With U.S. import tariffs expected to soon be history, millers south of the border are looking forward to again buying Canadian wheat.
“I would certainly look, after the first of the year, for those shipments to resume,” said Jim Bair, vice-president of the North American Millers’ Association.
The amount of wheat crossing the border in 2005-06 is hard to predict, he said, adding it will depend on the quality of the American hard red spring wheat crop and the availability of wheat from Canada.
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The United States International Trade Commission opened the door to a resumption of Canadian exports of hard red spring wheat with an Oct. 5 ruling that American wheat growers have not been injured by imports of Canadian wheat.
The tariff, which has been in place in one form or another since March 2003, is expected to be lifted in mid-November. U.S. wheat growers have until Oct. 25 to formally challenge the ruling, which would delay the lifting of the tariff.
Either way, the Canadian Wheat Board expects to sell wheat to American buyers this crop year.
“We’re coming into the picture kind of late but we still feel there will be some sales opportunities,” said board chief executive officer Adrian Measner. He said sales could resume late this year or early in the New Year.
Bair said U.S. millers look to American wheat first, for freight and other logistical reasons, but when domestic production is down or if there are quality problems they will look north to meet their demand.
That could be the case this year, he said, because the North Dakota wheat crop has been severely infected by fusarium blight.
Measner said that given the limited quantities of high quality wheat likely to be available for export this year, and the fact that U.S. processors have already established their grists, the volumes moving south won’t be great.
Before the tariffs Canada was shipping about one million tonnes of wheat annually to the U.S., generating about $250 million in revenue, representing 10 percent of the total sales.
Neither the board nor the millers was prepared to say whether sales would reach that level again.
“We have a customer base down there that likes and appreciates the quality of Canadian wheat, so I would expect we would go back in that direction,” said Measner. “But it may not go back to a million tonnes.”
One reason is that the world market has changed in the last few years with China becoming a significant buyer of high protein, high quality wheat.
“There are some other markets out there in the international marketplace and that may mean we get back to the same level, but it will still be a substantial number,” said Measner.
The ITC’s decision represented a reversal of position by the commission, which almost exactly one year earlier had determined that there was injury.
That decision meant that interim tariffs, which had been in place since the spring of 2003, were made permanent, with a 14.15 percent duty effectively closing the border to Canadian wheat.
The Canadian Wheat Board appealed the ITC’s original decision to a binational panel under the North American Free Trade Agreement. In June, that panel ordered the ITC to review its decision, citing a number of crucial areas in which the commission ignored evidence favourable to the Canadian position.
Strong endorsement
In its Oct. 5 decision, the ITC sided with Canada on virtually every aspect of the case, finding that Canadian imports had no significant impact on wheat prices or the general financial situation facing spring wheat growers south of the border.
The decision was welcomed by Canada’s international trade minister Jim Peterson, who urged the Americans to “do the right thing” and drop the duties.
CWB chair Ken Ritter said while the board would rather have spent the $11-$12 million in legal fees incurred fighting the case on something else, it was money well spent on behalf of Canadian wheat growers.
“We have been vindicated again as a fair trader, and in a very big way,” he told reporters. “I really hope this will be the last time.”
He appealed to the North Dakota Wheat Commission, which launched the case in 2002, to drop any further action and instead work with Canadian wheat growers to solve the economic problems facing wheat growers on both sides of the border.
N.D. commission officials denounced the ITC’s ruling and said it would take a few days to review the decision before deciding whether to launch an appeal.
However, CWB lawyer Jim McLandress said the commission’s 4 to 1 decision leaves little room for appeal.
“I can’t think of anything the (state group) could say that the NAFTA panel wouldn’t simply dismiss out of hand,” he said.
