Canadian wheat farmers can look forward to resuming unfettered trade with the U.S. after an American body today reversed its 2003 trade ruling in response to a NAFTA panel directive.

Canada's largest crop, hard red spring wheat (HRS), has been prevented from entering the U.S. for the past two years due to a prohibitive tariff, currently 11.4 per cent. The duties could be removed as early as mid-November.

"We are extremely happy about the prospect of resuming sales to our valuable American customers on behalf of western Canadian producers," said Ken Ritter, chair of the CWB's farmer-controlled board of directors. "It's been a frustrating battle but, in this case, persistence seems to have paid off."

"Canadian farmers have been forced to suffer through this trade harassment for too long. I hope these pointless attacks will now finally come to an end."

In today's remand response, the U.S. International Trade Commission (ITC) reversed its original decision (which had split commissioners 2-2) that imports of Canadian HRS cause injury to American farmers. After an appeal by the CWB, the NAFTA panel on June 7 remanded the injury finding back to the ITC for review, saying it could see no substantive evidence to support it.

Wheat imports from Canada have been the subject of 14 trade challenges by American interest groups since free trade was instituted with the U.S. in 1989, costing western Canadian farmers more than $15 million to defend their market access. The current case began in 2002, when the North Dakota Wheat Commission complained to the U.S. Trade Representative about Canadian imports (see backgrounder attached). North Dakota farmers have spent a similar amount.

"Let's hope we can stop diverting farmers' scarce resources to these pointless battles and focus our attention on the real and serious problems facing farmers on both sides of the border," Ritter said. "This is where Canadian and American farmers should be working together, instead of picking fights for no good reason. We are not the enemy here."

Controlled by western Canadian farmers, the CWB is the largest wheat and barley marketer in the world. As one of Canada's biggest exporters, the Winnipeg-based organization sells to over 70 countries and returns all sales revenue, less marketing costs, to Prairie farmers.

Backgrounder: The wheat trade case

September 13, 2002: The North Dakota Wheat Commission and the U.S. Durum Growers Association file petitions seeking anti-dumping and countervailing duties on imports of durum and hard red spring wheat from Canada.

October 23, 2002: The U.S. Department of Commerce (DOC) initiates countervailing and anti-dumping investigations.

March 4, 2003: The DOC determines on a preliminary basis that two Canadian programs represent countervailable subsidies: the provision of government railcars and the government guarantees to the Canadian Wheat Board. Provisional duties of 3.94 per cent are imposed on durum and hard red spring wheat.

May 2, 2003: The DOC makes a preliminary determination in the anti-dumping case, resulting in provisional duties of 8.15 per cent on durum and 6.12 per cent on imports of Canadian hard red spring wheat.

August 29, 2003: The DOC announces affirmative final determinations in its countervail and anti-dumping investigations. In the countervail case, the DOC identifies what it terms "comprehensive financial risk coverage", as well as the provision of government railcars, as subsidies. The outcome: a countervail rate of 5.29 per cent for durum and hard red spring wheat; final anti-dumping rates of 8.26 per cent for durum; and 8.87 per cent for hard red spring wheat.

October 3, 2003: The ITC determines that imports of durum wheat from Canada are not injuring U.S. durum producers, but is split on whether imports of Canadian hard red spring wheat are injuring the U.S. wheat sector. Under U.S. trade law, a split decision favours the plaintiff and as a result, the 14.15-per-cent tariff applies to imports of hard red spring wheat from Canada, while the tariff on durum is lifted.

July 9, 2004: The NAFTA panel is selected to review the DOC countervail decision, following appeals by the CWB and governments of Canada, Saskatchewan and Alberta.

July 30, 2004: The U.S. Court of International Trade dismisses an appeal by the North Dakota Wheat Commission of the ITC determination that Canadian durum imports are not injuring the U.S. durum industry.

August 3, 2004: The NAFTA panel is selected to review the ITC injury decision, after an appeal by the CWB.

March 10, 2005: The NAFTA panel reviewing the DOC countervail determination announces its decision. The panel ordered the U.S. Department of Commerce (DOC) to reconsider duties on spring wheat imports from Canada. This case concerned countervailing duties (related to the CWB guarantees), which at this point account for 4.94 per cent of the overall 14.15-per-cent tariff on imports of Canadian hard red spring wheat to the United States. The DOC is given until Aug. 8 to respond, after a making a successful request to extend the response period beyond 90 days.

March 9, 2005: The CWB argues at a NAFTA panel hearing against the U.S. ITC ruling that imports of Canadian hard red spring wheat cause injury to U.S. wheat farmers.

June 7, 2005: The NAFTA panel reviewing the ITC injury ruling determines there is "no substantial evidence" to support it. The panel orders the ITC to reconsider the ruling, keeping nine specific points in mind. The ITC has been asked to respond by early October.

August 8, 2005: The DOC responds to the directive of the first NAFTA panel by lowering the CVD rate to 2.54 per cent from 5.29 per cent.

October 5, 2005: The ITC responds to the June 7 NAFTA panel remand by reversing its original injury determination. The wheat tariff could be removed as early as mid-November 2005.