U.S. Perspectives on Grain Trade with Canada: A Critical Appraisal

Resolving Canada-US Trade Disputes in Agriculture and Forestry: Lessons from Lumber

“…Many of these complaints originated in North Dakota, which produces 50% of the U.S. hard spring wheat crop and identifies itself as the primary beneficiary of the recent dispute (NDWC 2005). However, an economist at North Dakota State University identified several claims by U.S. producers and politicians that he described as "misguided, unsubstantial or irrelevant" (Johnson 1998). One claim is that the falling Canadian dollar during the 1990s has benefited Canadian producers.…”

“…Furthermore, a 1990 report by the United States International Trade Commission (ITC) revealed that Canadian and U.S. prices for durum wheat showed no consistent difference. A 1994 ITC ruling found in favour of import restrictions, not because of Canadian subsidies to wheat, but because the imports caused 'material interference' with USDA commodity programs (Johnson 1998).…”

“…More significantly for Canada, however, is not whether duties should be levied against CWB grain, but whether the CWB should be allowed to exist as a single-desk seller of Canadian wheat and non-feed barley under the guidelines of the WTO. The most common U.S. position is that the CWB, as a State Trading Enterprise (STE), is trade discriminating by nature and thus in contravention of the principles of free and fair international trade (Johnson 1998). The CWB practice of setting prices that discriminate between markets, which has been admitted (and at times promoted), is a particular target of U.S. trade action (Schmitz and Furtan 2000;Schmitz, Gray, Schmitz and Storey 1997).…”

“…However, Article XVII points out that an STE can price discriminate as long as it does so in the same manner it would if it were not an STE, namely, by seeking to take advantage of market conditions. Given that there is no published evidence that the CWB dumps wheat below cost, it cannot be price discriminating in a non-commercial manner, by charging high prices in one market in order to fund below cost pricing in another (Johnson, 1998). In terms of price discrimination, the CWB does not violate the GATT.…”

“…One alternative is to co-opt U.S. lobbyists by bringing them into already existing Canadian institutions. Incorporating North Dakota wheat farmers into a pan-American version of the CWB has been proposed on both sides of the border, though significant obstacles exist (Johnson 1998). A complementary option would be more aggressive promotion and proliferation of STEs domestically (in creating new institutions) and internationally (for instance, during Doha round WTO negotiations).…”