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U.S. slaps preliminary duties on Canadian wheat exports
The Globe and Mail ^ | 5-3-03

Posted on 05/04/2003 6:44:19 AM PDT by mikenola

WASHINGTON and OTTAWA -- The United States has ratcheted up its assault on the Canadian Wheat Board (CWB) by slapping preliminary duties as high as 8.15 per cent on $400-million worth of Canadian wheat it claims is being dumped across the border.

As with numerous other high-profile disputes with its largest trading partner, Ottawa vowed to vigorously fight yesterday's U.S. Commerce Department decision, which pushes interim duties on Canadian wheat to more than 12 per cent.

Ralph Goodale, the minister responsible for the CWB, said the duties are part of a pattern of "trade harassment" by the U.S. government, and that Canada would challenge them at the World Trade Organization if they aren't removed.

"Obviously there is a very significant level of frustration here," Mr. Goodale told reporters in Ottawa yesterday.

"At some point, the harassment should end."

The U.S. move comes less than two months after the Commerce Department hit the same products with a 3.96-per-cent duty, alleging that Canadian wheat is illegally subsidized.

The latest duties -- 8.15 per cent on durum wheat and 6.12 per cent on hard red spring wheat -- are aimed at offsetting U.S. allegations that the CWB is selling Canadian wheat in the U.S. market at less than fair value. The offence is known as dumping.

Durum wheat is widely used to make pasta, while spring wheat is used for baked goods such as bread and bagels.

If the duties are allowed to stand, Canadian wheat could be priced out of the U.S. market, and other buyers may be tough to find, Canadian officials said.

The CWB is the exclusive seller of Western Canadian wheat on world markets, and the U.S. government has vowed to dismantle it and other so-called state trading enterprises during global talks.

The CWB must immediately post bonds to cover the cost of the duties. It would not have to start paying the U.S. government in full unless they are made final by the Commerce Department in mid-July and then blessed by the U.S. International Trade Commission roughly a month later. Both outcomes are considered probable.

Canadian officials did take some comfort that the duties are much lower than the punishing 30- to 45-per-cent levies sought by U.S. wheat farmers.

"It says something about the strength of the allegations when the arithmetic keeps coming out at such a low level," Mr. Goodale said.

U.S. wheat farmers and their political allies in Congress hailed the preliminary duties as vindication of their long-standing complaints about the marketing practices of the CWB.

North Dakota Senator Byron Dorgan said wheat farmers had provided the Commerce Department with "clear, substantial and credible evidence" of dumping.

"There are rules that apply to U.S.-Canada trade and they need to be followed," Mr. Dorgan said. "When they are not observed, it is not only appropriate but required that the Commerce Department step in, call the foul, blow the whistle and stop the violations."

Officials of the North Dakota Wheat Commission, which filed the complaint that led to the duties, complained that illegal Canadian imports had already cost farmers $1.1-billion in lost sales.

"Until the government of Canada opens the procurement and trade of wheat in Canada to free-market competition and eliminates its export subsidization practices, the United States cannot let unfair trade practices destroy our hard red spring and durum wheat production industries," said Larry Lee, a wheat farmer from Velva, N.D., and commission chairman.

He warned that U.S. milling and pasta makers are already "dangerously reliant" on Canadian wheat.

Exports to the United States for about 10 per cent of the CWB's total sales, or $400-million (Canadian).

CWB chairman Ken Ritter denied that Canada dumps its wheat in anyone's market.

"We don't need to. We produce some of the world's highest-quality grain, for which our American customers have testified they are willing to pay a premium."

Canadian officials also criticized the sampling method used by the U.S. Commerce Department to calculate the dumping duties, noting that it's based on data from just 27 Canadian farmers.

"So far all we have got from the United States are the anecdotes from the coffee shop in Minot [North Dakota] and with the greatest of respect, that's no basis on which to maintain a trading relationship," Mr. Goodale said.


