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Trade disputes over Corn and Grains, between Canada and America

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  • Trade disputes over Corn and Grains, between Canada and America

    Like softwood this has been going on for a while, Americans claim that Canada is dumping wheat into America at a below market value, while Canada claims American is dumping Corn into Canada at a below market value.

    Washington to fight new tariffs on U.S. corn
    CTV.ca | U.S. seeking to dismantle Canadian Wheat Board
    Canadian Wheat Board - 2003
    U.S. raises tariffs on Canadian wheat

    Canadian Wheat Board website

    Quotes:

    The WTO complaint targets Canadian trade beefs: $9-billion (U.S.) in U.S. corn subsidies that Ottawa says hurt Canadian producers, and the overall level of trade-distorting American government support for agriculture, which was measured at about $12.5-billion in 2005.

    “The United States has been providing subsidies to its agricultural producers that create unfair market advantages,” International Trade Minister David Emerson said.

    The move should placate Canadian corn producers, who last failed to convince federal trade regulators to slap long-term tariffs on U.S. corn.
    As part of a long-running trade dispute, American farmers claim the Canadian Wheat Board unfairly subsidizes wheat and dumps it in the United States below market prices. Complaints against Canada were filed last year by the North Dakota Wheat Commission, the U.S. Durum Growers Association and the Durum Growers Trade Action Committee.
    The United States is "very disappointed" by Canada's decision to impose "excessive" duties on American grain corn, U.S. Trade Representative Rob Portman and Secretary of Agriculture Mike Johanns said in a joint statement Friday.

    "The United States government will continue to argue its case with the Canadian investigative agencies and defend the interests of U.S. corn producers and exporters as the inquiries move forward."

    They were reacting to Ottawa's decision Thursday to levy duties of $1.65 US a bushel on imports of U.S. corn, after the Canada Border Services Agency ruled that the grain was being subsidized in the United States and then sold in Canada below its true cost.

    An earlier, preliminary finding by the Canadian International Trade Tribunal found the imports have caused injury to Canadian corn growers.
    “It is surprising that the Americans -- with their own massive levels of farm support -- have said that Canadian wheat is unfairly subsidized,” said CWB Chair and farmer-elected director Ken Ritter from Kindersley, SK. "Our wheat exports are not unfairly subsidized under any rule of international trade. This is harassment provoked by the success of western Canadian farmers in the U.S. marketplace."
    Last edited by Canmoore; 17 Jan 07,, 05:40.

  • #2
    Farm subsidies are complicated issues. A nation has to maintain the ability to feed itself, which means farms have to be protected.

    The subsidies serve to keep the prices up, which helps to keep developing countries competitive in the world markets, and small farmers fiscally viable at home.

    Our farming techniques are so efficient that without them the markets would be flooded with product, and prices would crash. The small producers would be forced out of business, and developing countries wouldn't be competitive in world markets.

    It's not just a Canada-US issue, but we have to have something to argue about, lol.

    It would be nice to figure out a way to eliminate the subsidies and just use the excess production for biofuels, but I have no idea how to structure such a system.
    "We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way." -President Barack Obama 11/25/2008

    Comment


    • #3
      Frankly, I don't know why Canada wants to pick a fight in the agricultural arena, when we engage in many of the same practices as the USA.

      I mean, why quarrel over agriculture, where we don't have a very good case, when we pretty much surrendered over lumber, where justice was absolutely on our side?

      But since Emerson is involved, it's only a question of time before the craven rollover takes place. In Hong Kong the other day, Emerson in a speech compared HK's destiny to be integrated into China, with Canada's destiny to be integrated with the USA. What a patriot.

      Comment


      • #4
        Well the corn farmers in this country are hit hard by the cheaper american corn. The shorter growing season in Canada due to our climate doesnt help either, most corn farmers In Canada cannot live off just corn, they usually have other crops to sustain there operations.

        However, there are more strings attached to this issue. Livestock farmers rely on cheaper American corn to feed there stock, Canadian corn is not as readibly available throught the entire year, most notably winter. The tariffs put on american corn can make it unprofitable for livestock farmers to raise there stock in Canada, and force them to send there young livestock to the states to be raised and butchard, and that would eliminate meat packing jobs in Canada.

        There are so many issues attached to this, I am sure there are also sectors in America that rely on cheap Canadian wheat.

