The Canadian government says it’s right and the Americans are wrong in
the debate over whether the Canadian Wheat Board is a fair trader.
But a prominent agricultural economist cautions that may not matter.
Being right, says Daryl Kraft, is no guarantee against being the target
of trade action.
“With trade, you’re presumed guilty until proven innocent,” he said.
“You’re never safe from the initial imposition of a countervail.”
All one has to do is look at the Canadian softwood lumber industry, he
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said, which been protesting in vain against what it considers unfair
American duties for years.
In a long-awaited report released last week, United States Trade
Representative Richard Zoellick decided not to impose restrictions
against Canadian wheat shipments to the U.S.
Doing so would violate the U.S. government’s commitments under the
World Trade Organization and the North American Free Trade Agreement,
he said. That would likely invite retaliatory action by Canada and
wouldn’t provide a permanent solution to American concerns about the
CWB.
However, Zoellick also said the government will work with the U.S.
wheat industry to “examine the possibilities” of filing countervailing
duty and anti-dumping petitions against the wheat board with the
department of commerce and the International Trade Commission.
Canadian government and wheat board officials said the fact that the
USTR didn’t impose a tariff on Canadian wheat imports indicates that it
couldn’t find evidence of wrongdoing by the board.
“My assumption is if they had any evidence they would have imposed some
form of penalty upon us,” said CWB chief executive officer Greg Arason.
But Kraft said even though the USTR report didn’t present specific
evidence of unfair or illegal trading practices by the CWB, that may
not be sufficient to protect Canadian exports into the U.S.
“I would not say we’re out of the woods with respect to countervail
action, because that could be brought forward by the U.S. at any time.”
The University of Manitoba economist, who had access to confidential
CWB sales information for a study of the board’s pricing policies, said
he believes the board is a fair trader, follows the rules and would be
vindicated by any impartial investigation.
Kraft said his research, which involved studying CWB sales over a
15-year period ending in 1994, found no evidence that the board makes a
practice of undercutting U.S. prices in overseas markets, as alleged by
the USTR report.
In fact, the board generally tries to extract from customers a modest
premium over U.S. selling prices.
Nor did the study find any indication that the board dumps wheat into
the U.S. at cheap prices in order to make sales.
Not only is there no evidence that happens, he said, but such a
practice would be a direct violation of the board’s mandate of getting
the highest net return for prairie farmers.
“If they did that, they would have to answer to their own constituency
pretty fast.”
Kraft said the continued harassment of the board by the U.S. government
is motivated by ideological opposition to single-desk selling.
Americans have an “ongoing suspicion” that the CWB must provide some
benefit to Canadian farmers, and anything that works to the advantage
of Canadian farmers must be a disadvantage to U.S. producers.
“There is clearly a political motivation on their part and I don’t see
that changing as long as we have a system for marketing grain that is
different from the U.S.,” he said.