TOPICS: Business/Economy; Foreign Affairs; Front Page News; News/Current Events
KEYWORDS: tarriff; wheat
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To: freeforall
Your sarcastic substitution of "health care" in the rewording of my reply does not hold up under economic scrutiny.
21 posted on 05/04/2003 9:01:14 AM PDT by Willie Green (Go Pat Go!!!)
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To: mikenola
But we have such good relations with Prime Minister Yellow Stain, I don't understand. Perhaps they can sell the wheat to their friends in Cuba, North Korea and the Sudan.
22 posted on 05/04/2003 9:01:42 AM PDT by Beck_isright (If a Frenchman and a German farted in the Ardennes, would Belgium surrender?)
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To: mikenola
On one hand, I understand Bush's reasoning on the wheat and steel tarrifs from a national security perspective.
On the other, I can see negative consequences of tarriffs on ancillary industries.

G.W. Bush's application of protective, targetted tariffs on behalf of special interests is an abomination. We would be better off with a relatively low, flat-rate "revenue tariff" levied across the board on ALL imported goods, as preferred by our Founding Fathers.

23 posted on 05/04/2003 9:05:11 AM PDT by Willie Green (Go Pat Go!!!)
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To: kpml
"the only diffrance is the French and Germans make better wine."

You should be banned because of this absurd comment alone. The California and Aussie wines are just as good and in some cases better. You won't see a frog or german product in my house unless I go blind and can't read the labels.
24 posted on 05/04/2003 9:06:36 AM PDT by Beck_isright (If a Frenchman and a German farted in the Ardennes, would Belgium surrender?)
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To: cynicom
Sell it to Cuba. Oh wait. Cuba has no hard currency and is a 3 year slow pay, darn.
25 posted on 05/04/2003 9:13:08 AM PDT by Eric in the Ozarks
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To: mikenola
i think we are doing a disservice to the agriculture industry, by giving individual farmers little incentive to minimize costs and become competitive.

You wrongly assume that individual farmers have no incentive to minimize costs. The exact opposite is true. Farming is a fiercely competitive industry. The "feast or famine" cycle previously mention arises when TOO MANY farmers are forced out of business due to the harsh reality of competition. This is what would lead to food shortages, hunger and skyrocketing prices in subsequent years, especially in conjunction with a season of adverse growing conditions.

26 posted on 05/04/2003 9:14:07 AM PDT by Willie Green (Go Pat Go!!!)
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To: Eric in the Ozarks
Maybe we could loan cuba some money to buy the Canadian wheat. Jimmy Carter would like that, and Dan Blather.
27 posted on 05/04/2003 9:20:07 AM PDT by cynicom
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To: kpml
There's a thread around here concerning logical fallacies. Should I find it for you?
28 posted on 05/04/2003 9:29:48 AM PDT by 1rudeboy
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To: Willie Green
All protectionist government programs, misallocate resources, raise production costs, and stifle entrepreneurship. The existence of government price-support programs for conventional products tends to decrease the incentive to search out entrepreneurial opportunities in unconvetional products.
John Maynard Keynes wrote: "The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution put forth under conditions of free competition and a large degree of laissez-faire."
29 posted on 05/04/2003 10:08:08 AM PDT by freeforall
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To: kpml
"i suppose,my main point is,even in the U.S.which claims to be a champion of capitalism,can not avoid socialist practices at many levels,be it giving money to farmers, providing welfare to the poor,or medical services,and the biggy is corprate welfare,with the full weight of congress behind it.so i must admit the U.S. is in the same league as Canada,France,Germany when it comes to socialism, the only diffrance is the French and Germans make better wine. kind regards kpml"

There is a difference between "social programs" and "socialism". Canada has crossed the line into "socialism" with socialized medicine. The US has not crossed that line. We probably provide too many social programs and that is a worthy debate for another thread, but America is not "socialist". Whereas Canada, France and Germany are.

And you can see in Canada a difference in the public as socialism and "entitlement" take hold. You beging to see an attitude of smug complacency as well. And then comes the sense of "moral superiority" and pacisfism, as opposed to keeping a strong military.

Not only should our government "fight" Canada's unfair practices, but individual Americans should not travel to or vacation in Canada. They need a wake up call up there.

30 posted on 05/04/2003 10:10:56 AM PDT by Sunsong
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To: Willie Green
The "feast or famine" cycle previously mention arises when TOO MANY farmers are forced out of business due to the harsh reality of competition.

