Saskatchewan, Canada, September 15, 2003: Since the
Cold War ended and governments adopted globalization and international
trade as the panacea for we-are-not-sure-what, a whole new
cold war has opened up, sparked by trade itself.
On this new battlefield, nations sign agreements that promise
greater trade by lowering tariff barriers and reducing domestic
subsidies. After these are signed, various interest groups
in those countries spend the ensuing decades trying to subvert
the agreements to gain some advantage. Caught at the bottom
of this massive pile-up is usually the little guy –
the farmer or worker in the affected industry.
In this new cold trade war, the first casualty, as in all
wars, is truth. Propaganda displaces fact and reason is simply
shoved out the window.
Probably some of the best examples of this new cold war are
found in the field of agriculture. A recent ruling by the
U.S. Department of Commerce (DOC) concerning Canadian wheat
exports to the U.S. is a prime case. Released August 29, that
ruling slapped punitive tariffs of approximately 14 percent
against Canadian spring wheat and durum going into the U.S.
The ruling will achieve what nine previous attempts over the
past decade by American farm organizations and governments
have failed to do – it will shut down exports of Canadian
wheat to the U.S. (Note that the last decade of such complaints
coincides with the life span thus far of the Canada/U.S. Free
As a Canadian farmer, I have a hard time looking at this trade
war with unbiased eyes, so I will have to admit to my bias
and let the reader judge my opinions. As I said earlier, much
of what passes for fact in trade wars is simply propaganda.
Consider the press release from the North Dakota Wheat Commission
(NDWC). In celebrating its victory, the NDWC ran somewhat
roughshod over the truth.
The press release repeats many of the contentions made in
the NDWC's original statement of claim. Thus it lists the
benefits that accrue to Canadian farmers by virtue of the
Canadian Wheat Board's relationship with the Canadian government.
These include government guarantees of initial payments to
farmers, government credit extended to foreign buyers, government
backing for CWB borrowings, etc. The press release says "the
Commerce ruling substantiates the NDWC claim that the Canadian
Wheat Board sells wheat with the aid of government subsidies
and without regard for its true market value."
These statements are designed to create an impression, but
how true are they?
First of all, the original points raised by the NDWC were
almost all rejected by the DOC. It denied that credit sales
to foreign buyers represent an unfair advantage. No credit
arrangements are available to American customers. The DOC
also rejected the notion that Canadian regulations regarding
railways and short lines give some advantage to Canadian farmers.
Nor did the DOC attack the Canadian grading system, which
the NDWC claims penalizes Americans wanting to export to Canada.
Only in two areas did the DOC find fault. It said the government
guarantee of CWB borrowings represented a subsidy, as did
government ownership of part of the grain hopper car fleet.
(In fact, grain going to the U.S. pays ownership costs for
the cars that carry it. The DOC simply said it did not receive
evidence on that point.)
The claim in the NDWC press release that the CWB sells wheat
"without regard for its true market value" was rejected
outright by the U.S. International Trade Commission (ITC).
The ITC found that Canadian wheat and durum sold in the U.S.
fetches consistently higher prices than similar American grain.
The press release claims that the proof of damage to American
farmers is found in the reduction in spring wheat and durum
acres in the U.S. since the Free Trade Agreement. It fails
to mention that Canadian acres of wheat have also fallen dramatically
in this time period – due to the severely depressed
price of wheat on world markets.
There are many ironies in all this. Imports of American corn
into Canada are much larger than our wheat exports to the
U.S. These have depressed the price for Canadian feed barley
in our domestic markets. Americans are also blamed for destroying
the livelihood of many small Mexican farmers since the North
American Free Trade Agreement was signed in 1994. Cheap American
corn, propped up by massive government price supports, has
flooded into Mexico.
Oddly enough, the NDWC showed no shame in recently asking
the U.S. Department of Agriculture to provide trade financing
for flour mills in Indonesia. "Indonesia's imports could
be… double or triple the current level — if guaranteed
credit or other trade financing would be authorized".
The NDWC is asking for the very thing it attacked Canadian
farmers over – credit sales to foreign countries.
The other pillar of the American judgement against Canadian
farmers concerned dumping. After demanding the records of
27 Canadian farmers, the DOC decided the CWB sometimes sell
wheat below the cost of production. Surprise, surprise! Market
prices are sometimes below the cost of production. Since the
ITC decided that Canadian wheat sold in the U.S. fetches higher
prices than comparable American grain, American farmers must
be selling below the cost of production as well.
It is all most unfortunate. As I have said repeatedly in
this column, farmers around the world do not receive adequate
compensation for what they produce, but the problem is not
other farmers. The problem is an economic system that leaves
farmers powerless against the near monopolies that buy their
product and sell them their inputs. When Canadian farmers
benefit by setting up their own "monopoly," the
Canadian Wheat Board, it is sad that other farmers, or organizations
claiming to represent them, would try to destroy it.
© Paul Beingessner, firstname.lastname@example.org . The author
is a columnist, transportation consultant and third-generation
farmer in Truax, Saskatchewan.