        Comment


        • #5
          Originally posted by cape_royds View Post
          ...I mean, why quarrel over agriculture, where we don't have a very good case, when we pretty much surrendered over lumber, where justice was absolutely on our side?
          What do you mean, you surrendered? The US agreed to return $5 Billion in duties and suspend all existing tariffs. All Canada has to do is not dump on the market.

          Canada's gov't subsidies to Canadian timber companies continue as before. Canada got everything she was asking for.

          Between the environmentalists and the B.C. timber companies, Western WA timber towns are now economically DOA.
          "We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way." -President Barack Obama 11/25/2008

          Comment


          • #6
            highsea:

            Over a billion dollars of the money was not returned. Moreover, that money went directly to American firms competing with ours, directly contrary to the rulings of NAFTA and WTO tribunals. But under the current "deal" Canada waives its prerogative to pursue that illegally confiscated sum.

            More importantly, the entire notion of free trade in lumber was dropped. Under the "deal," Canada meekly accepts a US quota on our exports. So much for free trade promoting natural relative competitive advantage. And so much for all of lauded adjudicative processes with which these trade treaties were supposed to bless us.

            The tribunals ruled in Canada's favour, but we learned that power trumps law. Of course, wiser heads in Canada were saying so back in 1988 before we ratified trade liberalization, but the global integrationists and other sugar-plum dreamers unfortunately got their way.

            Some friends of mine in the Interior of British Columbia are grumbling that the current "deal" is in some ways worse than the tarriffs. Why? Because under the tarriffs (and without quotas), Interior BC mills could overcome the tarriff through sheer economy of scale. For example, some of the largest and most efficient sawmills in the world are located in towns like Houston, BC.

            In the midst of the lumber trade war, the mill in Smithers, BC was sometimes working three production shifts (i.e. around the clock).

            We were competitive despite the tarriff, because of updated plant, a highly skilled labour force, and staggering throughput.

            But shortly after David Quisling Emerson signed his "deal", several BC mills in the southern Interior have closed, and projected investments for upgrading other mills have been cancelled. Please note that this downturn did not coincide with the cooling US housing market, a trend which clearly predates the closures. No, the cutbacks are due to the quota level freely agreed to by David Quisling Emerson.

            That's okay for Emerson, though, since he believes that Canada's destiny is to become a Special Administrative Zone of the USA, analogous to Hong Kong's current relationship to China.
            Last edited by cape_royds; 18 Jan 07,, 22:38.

            Comment


            • #7
              ^^^ Those tribunals were a matter of contention, They were stacked 3-2 in Canada's favor, and voted on national lines every time. The ITC rulings consistently supported the US position, and the NAFTA panels always went Canada. Anyway, it was a big mess for everyone. Even when the NAFTA panel ruled that the US tariffs were too high, they still admitted that the Canadian companies were receiving subsidies. The US lowered the tariffs in response to the ruling.

              Canada then imposed a completely unrelated retaliation against fishing boats transiting the inside passage to Alaska- charging an illegal transit fee of over $1000 per vessel. This was done out of pure spite. That money was never returned either.

              While those BC lumber companies were working round the clock, Washington lumber companies were all closing down and laying people off- many of these people were 3rd generation timber workers, and most are still unemployed today. That's all they know how to do. The economies of these timber towns are in ruins.

              The agreement to accept $4 bn in reparations was agreed to in order to avoid further litigation- no one held a gun to Canada's head, and there was a possibility that Canada would have received even less if the litigation had continued.

              BTW, the taxes/quotas only come into effect when the price of lumber falls below a certain threshold. Don't dump, and there are no taxes or quotas to deal with.

              I won't comment on the idea of Canada as a "Special Administrative Zone" or whatever, it's plain silly.

              But the timber issue is contentious, that's for sure. We have a lot of people here that aren't too happy about it either.
              Last edited by highsea; 18 Jan 07,, 03:32.
              "We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way." -President Barack Obama 11/25/2008

              Comment


              • #8
                The larger BC mills survived the lumberwar, however, many Ontario and Quebec sawmills and Paper mills weer shut down, because of the tariffs put onto Canadain lumber, it became to unprofitable to remain open, many many people lost there jobs. In Northern Ontario and Quebec, entire towns may be dependant on a mill, if it shuts down the town is killed.

