CWB Looses USTR case

[TOM4CWB]

U.S. Trade Representative Robert B. Zoellick announced today that the United States will pursue multiple avenues to seek relief for U.S. wheat farmers from the trading practices of the Canadian Wheat Board (CWB), a government monopoly trading enterprise.

USTR also today released an "affirmative finding" that reviews the results of its investigation, details the CWB's monopolistic characteristics, and describes the steps USTR intends to take to address this issue.

"The Government of Canada grants the Canadian Wheat Board special monopoly rights and privileges which give it competitive advantages that hurt U.S. wheat farmers," said Zoellick. "We agree with North Dakota wheat farmers that Canada's monopolistic system disadvantages American wheat farmers and undermines the integrity of our trading system. We are committed to using all effective tools at our disposal to stop the Canadian monopoly wheat board from hurting our farmers. We will undertake several strong initiatives, working with producers in North Dakota and others in the wheat industry, to address our problems with the Canadian Wheat Board."

USTR will aggressively pursue a four prong approach to fight for a level playing field for American farmers:

• First, USTR will examine taking a possible dispute settlement case against the Canadian Wheat Board in the World Trade Organization (WTO);

• Second, the Administration will work with the North Dakota Wheat Commission and the U.S. wheat industry to examine the possibilities of filing U.S. countervailing duty and antidumping petitions with the U.S. Department of Commerce and U.S. International Trade Commission.

• Third, working with industry, USTR will also identify specific impediments to U.S. wheat entering Canada and present these to the Canadians so as to ensure the possibility of fair, two-way trade.

• Fourth, these short-term actions are complemented with the Administration's ongoing commitment to vigorously pursue comprehensive and meaningful reform of monopoly state trading enterprises in the WTO agriculture negotiations. Those negotiations gained new momentum with the launch in November of the Doha Development Agenda, set to conclude by 2005.

This decision is in response to a petition filed by the North Dakota Wheat Commission in September 2000 under section 301 of the Trade Act of 1974. USTR undertook an unprecedented 16-month investigation examining the practices of the monopoly Canadian Wheat Board. In addition to inviting public comment twice on the investigation, USTR requested that the U.S. International Trade Commission (ITC) examine the competitive practices of the Canadian Wheat Board in the U.S. market and overseas. As part of its investigation, the ITC held a public hearing, requested public comments and pursued multiple avenues to obtain information on the Canadian Wheat Board.

USTR has decided not to impose a tariff rate quota (TRQ) at this time since such an action would violate our NAFTA and WTO commitments, could result in Canadian retaliation against U.S. agriculture, and would not achieve a durable solution or a permanent change to the market distortions caused by the monopoly of the Canadian Wheat Board.

I am sure happy the US is being graceful about the CWB!

Maybe it is time to own up to the CWB monopoly distortions, instead of denying there is a problem?

Denile isn't just a river in Egypt, it is alive and well at the CWB.

The CWB's Response is curious isn't it?

DATE: February 15, 2002

Fair-trading CWB will continue to serve U.S. customers

Winnipeg – Prairie farmers’ grain, which commands premium prices in export markets, will continue to move into the American market following today’s ruling by the United States Trade Representative Robert Zoellick.

Ambassador Zoellick ruled on a petition by the North Dakota Wheat Commission that sought the imposition of tariffs and quotas on Canadian wheat shipments to the United States. However, the Ambassador determined that no tariffs would be applied and recommended instead that a variety of trade-related alternatives be explored.

“Since the U.S. did not impose tariffs, we have successfully come through our ninth trade challenge,” stated Greg Arason, President and CEO of the CWB. “The facts show that the CWB is a fair trader and we will continue to trade fairly in the American and the international marketplace.”

The spin doctors at the CWB were obviously working overtime!

Only in Canada you say.

[AdamSmith]

I'm not sure what report Arason and the CWB saw, but I see nothing in the USTR report that vindicates the CWB as a fair trader.

I guess they still believe Canadian farmers are just a bunch of illiterate dolts who can't log on to the web and read what the report really said and what the Americans intentions are?

The CWB? A fair trader? Yeah right and figure skating judges are fair and impartial. Gimme a break!

[charliep]

I might highlight here that on the same day that the US put out this report, the new/improved US farm bill made a couple of more steps towards reality. A part of this reality may include loan rates on pulse crops. If pulse crops loan rates are included at the current proposed levels, US production of peas, lentils and chickpeas will increase. The industry we developed is under threat if the US floods world markets with pulses.

I might suggest there is lots of smoke and mirrors on both sides of the border with politians (including the CWB) playing to their electors.

The best solution to both these issues may be a quick reference to the WTO with both the US and Canada being willing to live by the results.

[TOM4CWB]

Charlie,

I believe the common law principals;

Two wrongs do not make a right,

Fundamental principals cannot be set aside to meet the demands of convenience or to prevent apparent hardship in a particular case,

That for every wrong there is a remedy, and

The end does not justify the means...

ALL show why we are participating in a suicidal game that will only end in destruction for all involved.

Leadership, making the hard decisions to "remove the log from our own eye before trying to remove the spec in our neighbour's eye", would go a long way to ratcheting down this whole mess!

We can only do something about cleaning our own house, won't it be less painful if we do it voluntarily, ourselves, rather than having someone elses army come do it for us?

Isn't this what controling our own destiny is all about?

[TOM4CWB]

The CWB ignores every complaint that they have ever received. They just can't see that a total monopoly is unfair and unjust to all.

