The Canadian Wheat Board has enlisted help from an American economist in its defence against an international trade challenge issued by an American farm group.
The board has commissioned a report from Daniel Sumner, a former assistant secretary for economics at the United States Department of Agriculture, who unequivocally says the board is not guilty of predatory pricing.
The report is part of the wheat board’s main submission to the U.S. International Trade Commission in response to a challenge filed by the North Dakota Wheat Commission.
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The Section 301 petition asserts that the board is stealing U.S. wheat markets in eight countries through unfair and illegal pricing and trading practices. The group wants the board punished by imposing restrictions on Canadian wheat shipments to the U.S.
Sumner, now an economist with the University of California, said that challenge is rife with errors and “simplistic cause and effect” hypothesis.
“(It) fails to recognize that U.S. wheat sales may in fact be aided by the CWB’s marketing activities in the global market,” he wrote in a 20-page report co-authored by American international trade specialist Richard Boltuck.
Sumner has worked on the board’s behalf in the past, but this was the first time for Boltuck, who is vice-president of international trade at Charles River Associates Inc.
The authors said the North Dakota Wheat Commission’s biggest error is to focus on sales in eight specific countries, ignoring the fact that the market for wheat is global. They said wheat markets can’t be isolated in a handful of countries and produce a meaningful study result.
“This proposed approach illogically fails to consider the possibility, borne out by facts, that any loss of market share the NDWC postulates through competition in those selected countries is more than offset by market share gains for U.S. wheat in other countries that make up the global market for wheat.”
Wheat board corporate policy adviser Alexandra Lamont said the report addresses some of the North Dakota farm group’s erroneous allegations.
“The conditions that they characterized just aren’t a proper reflection of how the global wheat market operates,” said Lamont, who is assisting the board in its ninth defence of a U.S. trade complaint.
She said the report also did a good job of characterizing the wheat board’s role.
“It is organized much like common agricultural marketing co-operatives in the United States, only on a larger scale within Canada,” Sumner and Boltuck wrote.
“There is nothing inherently wrong, anti-competitive, or inefficient about such co-operatives.”
Lamont said a representative from U.S. International Trade Commission, which is investigating the complaint, was in Winnipeg last week to get a first-hand look at the wheat board’s operations.
The commission has until Sept. 24 to deliver its report to the U.S. Trade Representative’s office, which has until Oct. 23 to give its recommendations to U.S. president George W. Bush.
Bush will decide if retaliation is required.
The North Dakota Wheat Commission is seeking a quota, a tariff-rate quota or voluntary restraints.