                Of what I know, the current deal stands that the lumber is still taxed, It was set to the then current cost of lumber. If the cost of lumber drops, then the tax will raise.

                American lumber mills may have sufferd because of subsidized Canadian softwood, however, American housing companies prosperd. Cheaper Canadian lumber ment building houses was cheaper. When the tariffs were set in place, many of these groups apposed it, as there costs would rise also.

                Comment


                • #9
                  Originally posted by Canmoore View Post
                  ...American lumber mills may have sufferd because of subsidized Canadian softwood, however, American housing companies prosperd. Cheaper Canadian lumber ment building houses was cheaper. When the tariffs were set in place, many of these groups apposed it, as there costs would rise also.
                  That's partly true, and part of why tariffs are so difficult to deal with. It's always robbing Peter to pay Paul, no matter what you do. The effect of the tariffs on the builders was to make the Canadian lumber the same price as domestic, so naturally they opposed them.

                  About whole towns being killed- that's exactly what happened in Western WA when the mills shut down.
                  Last edited by highsea; 18 Jan 07,, 05:09.
                  "We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way." -President Barack Obama 11/25/2008

                  Comment


                  • #10
                    Originally posted by highsea View Post
                    It would be nice to figure out a way to eliminate the subsidies and just use the excess production for biofuels, but I have no idea how to structure such a system.
                    I was thinking about this. I know that at local grocery stores here in the country, the produce departments give there scraps to local pig farmers.

                    In the big cities and large corporate stores you would never see this happen, but it is so much more efficient. Restaraunts and Grocery stores throw out so much waste, alot of that waste would be better spent used as fertilzer for farms, or processed into pet feed.

                    I know of one place where this excess farm products could be used, that is the Aquaculture Industry. Plant based fish feed is still in its infacny, the technology is not quite perfected yet, however in the near future it should be.

                    Majority of farmed fish here in Canada are from the salmonid family (trout and salmon), these fish are unable to fully digest carbohydrates and fibre. It just sits in there guts and rots and the fish will die from bacterial infection.

                    Currently, the fish are fed a mixture of fish meal and some plant matter (fibre slowly absorbs the water, so the feed will float on the surface longer).

                    Fish meal, is a mixture of minced ground fish, like sardines and mackeral. The ground fish is caught from commercial trawlers, so the fish used are taken from the wild. Fish meal is packed with fat and nutrients (I once visited a re-circulation fish farm, where the guys fed a stray cat Salmon feed. The cat balooned into a giant ball of fat within a few months!! this stuff is ment to make the fish grow as big as possible in the shortest time possible)

                    However, the problem with fish meal is that it is extremely expensive, and you are feeding thousands of hungry fish every day. These costs are what makes large cage culture sites more attractive for salmon culture, you can grow massive quantities of fish to cover you costs of feed and operation.

                    Re-circulation stations, are much easier on the environment, however the costs are just to stagering to be done in a large scale system like cage culture can be done.
                    A re-circulation system uses the same water over and over again, the water is constantly going through a series of sand, bio and carbon filters. Then the water is resent to the fish. During feeding times, it becomes really tricky, as the feed contains protein, which raises the Ph of the water, and the fish need to poop and that poop raises amonia levels, not to mention the fish need to breath oxygen, aswell as decaying poop and feed, these things use up oxygen, depleting the oxygen levels in the water.

                    So a re-circulation system is like a giant balancing act, one screw-up and you can have thousands of dead fish, and be out hundreds of thousands, in some cases millions of dollars.

                    So we are stuck with cage culture, and look to the problems associated with large scale cage-culture stations. That fish meal I was talking about causes a whole lot of headaches for the environment, 100% of that feed isnt being consumed, alot of it falls through the cages and sits on the ocean floor, decomposes and causes all sorts of problems. The feed is packed with nutrients, that nutrients can spark a massive bloom of poisonous algae, carried around by current, killing all sorts of marinelife in its wake.

                    Aquaculture is a booming industry, the main thing holding it back right now are costs, and the public perception of farmed fish.

                    I remember when I was in College in 2004, there was a huge scare that farmed fish somehow contained more PCB's and other chemicals than there wild cousins. Many prominant environmentalists, ie. David Suzuki drove public perception of farmed fish into the ground.

