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Canadian Wheat Board Survives Challenge by Scott A. Yates Capital Press, September 3, 2004

SPOKANE -- The Canadian Wheat Board won again in a decision from the World Trade Organization affirming the board’s right to exist within current trade rules.

The panel of WTO arbitrators dismissed the U.S. appeal of an April verdict. They said the U.S. position had “failed to establish that Canada acted inconsistently with its obligations.”

The chairman of the North Dakota Wheat Commission expressed frustration over the panel’s failure to find violations among the numerous ways in which the Canadian Wheat Board operates outside commercial consideration.

“The appellate finding underscores the inability of the current WTO rules to adequately prevent and punish unfair practices of state trading enterprises,” said Harlan Klein, who farms near Elgin, N.D.

But he said he sees a silver lining: Thanks to negotiations over the agricultural portion of a new WTO agreement, the wall protecting the CWB is slowly crumbling. As a result of U.S. leadership during preliminary negotiations, Canada has become the only member country to support state trading enterprises, he said.

For now, however, it appears the CWB’s position as the sole marketer of Canadian wheat production is secure. Ken Ritter, chairman of the board’s directors, said the vehemence with which the United States is pursuing the board only offers further evidence “of how effective this system of marketing is for prairie farmers.”

Alan Tracy, president of U.S. Wheat Associates, saw the situation very differently. While he was disappointed that WTO Article 17 was not interpreted more strongly, he said the decision clearly demonstrates the need for new WTO rules to ban state-authorized export monopolies such as the Canadian and Australian wheat boards.

“The current rules are obviously not strong enough to curb the trade-distorting practices of these archaic, socialistic and anti-competitive beasts. We place our hopes in the Doha Round (WTO) negotiations and our faith in our U.S. negotiators to bring an end to these outdated and trade-distorting monopolies.”

Although the United States didn’t get what it wanted, the CWB does have to make good on solving violations the WTO found in its April decision.

Specifically, the organization has to make importing U.S. wheat into Canada more fair.

The WTO decision does not relate to the countervailing duty and anti-dumping actions against the CWB. The 3.9 percent tariff for Canadian durum and spring wheat, imposed in March 2003, has effectively held imports to less than 10 million bushels in 2003-04, down from levels as high as 60 million bushels imported in previous years.