Canada has won another battle with the United States over the Canadian Wheat Board.
But whether it will win the war remains to be seen.
A World Trade Organization panel has rejected an appeal by the U.S. government against an earlier WTO ruling that exonerated the grain marketing agency of allegations it engages in unfair and illegal trading practices.
The Aug. 30 decision represents the WTO’s final word on the case, which was launched by the U.S. in March 2003.
“This is a complete win from the CWB’s perspective,” said CWB senior counsel Jim McLandress. “There shouldn’t be anything left to talk about.”
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But at the same time, he said, no one who has followed the issue in recent years expects the U.S. to accept the ruling and stop harassing the board.
“I don’t think this will dissuade the U.S. from its bullying approach,” he said.
Sure enough, a U.S. farm organization that has instigated numerous trade challenges against the wheat board immediately condemned the ruling and vowed to continue its fight.
“The appellate finding underscores the inability of the current WTO rules to adequately prevent and punish unfair practices of state trading enterprises,” said Harlan Klein, chair of the North Dakota Wheat Commission.
The 83-page appeal board decision upheld an April 2004 WTO panel report that found no evidence to indicate the board was breaking world trade rules governing the operations of state trading enterprises.
In a nutshell, those rules require state trading enterprises to conduct business with the same operational disciplines as private companies.
However, this latest victory for Canada may be overshadowed by the upcoming round of world trade talks.
A negotiating framework for those talks calls for an end to government guarantees and underwriting of CWB losses and says the board’s monopoly powers will be subject to future negotiation.
CWB chair Ken Ritter said the Aug. 30 decision is “clearly beneficial” to Canada’s position in the negotiations.
“If reason governs trade, rather than politics, then this stands us in good stead,” he said.
But he also expects the U.S. and the European Union will carry on their battle to weaken or dismantle the board through the WTO process.
“They will do what they can to get rid of their competition in the world market and we are obviously a large and successful competitor to them,” he said.
In Ottawa, trade minister Jim Peterson welcomed the WTO ruling, saying it confirms that the CWB is a fair trader.
Peterson was one of several government ministers and officials who met with a delegation from the board in Ottawa last week to talk about how WTO negotiations might affect it.
CWB officials have been critical of the government’s decision to agree to the framework, with its commitment to end government guarantees and underwriting of losses for the board.
Ritter described the meeting as business-like, saying the board came away convinced of Ottawa’s commitment to retain the agency’s single desk status.
He said the board also raised the issue of compensating western Canadian farmers in the event the government guarantee is eliminated, much as it compensated them for the removal of the Crowsnest Pass freight rate.
“The response at this point was less than absolute,” he said, adding the board didn’t really expect to receive a firm answer.
It was also made clear that the negotiations are far from being settled.
“I think there is still a possibility that these guarantees will still remain in place and be noted as domestic subsidies rather than export subsidies,” said Ritter.