Ok now you lost me. How do you define "too many"? Law of Supply/Demand regulates how many suppliers are available for any given product, no?

Also, another way to view it, is that farmers are put out of business not by "harsh reality of competition", but in fact by poor competitive practices.

The move away from small independent family farms to industrial scale facilites is sad, yes. But that happened because the marketplace demanded it.

31 posted on 05/04/2003 11:26:54 AM PDT by mikenola
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To: mikenola
Ok now you lost me. How do you define "too many"?

Excessive supply that drives market price below average cost of production.

32 posted on 05/04/2003 11:30:29 AM PDT by Willie Green (Go Pat Go!!!)
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To: kpml
subsidy U.S. farmers to the tune of
8 billion dollars


You need to find a cite to back that up.
When you do find it, prepare to be
blown away.
33 posted on 05/04/2003 12:35:47 PM PDT by gcruse (Piety is only skin deep, but hypocrisy goes clear to the soul.)
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To: Willie Green
The ultimate source from which entrepreneurial profit and loss are derived is the uncertainty of the future of demand and supply.

If all entrepreneurs were to anticipate correctly the future state of the market, there would be neither profits nor losses. The prices of all the factors of production would already today be fully adjusted to tomorrow's prices of the products.
All governments that restrict competition in order to improve the position of privileged sellers, can also restrict competition for the benefit of privileged buyers.
34 posted on 05/04/2003 12:44:52 PM PDT by freeforall
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To: Willie Green
Excessive supply that drives market price below average cost of production

And you could agree that farm subsidies play a role in creating this excessive supply?

35 posted on 05/04/2003 12:48:31 PM PDT by mikenola
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To: freeforall
The ultimate source from which entrepreneurial profit and loss are derived is the uncertainty of the future of demand and supply.

The demand curve for food supply is not uncertain. People must eat every day. Aggregate demand for food is relatively constant, increasing or decreasing with the size of the overall population.

Supply, OTOH, is highly variable and dependent largely on the uncertainty of favorable growing conditions. It is supply that must be skewed toward bountiful overproduction in order to assure adequate satisfaction of demand. If this is not done through market intervention, the downside is famine and hunger.

36 posted on 05/04/2003 12:55:05 PM PDT by Willie Green (Go Pat Go!!!)
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To: mikenola
And you could agree that farm subsidies play a role in creating this excessive supply?

Yes. And I consider government intervention that maintains excessive supply to be preferable to the natural laissez-faire cycle which is more susceptible to widely fluctuating prices, food shortages, hunger and famine.

37 posted on 05/04/2003 1:05:13 PM PDT by Willie Green (Go Pat Go!!!)
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To: Willie Green
Willie, I've had a hard time thinking of an historical example of the shortages and famine you talk about.

The best I could think of was the dust bowl days during the Depression. I would point out that period was before modern farming machinery and methods.

Can you think of any failures of the capitalist system in agriculture *in the modern era* ?

-m

38 posted on 05/05/2003 4:56:19 PM PDT by mikenola
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To: mikenola
The best I could think of was the dust bowl days during the Depression. I would point out that period was before modern farming machinery and methods.

Ya gotta bone up on your history. The Great Depression and the Dust Bowl are an excellent example. The part you got wrong was about the farm machinery. Farm mechanization (tractors instead of horses or mules) paralleled automotive development from the early 1900s through the 1920s. The dramatic increase in productivity, coupled with the resultant drop in crop prices left farmers with no alternative: go bankrupt or try to eek out some kind of profit by producing even larger crops by putting more land into production. But producing more drove the market price even lower. Many went belly-up despite their best efforts. But when the Dust Bowl hit on top of that, that's when we had the hunger, bread lines and soup kitchens.

39 posted on 05/05/2003 5:15:52 PM PDT by Willie Green (Go Pat Go!!!)
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To: mikenola
Can you think of any failures of the capitalist system in agriculture *in the modern era* ?

Of course not, because in the "modern era" we've had the system of price supports in place to stabilize the market and prevent such catastrophe. It's worked extremely well!

40 posted on 05/05/2003 5:18:51 PM PDT by Willie Green (Go Pat Go!!!)
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