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WTO ruling on wheat sales goes against U.S.
The Seattle Times
World Trade Organization (WTO) arbitrators have dismissed a U.S. appeal of an April decision that the Canadian Wheat Board meets international rules, undermining the Bush administration's efforts to dismantle the grain marketer.

The U.S. claims against the board, the world's largest seller of wheat and barley, "failed to establish that Canada has acted inconsistently with its obligations," arbitrators said in a 77-page report on the Geneva-based WTO's Web site. The appeals panel upheld an earlier ruling.

The board has a government-granted monopoly on exports of Canadian wheat, durum wheat and barley and on domestic sales for food. The WTO case was the first to examine a state trading monopoly after a U.S. International Trade Commission finding last year that Canadian wheat imports undermine U.S. prices. The U.S. challenged the board's mandate and the Canadian system, arguing the organization illegally subsidizes grain shipments.

"This is good news for Canadian farmers," Terry Hildebrandt, president of the Agricultural Producers Association of Saskatchewan, said in a telephone interview. "Other countries have no business poking in and telling us how we should sell our grain."

The Wheat Board, which handles as much as $3.7 billion of grain exports a year, "is a fair trader," Ken Ritter, chairman of the organization's board of directors, said in a statement on its Web site. "The vehemence with which the U.S. is pursuing the board through various trade challenges is further evidence of how effective this system of marketing is for Prairie farmers."

The case may still alter the way the Winnipeg, Manitoba-based Wheat Board operates. A WTO dispute panel ruled in April that by treating imported grain differently, Canada had violated commitments to deal with all products the same way once they are on the domestic market.

Canada's trade minister, Jim Peterson, said earlier this month that he expects the board will face further efforts to overthrow its marketing monopoly as part of WTO negotiations to scale back tariffs and subsidies that protect farmers and tackle market distortions.

The WTO agreed to a framework to eliminate government financing, underwriting and export financing of state-trading enterprises, said Christopher Padilla, a spokesman for the U.S. trade representative's office. Yesterday's decision "reaffirms the need to develop meaningful disciplines on agricultural state-trading enterprises," Padilla said.

"The very fact that the Wheat Board and state traders are on the table is a good sign for us," said Neal Fisher, administrator of the North Dakota Wheat Commission, which prodded the U.S. into bringing the action against Canada.

"The whole negotiating position of the U.S. is to eliminate unfair, monopolistic state-sponsored trading practices."

While the North Dakota commission considers the ruling "unfortunate," it will "better define where we need to change the rules and regulations," marketing director Jim Peterson said in an interview.

Saskatchewan farmer Hildebrandt said he doesn't expect the ruling will end U.S. attacks on the Wheat Board.

"Those same U.S. wheat growers and the North Dakota Wheat Commission probably aren't going to settle down and go away," he said.

The WTO also found in April that Canada set mandatory requirements for foreign grain, prohibited the mixing of such grain with eastern Canadian grain and had a system that may have given the Wheat Board cheaper rail-transportation rates.

The U.S. has won separate WTO cases finding Canadian support for dairy producers and lumber exports illegal.
MGR Archive 1.9.2004
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