Canada is taking its fight against U.S. wheat tariffs to the World Trade Organization.
The Canadian government has formally requested WTO consultations with the United States on the 14.15 percent import duty imposed last year on red spring wheat.
If the two governments can’t resolve the issue during the 60-day consultation period, it will almost certainly be referred to a trade dispute resolution panel.
In that case, a decision might not come until the early spring of 2005.
In announcing the decision to go to the WTO, international trade minister Jim Peterson said Canadian exports of hard red spring to the U.S. are carried out “fairly and transparently” and in full accordance with international trade obligations.
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“To say they’re causing injury is wrong, and we will continue to push hard for the removal of these unfair duties,” he said.
The tariffs became permanent in October, when the U.S. International Trade Commission ruled by a two to two vote that imports of Canadian wheat were causing injury to U.S. wheat growers.
The U.S. Department of Commerce had earlier found that Canadian wheat shipments to the U.S. were subsidized by the federal government and dumped by the Canadian Wheat Board.
Wheat board director Larry Hill welcomed the government’s decision to take the case to the international trade forum.
“The WTO will work on the basis of facts, which is important for us,” he said, adding that trade decisions by U.S. agencies are often driven more by the politics than the evidence.
“Any time it’s based on facts, then we’re in a good position.”
If the issue ends up before a formal dispute resolution panel, then to win its case Canada will have to prove the ITC’s injury decision violated specific sections of international trade law administered by the WTO.
CWB general counsel Jim McLandress said the Canadian argument will focus on the reasoning used by the two commissioners who determined that Canadian imports caused injury by driving down U.S. wheat prices.
“The methodology those two commissioners used to come to their conclusion simply ignored, effectively, causation,” he said. “That’s the core of the beef.”
Canada’s position is that prices in the U.S. are driven by global market forces, which are unaffected by Canadian wheat sales to the U.S.
McLandress added the WTO has in the past overturned ITC decisions over the same issue of failing to establish a causal relationship.
The WTO isn’t the only forum in which the U.S. tariffs are being challenged, with two separate appeals under way under the North American Free Trade Agreement.
In one, the federal government, the governments of Alberta and Saskatchewan and the wheat board have jointly appealed the U.S. department of commerce’s finding that sales of hard red spring wheat to the U.S. have been unfairly subsidized by Ottawa. A decision is expected by Sept. 29.
In the other, the CWB is appealing the ITC’s injury ruling. A decision is expected by Nov. 22.
In each case, the NAFTA panel can uphold the ITC ruling, send it back to the ITC for review or reverse it.
Meanwhile, the North Dakota Wheat Commission, which initiated the trade complaint against Canada, is appealing the ITC’s decision that there is no injury from imports of durum wheat.
In the same Oct. 3 ruling that imposed tariffs on hard red spring wheat, the ITC voted 4-0 that there was no injury from imports of Canadian durum. As a result, a 13.55 percent duty on durum was revoked.
The commission is conducting its appeal through the U.S. Court of International Trade in New York, which is considering a motion from the ITC to dismiss the appeal on jurisdictional grounds. The wheat board is supporting the ITC.
McLandress said the North Dakota group faces an uphill battle: “They will be hard pressed to overturn a 4-0 decision.”
As a result of the tariffs, wheat shipments south of the border have ground to a halt and the wheat board has had to find other customers for the one million tonnes of hard red spring that it normally sells into the lucrative U.S. market each year. The board has said that wheat will fetch about $30 million less revenue in those other markets than it would in the premium-priced U.S. market.
