LONDON, U.K. – Canada says it’s being denied fair access to the lucrative European market for high quality wheat and may launch a formal trade complaint later this year.
“There’s a strong possibility we will initiate it this fall,” said a Canadian government official who asked not to be identified.
It would be the second such complaint about the way Canada is treated under the convoluted rules governing wheat imports into Europe.
Two years ago, a complaint prompted some short-term changes in EU policies, but Canada again feels it is being discriminated against.
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It was hoped senior Canadian government officials would be able to discuss the issue with a senior EU official during the June 19-20 meeting of the International Grains Council, but those plans fell through.
However, a CWB delegation led by chief commissioner Lorne Hehn was in Brussels, Belgium last week to air grievances directly to EU officials.
“I think it’s fair to say we get a sympathetic ear, but so far the change hasn’t taken place,” Hehn said in an interview last week. “They agree with our arguments and agree they should do something about it, but the change hasn’t come through on the policy side.”
The EU allows 300,000 tonnes of high quality wheat to be imported each year duty-free. That’s the kind of wheat Canada sells to Europe, mainly to the United Kingdom.
However, to qualify for duty-free status, the wheat must arrive in port no later than 45 days from the date the EU announces that it will be making a purchase.
That effectively bars Canada from participating, because rather than storing large quantities at export position as the U.S. and Australia do, the Canadian system is based on drawing grain from farms when needed.
“We need more time than 45 days on the front end,” said Hehn. “We would prefer at least eight weeks.”
He said it’s ironic that the 300,000 tonne duty-free quota was put in place largely in response to Canadian concerns, but the mechanics of it put Canada at a distinct disadvantage.
The other issue in dispute involves the so-called “reference price” which is used to assess duties on wheat shipped outside the duty-free quota.
If wheat is judged to be priced at less than 155 percent of the EU’s intervention price, it is subject to tariffs. The EU lumps Canadian wheat in with U.S. dark northern spring varieties for purposes of the calculation.
Canada says its wheat is superior to the U.S. Dark northern and individual sales contracts are invariably well above the price at which the duty is charged.
But EU authorities have shown no indication they’re ready to change the rules.
As for the prospect of launching a formal complaint under the World Trade Organization, Canadian government officials attending the grain council meeting said attempts will be made to resolve the dispute through negotiations this summer.
If that fails, the next step would be to give notice of intent to ask for a panel, which could be enough to generate a negotiated solution.
