revenues from Canadian products, primarily in the ball bearing, steel and household items sector, is $12 million US since 2001.
“Canada’s retaliation rights are fully protected,” trade minister Jim Peterson said.
“We continue to urge the U.S. to live up to its WTO obligations and to repeal the Byrd amendment.”
Critics of the Byrd amendment see it as an incentive for American industry to launch countervail or dumping complaints because they could end up being the direct beneficiaries by sharing in the tariffs collected.
The Canadian Wheat Board estimates that since the tariff on hard red spring wheat was imposed last year, up to $500,000 has been collected. It is held in trust until the case is resolved.
The tariff, which raises the price of Canadian wheat in the U.S. market, also has reduced sales.
Under the WTO ruling, Canada’s retaliation could take the form of higher tariffs on U.S. imports or a relaxation of rules that allow anti-dump or countervail duties to be imposed on imports from the U.S.
The WTO would have to approve any retaliation plan.
Peterson said there would be consultation with Canadian industry before any retaliation was launched.
Canada was one of eight WTO members that challenged the Byrd amendment and were given the right to retaliate. Also included were the European Union, Brazil, Chile, India, Japan, Mexico and South Korea.
