(Laura Rance is based in Winnipeg as National Correspondent for the Western Producer.)
The frenzy in northern U.S. states over Canadian grain imports will gain new momentum with the release last week of the U.S. International Trade Commission’s report. Although less than conclusive, the report will be used as evidence to support the view held by many Americans that the Canadians are using unfair trading practices.
The rhetoric is impermeable.
Canadian industry officials are confronted with uncomprehending stares when they attempt to explain to U.S. farmers their perspective on how and why grain is sold into the U.S. market.
Read Also
Late season rainfall creates concern about Prairie crop quality
Praying for rain is being replaced with the hope that rain can stop for harvest. Rainfall in July and early August has been much greater than normal.
Journalists on both sides of the border have been frustrated in efforts to find and articulate the logic behind the dispute.
A prominent U.S. agricultural journalist was recently demoted after he examined the volume of Canadian imports in the context of total U.S. wheat trade and wrote a story asking what the fuss was all about. At a Fargo conference recently, Canadian reporters who asked a speaker to elaborate on accusations that the Canadian Wheat Board uses predatory pricing were curtly rebuked as being partisan.
“Every time I am interviewed by Canadian journalists on this issue I wind up in some kind of pissing match over who’s system is better,” said Carol Brookins, a prominent Washington consultant who frequently works for the USDA.
In reality, “the little Canadian problem,” as Winston Wilson, of the U.S. Wheat Associates calls it, goes far beyond the impact of wheat, durum and barley moving into the U.S. market.
The wheat export lobby has used domestic discontent to underpin its campaign against Canada as a global competitor. According to Wilson’s interpretation of history, the Export Enhancement Program was introduced in 1985 to combat the unfair trading practices of the Canadian and Australian wheat boards as well as the Europeans.
“They are one of the reasons EEP exists,” Wilson told the Fargo symposium. U.S. world wheat market share dropped from nearly 50 percent in 1981 to around 20 percent in 1985. “Basically these three exporters had divided up the market.”
From the Americans’ viewpoint, the wheat board’s system of paying farmers an initial price and pooling the proceeds from all sales gives it more marketing leeway than held by its competitors.
It can price-discriminate, offering different prices to different markets in order to maximize returns to the overall pool account. Brookins said that makes it an export subsidy, albeit one that is largely financed by producers. As such, she argues it should fall under the same GATT rules which apply to American and European export subsidies.
Since that didn’t happen under the latest round of GATT negotiations, Brookins said it is up to the U.S. to lead the challenge against such unfair trading, in much the same fashion as it used its military and political might to fight the Cold War.
“We have got to be willing to challenge countries that are not willing to implement trade policies correctly,” Brookins said. “If we don’t, we’re going to lose the game.”
Eugene Moos, the second highest ranking politician in the USDA, delivered an even stronger message, saying Canadian “practices must end or the entire concept of free trade may erode, setting loose forces that could open the door to an escalating series of demands to restore balance.” Canadian farmers may not agree with the U.S. rhetoric, but they can’t ignore its implications.
First of all, the dispute with the Americans will accelerate the debate in this country over whether farmers want the Canadian Wheat Board as their export marketing agency.
The federal government is unlikely to engage in a trade war with its closest trading partner without making some effort to gauge the level of support for the marketing system in question.
Secondly, creating a continental market, as has been suggested by some, won’t appease the Americans. U.S. politicians have already taken their complaints over the Canadian Wheat Board to Brazil, Mexico and to the Europeans.
