U.S.-Canada Wheat Trade Dispute
Publication Date: April 2006
Publisher(s): Library of Congress. Congressional Research Service
U.S. trade officials and northern-tier wheat producers have long expressed concerns that Canadian wheat trading practices -- both import and export -- are inconsistent with Canada's international trade obligations. Canada maintains that its import practices and the Canadian Wheat Board (CWB) wheat export practices comply fully with international trade rules and its WTO obligations, and that Canada does not subsidize its wheat exports. In addition, U.S. millers and pasta makers have expressed concern over potential trade restrictions that might limit their access to Canada's high-quality grain supplies.
U.S. allegations against Canadian wheat trading practices have led to a series of investigations by U.S. agriculture and trade authorities at various levels -- including both the U.S. International Trade Commission (ITC) and the World Trade Organization (WTO) -- against wheat imports from Canada, as well as the trading practices of the CWB.
ITC investigatory findings (October 2003) resulted in an 11.4% punitive duty -- including both antidumping (AD) and countervailing (CV) duty components -- on Canadian hard red spring (HRS) wheat upon entry into the United States. Canada appealed the ITC's positive injury finding against Canadian HRS within the NAFTA dispute settlement framework. On March 10, 2005, a NAFTA panel reviewing the ITC findings recommended removal of the AD portion of the punitive duty. On June 7, 2005, the NAFTA panel ordered the ITC to revisit its material injury findings. In October 2005 the ITC, pursuant to the NAFTA panel's review remand, reversed its earlier finding and issued a new determination that there was no injury or threat of injury. This decision was upheld on appeal to the NAFTA panel by the North Dakota Wheat Commission, and both the AD and CV duties were removed in March 2006. As a result, Canadian durum and HRS may freely enter U.S. markets.
At the WTO, a dispute settlement panel ruled (April 4, 2004) that the CWB's trading practices do not violate WTO rules for STEs; however, the panel found that certain Canadian grain marketing practices were not in compliance with WTO rules. As a result, Canada passed legislation (May 19, 2005) that rectified its grain import and marketing system practices (effective August 1, 2005) to bring them into compliance with the WTO panel's recommendations.
The WTO panel's ruling in favor of the CWB was upheld on appeal by the United States. However, the United States continues to pursue greater regulation of the CWB through the ongoing WTO trade negotiations that seek stronger disciplines on state trading enterprises. This report will be updated as events warrant.