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Bush Refusal to Enact Tariffs on Canadian Wheat Criticized by Associated Press Capital Press - May 3, 2002

WASHINGTON (AP) -- Lawmakers and farmers criticized the Bush administration for refusing to impose punitive tarriffs on Canadian wheat, which U.S. officials have said gets unfair help from the Canadian government.

Sen. Byron Dorgan, D-N.D., noted the Bush administration imposed tariffs on softwood lumber from Canada and foreign steel after determining those items were improperly subsidized by other governments.

"It is fundamentally unfair. We have asked time and time again to remedy this," said Dorgan, whose state is a major wheat producer.

Thought complaints about Canadian wheat date back more than a decade, a Bush administratoin official urged patience.

Allen Johnson, chief agriculture negotiator for the U.S. Trade Representative's office, said the administration is trying to build support with trading partners to pressure Canada to enact long-term reforms.

"We're not alone in going after the Canadian Wheat Board," Johnson told the Senate Commerce subcommittee on consumer affairs, foreign commerce and tourism.

U.S. Trade Representative Robert Zoellick ruled in February that Canada provides unfair help to its wheat farmers, but decided to continue negotiating the issue rather than to impose punitive tariffs sought by American farmers.

Zoellick's finding capped a 16-month investigation prompted by a complaining from North Dakota wheat farmers, who alleged the Canadian Wheat Board is a state run monopoly with an unwritten policy of underselling American wheat, even at a loss.

The board, which sells grain grown in Canada's western provinces, is supported by the Canadian government, which also subsidizes the cost of shipping wheat by railroad, Zoellick found.

The United States is expected to import this year 18.5 million bushels of Canadian durum wheat, used for making pasta, and 44 million bushels of Canadian hard red spring wheat, used in bread.

Those imports will mean American farmers will lose a quarter of their sales in the U.S. domestic market in durum and 15 percent to 20 percent in spring wheat, said Neal Fisher, a farmer and administrator with the 19,500-member North Dakota Wheat Commission.

American farmers are planting less because of the imports, Fisher said. Farmers in North Dakora will plant 8.6 million acres of wheat this year, compared with 9.5 million last year and 10.2 million in 2000.

"That's not of their own accord. That's thanks to the practices of the Canadian Wheat Board," Fisher said.

Johnson said U.S. officials are trying to get Japan and European countries to join them in pressuring Canada. Zoellick will make state-run monopolies, such as the Canadian Wheat Board, the first item of discussion in global trade talks this spring.

"We're not looking for a one-year solution. We're looking for permanent solution," Johnson said.

Sen. Conrad Burns, R-Mont., questioned why the administration is holding off any punitive measures. Burns said he appreciated Johnson's promises that Zoellick will take up state-run enterprises in global trade rounds later this year.

"It's time we look at how we deal with government-sponsored monopolies," Burns said.