They have protected our railways to the extent that it as broke all of our cooperative grain handlers.

We let railways dictate our freight rates when it should be them that are bitting on the chance to haul our grain. The CWB will not give us an open domestic market which would open up whole new added valued businesses for our grains that do not exsist now. They keep saying they are responsible for the flour and pasta mills we have now but I doubt that. The only thing they are adding value to is the railroad by exporting our grain at fixed freight rates.

Lets not kid ourselves. The CWB has out lived its usefulness if it ever was useful for the Western farmer.

[charliep]

I'll maybe ask a little different question. If the US continues on its present course with wheat, should Canada review its position on imported US corn? If you saw this as a possibility, what would you change in your crop mix this spring?

What impact would a countervail on US corn have on feeder cattle movement between Canada and the US?

[wedino]

>>What impact would a countervail on US corn have on feeder cattle movement between Canada and the US?

If the prairies produce a short barley crop a countervail would ruin the cattle feeding industry. MHOFWIW

[TOM4CWB]

thalpenny,

I found this report in Grand Forks Hearld Agriculture Week;


Earlier this month, North Dakota's congressional delegation got 33 senators and House members to sign a letter to Zoellick urging the Bush administration to impose limits on Canadian wheat imports to the United States until an agreement could be negotiated.

"The Canadian Wheat Board, acting in secret, effectively sets the price of Canadian exports, undercutting our producers," Sen. Kent Conrad, D-N.D., said in his letter.

An earlier North Dakota State University, Fargo, study found that American farmers - not just North Dakota farmers - lose about $100 million annually because they cannot compete overseas with the lower-priced grain offered by the Canadian Wheat Board.

NOW, IF WE HAVE THE BETTER QUALITY WHEAT LIKE THE CWB SAYS WE DO... AND IF WE HAVE A MONOPOLY THAT EXTRACTS A PREMIUM VALUE FOR THIS BETTER QUALITY, THEN WHY ARE WE UNDERCUTTING THE US?

Anyone can sell a Porshe at a Lada price, is this the purpose of the CWB monopoly, to stop us from getting better prices?

We on this marketing forum work hard to sell at the highest possible prices, why isn't our monopoly doing the same?

Are the US farmers not justified in asking for increased subsidies when we are the major cause of lower world wheat prices?

Now, just where does this leave "designated area" wheat and barley producers... don't we have the worst of all worlds, low prices and low subsidies?

[charliep]

Tom4cwb

What evidence has the US presented that the CWB undercuts world prices? Both sides on this debate seem to like to throw prices but I have never seen the hard facts. My experience says $2/t (US 5 cents/bu) is the difference between making a wheat sales or having it go else where. On the other hand, the US continues to spend billions of dollars on subsidies that have a major influence on their farmers production decisions.

Our share of world wheat trade has declined from over 20 % to likely under 15 % this year. This number is likely to decline even further as western Canada shifts to other crops and processes more wheat domestically(including livestock feed). Our influence on world wheat markets will continue to decline unless wheat provides better profits relative to other uses of our land and our production increases.

I have a concern about using the US politics to drive change in our system. I realize old style CWB mentality is hard to change but I have trouble getting into bed with a competitor whose real agenda may not be the CWB but rather keeping Canadian wheat out of their country.

I liked the ideas in the discussion on CWB elections. Moving the process for determing CWB director elections from a one person/one vote (including landlords) to voting based on cropped acreage would be a step in this direction.

What are others thoughts?

[charliep]

I did some interesting math with the numbers. Tom4cwb - you indicated that the N. Dakato study said that CWB cost the US US$100 mln. On a per tonne (based on 53 mln tonne US crop), this amounts to about $2/t or 5 cents/bu. In terms of the loonie, the impact is $3/t or 8 cents/bu.

[charliep]

Tom we are argueing over pennies here, go back to the GPO thread and read what you said about gouging our customers.

[TOM4CWB]

Charlie and Kernel,

I have no problem with what either of you are saying;

But the bottom line is that a monopoly with a majority of directors who make more money from it, or off farm income, than from their own farms (one told me he rented his farm out, cause it wasn't making a good enough return)can not deal with the reality of those few who must actually make a living from growing wheat.

I was told today that in Alberta there are 60,000 farms, but 10,000 of them produce 85% of the production!

Is it fair that 15% of the production represented by 50,000 farms who obviously do it for a "hobby", should dictate how marketing must occur for the 85% of production?

This does go back to who represents us, but more importantly why they have the right to expropriate my grain and cause this problem with the US to begin with.

The CWB no doubt is in a no win situation! But the CWB could issue no cost licenses to us who don't want or need to use the Canadian grain handling system tommorrow!

Producer cars are the relief valve to make our grain handling system competitive, and no-cost export licenses were supposed to be the relief valve to make the CWB competitive.

Just as there are inherent risks with shipping producer cars, so there are these same risks in shipping that avoids the Canadian grain handling system.

Arbitage happens almost instantly, and I believe the good guy bad guy benefit that the CWB would encounter(and can use as a selling tool) will benefit the CWB (western grain producers)far more than the a little competition, will drop prices!

The fact is that the CWB will have the obligation to listen to ***kernel, which will help world prices to increase, not decrease!

And that would be a good thing, wouldn't it?

[TOM4CWB]

Tom4cwb: I have got to agree with you Tom. The Alberta Gov. appears to be our best hope in getting us a free market. The directors of the CWB should be allowing a vote on a voluntary CWB market or not, under a vote of one acre one vote as was mentioned in a previous thread.

The Kernel