The American government has cut in half the countervailing duty it clamped onto Canadian hard red spring wheat imports in 2003.
But the much higher antidumping penalty, when combined with the remaining 2.54 percent countervailing duty, will continue to cripple Canadian hard red spring wheat sales to the United States, says the chair of the Canadian Wheat Board.
“It leaves a tariff of 11.4 percent, which is still prohibitive,” said Ken Ritter. But he said the board is keen about the forthcoming hearing of the U.S. International Trade Commission that will determine whether “dumped” Canadian wheat has hurt U.S. prices.
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“We are still hanging our hat on the main injury decision, which is supposed to come out in early October.”
If the commission does not find that Canadian hard red spring wheat has hurt U.S. prices, then the antidumping duty will be dropped.
The American decision to reduce the countervailing duty on Canadian wheat comes in response to a North American Free Trade Agreement panel ruling that the U.S. Department of Commerce erred by lumping together a number of CWB elements that it considers to be subsidies.
It ordered the commerce department to break out each issue separately and impose concrete duty levels for each, rather than one overall duty that did not specify the alleged value of each Canadian subsidy.
The department complied, claiming the new, reduced duty is a combination of penalties for the board’s initial payment guarantee for Canadian farmers, the Canadian government’s guaranteeing of the wheat board’s borrowings, and for transportation subsidies.
The commerce department dropped the part of the duty that had been applied against the government’s lending guarantees for buyers of Canadian grain because those guarantees were determined to not count as subsidies.
The countervailing duty now drops from 5.29 percent to 2.54 percent.
North Dakota Wheat Commission administrator Neal Fisher said he did not see the halving of the duty as a setback for his organization, which was the main force behind the complaint that led to the duties.
“The important message here is that there were indeed countervailable subsidies here that after a number of reviews have been found to be still countervailable and left in place,” said Fisher. “It’s still prohibitive.”
But Ritter also sees the duty reduction as a victory. This reduction now puts a ceiling on what the American government can claim in the future when imposing import controls.
“They can’t argue that the countervail should go even higher than this 2.54 percent,” said Ritter.
The board will probably appeal the commerce department’s refusal to completely drop the duty. If an appeal can show that Canadian “subsidies” are worth less than one percent of the value of the grain, then they will be dropped completely.
“We’re only 1.54 percent away from nothing,” said Ritter.
Both the board and the North Dakota Wheat Commission are confident they will win the upcoming injury inquiry.
“We think that we’ve got a very strong case here and this portion’s been validated and we expect the same for the rest of it,” said Fisher.
No one is predicting a quick conclusion to American producer efforts to keep Canadian wheat out of their nation’s markets.
“If you look at some of the other commodities that have been involved in some of these trade cases (softwood lumber, steel), some of them have been ongoing for many decades,” he said.
The spread of free trade agreements probably means there will be more trade disputes.
“In this day and age, maybe one just becomes more used to (disputes) as part of the reality because of all the agreements that are out there and the need to enforce the rules,” said Fisher.