                    When in reality, the amount of PCB's in a farmed fish is only 0.009ppb. far below what is considerd an unhealthy amount. And only fractionally higher than wild fish. What the environmentalists didnt tell you however, is that wild fish are higher in other heavy metals than farmed fish. Wild fish eat alot of small crustaceans (the pink flesh is due to a diet high in crustaceans, the shells contain a natural pigment. Otherwise there flesh is white) these crustaceans all have small amounts of contaminants in them, a salmon will eat perhaps thousands of tiny crustaceans in its lifetime, thats when the bio accumilation effect kicks in. The Higher up in the food chain an organism is, the higher amount of contimants it will have. Belugas are the Apex predator of the St.Lawrence river, and there flesh is classified as toxic material!

                    The reasoning behind the slightly higher amounts of PCB's in farmed fish, is that the same fish meal they are fed, contains ground fish caught from the wild. The bio accumilation effect takes place, and the farmed fish will have slightly higher amounts of PCB's.
                    HOWEVER, farmed fish are not fed crustaceans. So they will have lower amounts of heavy metals and other contaminants as wild fish. Farmed fish is pink, because food colouring is added to the feed to make the flesh pink. Customers are accustom to bright pink salmon meat, white salmon meat is not as attractive as it looks odd to the average customer. even though it is exactly the same as the pink stuff.

                    A plant based feed would eliminate the problem of bio accumilation, and farmed fish would have drastically low levels of contaminants compared to wild caught fish.

                    So Its in the industries best interest, not only on an economic scale, but on a PR scale. To develop a plant based feed.

                    On another note, another great reason to buy farmed fish is that it is extremely fresh. While a wild caught fish may have been stored in a ship for weeks or maybe months before being processed, farmed fish can be taken from the water, processed and on your dinner plate anywhere from 12 to 72 hours!

                    but anyways, Im getting WAAAAAAAAY off topic here
                    Last edited by Canmoore; 18 Jan 07,, 05:56.

                    Comment


                    • #11
                      Originally posted by cape_royds View Post
                      Frankly, I don't know why Canada wants to pick a fight in the agricultural arena, when we engage in many of the same practices as the USA.

                      I mean, why quarrel over agriculture, where we don't have a very good case, when we pretty much surrendered over lumber, where justice was absolutely on our side?

                      But since Emerson is involved, it's only a question of time before the craven rollover takes place. In Hong Kong the other day, Emerson in a speech compared HK's destiny to be integrated into China, with Canada's destiny to be integrated with the USA. What a patriot.
                      Looks like Harper hasn't beaten the "Liberal" out of him yet! Seriously though I think he likely ment in economic terms. The U.S. and Canada really could be between the two nations be self sufficient in most area's.
                      Last edited by smilingassassin; 18 Jan 07,, 07:29.
                      Facts to a liberal is like Kryptonite to Superman.

                      -- Larry Elder

                      Comment


                      • #12
                        Canmoore, don't get me started on farmed fish, that's guaranteed to get you an earful... ;)
                        "We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way." -President Barack Obama 11/25/2008

                        Comment


                        • #13
                          Originally posted by highsea
                          The agreement to accept $4 bn in reparations was agreed to in order to avoid further litigation- no one held a gun to Canada's head, and there was a possibility that Canada would have received even less if the litigation had continued.
                          I don't have a huge problem with the US driving a hard bargain. My issue is with the Quislings (or perhaps Hachas) in my own government, who not only fail to negotiate a good bargain on our part, but come back to the people and boast of how their repeated surrenders have improved Canada-US relations.

                          BTW, the taxes/quotas only come into effect when the price of lumber falls below a certain threshold. Don't dump, and there are no taxes or quotas to deal with.
                          But the thresholds are set at ridiculous levels. My Quisling government, so anxious to appease the USA, agreed to those thresholds and in doing so worsened the situation for the most modern and competitive Canadian mills.

                          As for your notion that Canadian lumber is subsidized, that is untrue. The real problem your government had with our timber supply is that most of the forest land in Canada is publicly owned and harvested under long-term licenses.

                          Incidentally, that's why David Quisling Emerson, formerly and soon again to be of the firm Canfor, was more in sympathy with the Americans attacking the Canadian industry, rather than with the people whose interests he was supposed to be defending. The corporate lobbies here in Canada are trying to get possession of our public lands, and they privately rejoice when international pressure assists their lobby.

