U.S.-Canada Wheat Trade Dispute (CRS Report for Congress)
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| Release Date |
Revised April 19, 2006 |
| Report Number |
RL32426 |
| Report Type |
Report |
| Authors |
Randy Schnepf, Resources, Science, and Industry Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
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.
