If the universe unfolds as the Canadian wheat industry hopes it will, spring wheat could be moving freely into the United States by early November.
Oct. 5 could be the climactic moment in the two-year battle over cross-border wheat movement.
That’s the day the U.S. International Trade Commission is slated to rule whether imports of Canadian spring wheat have been injuring U.S. wheat farmers.
If the answer is no, and barring any successful delaying action by U.S. wheat growers, the 11.4 percent tariff on spring wheat will be removed.
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The Canadian Wheat Board is confident of a favourable ruling.
“We would expect that, going by all the logical evidence, there is no way there could be any determination other than there has been no injury,” said CWB spokesperson Maureen Fitzhenry.
“Then we’d be looking at the end of the tariffs in early November.”
If the U.S. loses and goes through all the available avenues of appeal and Canada ultimately prevails, it would be January 2006 before the tariffs are lifted.
Fitzhenry added farmers shouldn’t expect to see an immediate resumption of shipments at the high levels seen before the tariffs, when Canada was exporting about one million tonnes annually to the lucrative market across the border.
“We’ve been concentrating on durum sales to the U.S. and will continue to do so even if the tariff on spring wheat goes,” she said, adding the uncertainty about the size and quality of this year’s spring wheat crop is also a limiting factor.
She also acknowledged that even if the Canadian side prevails, U.S. growers might find new ways to extend the dispute and keep the border closed, as has happened with softwood lumber.
The U.S. wheat organization that launched the case that resulted in the tariffs is just as sure it will prevail.
“We’re confident the duties will remain in place,” said Leland Barth, marketing specialist with the North Dakota Wheat Commission. “We feel we’ve addressed all the ITC’s questions and we feel confident they’ll rule in our favour on this issue.”
The wheat commission says imports of low-priced Canadian spring wheat took away domestic markets from U.S. producers and drove down prices, thus reducing incomes for U.S. wheat growers and forcing them to grow other crops.
The CWB said Canadian wheat accounted for only three percent of the U.S. market and had no impact on prices.
The Oct. 5 decision will mark the second time the ITC has considered the issue of whether Canadian wheat imports injure U.S. growers.
In October 2003 the commission voted 2-2 on the question, which was considered a “yes” under U.S. trade law. At the same time it voted 4-0 that durum imports were not injurious, resulting in a lifting of tariffs on that crop.
The CWB appealed the spring wheat ruling to a binational panel under the North American Free Trade Agreement, which in June sided with the CWB and ordered the ITC to reconsider its earlier decision.
In that ruling, the NAFTA panel castigated the ITC for ignoring what it described as crucial evidence that supported the Canadian position, in particular ignoring the fact that U.S. farm prices for spring wheat are based on the Minneapolis Grain Exchange, which is unaffected by Canadian imports.
One reason CWB officials are optimistic about a favourable ruling is that when the NAFTA panel sent the case back to the ITC, it included a list of nine specific and detailed questions about the evidence used by the commission in reaching its conclusions.
CWB officials said those nine questions mirror the case it made to the ITC in the first go-round, and if the commission acts fairly it will have to rule in Canada’s favour.
Meanwhile, another NAFTA panel is considering briefs filed by the board, the federal government, the North Dakota wheat group and the U.S. Department of Commerce on the department’s decision in August to reduce the countervailing duty on spring wheat to 2.54 from 5.29 percent. Combined with the anti-dumping tariff also in place, the total tariff is 11.4 percent.
If the ITC rules in Canada’s favour on the injury issue, then that review will be rendered meaningless.
