*EPF518 04/19/2002
U.S. Seeks WTO Coalition Against Canadian Wheat Board Practices
(USTR rejects imposition of immediate tariff rate quotas) (650)

By Berta Gomez
Washington File Staff Writer

Washington -- The United States is moving "as aggressively as possible" in the World Trade Organization (WTO) to reform state trading enterprises such as the Canadian Wheat Board (CWB), says the chief agriculture negotiator for the Office of the U.S. Trade Representative (USTR).

Testifying April 19 before a panel of the Senate Commerce Committee, Ambassador Allen Johnson said that a 16-month USTR investigation had found that the CWB practices distort trade and harm U.S. industry.

Nevertheless, he said that imposing an immediate tariff rate quota (TRQ) -- as demanded by some U.S. wheat farmers and lawmakers -- would be seen as a violation of the United States' obligations under the WTO and the North American Free Trade Agreement (NAFTA). Such action would also undermine the U.S. position in global trade talks, Johnson said.

At issue are CWB practices that give unfair advantage to Canadian producers such as subsidies, a protected domestic market, government-guaranteed debt, below-market borrowing costs and use of government-owned rail cars.

Johnson told lawmakers that USTR has developed a four-pronged approach to the Canadian Wheat Board's monopolistic trade practices that does not involve TRQs. The approach, he said, involves: 1) considering a dispute settlement case against the CWB in the WTO; 2) working with U.S. industry to determine whether to file countervailing duty and antidumping petitions against the CWB; 3) identifying specific impediments to U.S. wheat exports to Canada that could then be presented during bilateral consultations on fair trade; and 4) working "vigorously" to reform state trading enterprises as part of the WTO agriculture negotiations.

The launch of new trade talks at the November 2001 WTO meeting in Doha provided "an unprecedented opportunity to pursue permanent reform of the CWB through the development of new disciplines and rules on state trading enterprises that export agricultural goods," Johnson said.

He said the U.S. WTO negotiating team had recently succeeded in having "export competition" -- including state trading enterprises (STEs) -- placed first on the negotiating schedule for the post-Doha talks. "This next year will be critical in developing an international coalition to support meaningful rules and disciplines on STEs," he said.

For his part, Senator Byron Dorgan, a Democrat from the wheat-producing state of North Dakota, told Johnson that U.S. wheat farmers require immediate relief.

"I called this hearing because our government has determined that the Canadian Wheat Board is a government-sanctioned monopoly that is not trading fairly and hurting U.S. farmers with each passing day, and my sense is that nothing is being done about it," Dorgan said in his opening remarks.

Of the four options pursued by USTR, "none offers near-term relief" and the WTO agricultural negotiations are not scheduled to conclude until 2005, said Dorgan. The senator, an advocate for the immediate imposition of tariff quotas, noted that USTR had very recently announced tariff quotas for imported steel and asked why the wheat industry should not receive similar treatment.

Johnson responded that TRQs are designed to offer only temporary relief to industry as it adjusts to import competition and that the Canadian Wheat Board should undergo comprehensive reform to offer a level playing field for U.S. wheat farmers. "We want to solve this problem once and for all," he said.

Johnson suggested that seeking anti-dumping and countervailing duties against Canadian wheat offered "a more likely path" to near-term relief for U.S. wheat farmers and said such duties could be in place within months. He also said that bilateral talks with Canada "have the potential for quicker action."

Johnson dismissed Dorgan's suggestion that Canadian officials are "gloating" over their ability to stave off U.S. trade remedies, saying that his counterparts in Canada understand the basis for U.S. complaints against the CWB, "and they know that this is not business as usual."

(The Washington File is a product of the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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