WASHINGTON, D.C. (Staff) — USDA acting assistant secretary Keith Collins told an inquiry last week that imports of Canadian wheat tend to reduce overall U.S. wheat prices.
The U.S. deficiency payments to farmers make up the difference between the average actual price and the current target price of $4 a bushel. So, he argued, the surge of imports of feed wheat and durum from Canada has been interfering with the program and costing U.S. taxpayers millions of dollars.
After International Trade Commissioner Janet Nuzum asked whether USDA is suggesting the mere presence of any imported wheat amounts to interference with U.S. farm programs, Collins said any amount would mean some interference, but such imports would not constitute “material” interference until they reached a certain volume.
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He said estimating that volume is subjective, but USDA is asking for a quota limiting imports of Canadian wheat to 50 percent of average imports from 1987 to 1992. Collins said that request involves an “implicit assumption” that there is material interference above that level.
Nuzum said ITC staff research found that wheat deficiency payments rose somewhat in 1993-94 compared with the previous crop year, but were still not as high as two and three years earlier, both in total and on a per-bushel basis. Also, she suggested, the fact that USDA has been increasing the loan rate suggests the department is optimistic that wheat prices will rise.
Collins agreed, but argued it is irrelevant whether the trend is up or down. He said the ITC should try to estimate what the figures would have been without the Canadian wheat imports.
USDA, he said, estimates that wheat imports reduced average U.S. farm prices by 12 cents a bushel in the 1993-94 crop year and will do the same in 1994-95 unless restrictions are applied. For the four crop years starting with 1991-92, he said, wheat imports will cost the U.S. government $682 million in additional deficiency payments.
The other side
The CWB, however, presented an analysis that included estimates of how much U.S. wheat exports would be reduced if imports of Canadian wheat were restricted. It concluded that average U.S. wheat prices would be only half a cent higher, reducing government deficiency payments by only $10 million a year.
The CWB and U.S. millers also argued that the surge in imports of Canadian feed wheat should not be considered harmful to wheat markets, since the U.S. feed market is heavily dominated by corn.
If the ITC finds material interference only concerning durum, Nuzum asked, how should it deal with the fact that durum makes up only three percent of U.S. wheat production? The presidential request for an ITC recommendation had mentioned Canadian wheat in general, not any particular type. Similarly, commissioners asked, what should happen if interference is found in only one or two border states?
“What we need to look at is the national effects on a national program,” Collins replied. He said there is just one U.S. target price for wheat, with no separate prices for feed grades or durum.
Commissioners also questioned what effect the Canada-U.S. free-trade agreement might have on the case, specifically a provision allowing import controls in response to a disruptive surge of imports only if the cause of the surge is determined to be a change in government policy.
Collins argued that the ITC should ignore that provision and leave it up to the White House to make the determination of cause. But ITC vice-chair Peter Watson expressed some doubt about that interpretation and called for more extensive arguments to be filed later.
Has no authority
Trade lawyer Charles Hunnicutt, representing U.S. farm organizations, was even more blunt, declaring that the ITC is not authorized to inquire whether any import restrictions under U.S. domestic trade laws are contrary to international treaties.
That drew vehement disagreement from the wheat board’s lawyer Richard Cunningham, who said that in 25 years of handling cases before the ITC he has never heard such “truly outrageous” assertions as the argument that the causes of the increased imports are none of the ITC’s business.
Cunningham said the ITC in the past has generally recommended against import restrictions if U.S. programs are operating healthily and normally but now USDA wants the ITC to ignore that consideration.
He said U.S. wheat programs are succeeding in the goal of ensuring fair domestic prices and their goal “is not to achieve the highest prices that the human mind can imagine.
