With a new round of world trade talks slated to get under way later this year, United States wheat growers and exporters are stepping up their campaign against the Canadian Wheat Board.
Wheat industry officials attending a recent trade strategy conference in Washington, D.C., identified so-called state trading enterprises such as the CWB as prime targets for U.S. negotiators during World Trade Organization talks.
Those same wheat groups had earlier sent letters to senior U.S. government officials, including trade representative Charlene Barshefsky, urging decisive action to force the wheat board to provide more information about its pricing practices.
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They have distributed an eight-page document entitled Grains of Truth About U.S.-Canada Wheat Trade, which describes what it calls inequities in cross-border trade and Canada’s “predatory actions” in third country markets.
And in testimony last week before a congressional committee studying international trade policy, a senior industry official used strong language to denounce single-desk grain-selling agencies.
“Government-sponsored monopolies such as the Canadian and Australian wheat boards are anachronisms of the old socialist era that do not belong in a modern world moving toward free and fair trade,” said U.S. Wheat Associates vice-president Nelson Denlinger. “We strongly support the introduction of disciplines on the non-transparent pricing practices of the STEs.”
He told the committee that his organization has evidence that those exporting agencies routinely engage in sales activities that are outside normal business practices, including standing offers to undercut U.S. prices.
In a letter to Barshefsky and U.S. agriculture secretary Dan Glickman, the U.S. wheat group said it has been told by buyers that the CWB has a standing offer to sell wheat at $7 or more per ton below U.S. prices.
USWA president Alan Tracy said in the letter that lack of progress in reforming the wheat board is raising the hackles of U.S. wheat producers.
“As a government-backed monopoly, the CWB can set prices where it wishes without the risk that private exporting companies face,” he said.
The harsh rhetoric against the wheat board comes despite recent calls by CWB minister Ralph Goodale for the U.S. and Canada to set aside their differences and work together to bring reforms to the European Union system of domestic and export subsidies.
Goodale took that message to the annual U.S. wheat industry conference in Nashville in February.
“We need to take on the Europeans, to get them to reform their Common Agricultural Policy, reduce their stocks, refrain from production and trade distortions, improve legitimate market access and stop using non-science-based excuses as thinly disguised trade barriers,” he told the U.S. group.
Christopher Shaffer, a wheat grower from Walla Walla, Washington, and vice-chair of USWA, said in an interview last week that while U.S. growers share Goodale’s sentiments, that doesn’t mean they’ll drop their campaign to “discipline” state trading boards.
“Obviously there are some areas where Canadian and U.S. producers can agree and be strong by working together,” he said. “By the same token there is no question we do have some problems between the U.S. system of marketing and the STE system, including Canada and Australia.”
Those agencies drive down world prices through their pricing policies, he said, and with U.S. farmers more exposed to world prices than was the case a few years ago, the situation has taken on a new urgency.
“A monopolistic, quasi-government entity that does not have full disclosure of pricing is a big, big concern to us.”
Several U.S. wheat organizations met in Washington, D.C., the week of March 15 to set out strategies and priorities for the WTO, inviting economists, trade experts and politicians like Glickman to talk about wheat trade issues.
Outlining position
Following the meeting, an industry task force was created to come up with a “wheat export plan” to take to U.S. trade negotiators.
“This is really an initial step in developing our WTO stance,” said task force spokesperson Lisa Jager.
Besides the future of STEs, the task force has identified other key issues, including the use of phyto-sanitary regulations as trade barriers, EU export and domestic subsidies and future regulations governing the trade of genetically modified organisms.
The wheat growers want to see a timely, science-based review and approval process for GMOs, harmonized among regulatory authorities in North America, Europe and Japan. They also want to ensure that GMO rules are not used to block trade access.
Shaffer said the GMO issue is largely one of perception among consumers.
“We in the wheat industry are trying to work through this from a scientific and common sense standpoint, because it potentially could be a big issue for the U.S. with the amount of product we produce and export,” he said.