                          I won't comment on the idea of Canada as a "Special Administrative Zone" or whatever, it's plain silly.
                          My point is that the little Quislings over here, like David Emerson and John Manley, really do see their country in that way, and see a relationship in which Canada possesses only symbolic and inconsequential autonomy as the ideal.

                          Anybody who thought that two countries of such lopsidedly unequal population and power could make an economic deal on an equitable basis were either sugar-plum dreamers, or closet annexationists. Twenty years later, one sees the Quislings becoming less and less shamefaced.

                          Comment


                          • #14
                            Originally posted by cape_royds View Post
                            But the thresholds are set at ridiculous levels. My Quisling government, so anxious to appease the USA, agreed to those thresholds and in doing so worsened the situation for the most modern and competitive Canadian mills.
                            How much share of the US market do you think Canada is entitled to? Just between 1991 and 1996 it went from 27% to 37%. Today it's about 35%.

                            Canadian mills are not more efficient that US ones. Even Canadian studies show that. Their harvesting and processing costs are actually higher. Their only advantage is in buying undervalued timber.

                            We're not opposed to Canadian lumber. We just don't think Canada should get 1/3 of the market due to unfair competition. Some mills in Canada can compete on a level playing field.

                            Wrt the ridiculously low levels- The 1996 agreement set the tax-free cap at 14.7 billion board feet, which was a historically high level. By 1999, imports were over 18 billion board feet. Again, how much do you think Canada is entitled to?

                            From 2000-2005, US mill closures were 3X Canada's.
                            Originally posted by cape_royds View Post
                            As for your notion that Canadian lumber is subsidized, that is untrue. The real problem your government had with our timber supply is that most of the forest land in Canada is publicly owned and harvested under long-term licenses.
                            The WTO determined that it was a subsidy.

                            The provincial governments manage the timber for maximum employment. The stumpage charges are 1/4 to 1/2 what they would bring in the competitive US market. The cost of timber represents about 60-70% of the variable costs of finished products, so this is a significant subsidy to Canadian lumber mills. In 1998, when the market was down, the B.C. gov't gave the lumber mills a 16% price reduction to keep production going. This had the effect of a gov't bailout out of otherwise bankrupt mills, further eroding the standing of US mills.

                            In September 2005, the Canadian gov't announced a whole new set of non-stumpage subsidies that total several billion dollars in the next 4-5 years.

                            http://www.fairlumbercoalition.org/o..._subsidies.pdf
                            "We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way." -President Barack Obama 11/25/2008

                            Comment


                            • #15
                              highsea:

                              Our harvesting costs are higher but our timber costs are lower. We don't lack timber supply here in British Columbia, but we do lack roads, and that's what drives up harvesting costs. In BC's tree farm licenses, roads are built at the license holder's expense, and road building costs, according to my friend working on Haida Gwaii, exceed all other costs put together. In other words, in BC the timber is often worth little, and the access is worth everything. At our stage of regional development, the main cost of the wood is getting to it. And since most of the forest is decadent, it does nothing but lose value unless it's accessed and harvested. It's rotting as it stands, unless it burns or gets eaten by bugs first.

                              Therefore, the land owner wants to establish young-growth silviculture, and makes a deal that the harvester builds the roads in exchange for the current old-growth timber. That deal makes sense in the long term for the land owner, and that's basically what's going on in BC, from about 1960 to about 2020 or so. The move to long run sustained yield hasn't gone exactly as planned in the 1950's, but in essence the plan is still being followed.

                              The main reason the Americans are complaining is that the government happens to be the owner of that land, and of course Canadian neoliberals are cheering them on.

                              It's hard to determine "subsidies" when you're dealing with two different development profiles, and two different ownership profiles.

                              For example, do you know that BC license holders are forced to harvest large amounts of virtually unmarketable "garbage wood" as part of their deals. In some Interior districts over half of the harvest goes straight into the whole-log chipper, and of course the harvesters lose money on it. This is the exact opposite of a subsidy--it's an contractually imposed expense. But that's an important part of the whole programme of converting a huge "decadent" forest into a system of modern tree plantations. It's also part of the reason why stumpage is low.

                              But naturally, companies would prefer to cream off just the best stuff, preferably through an auction system, regardless of the long-range consequences for the state of forests in BC years from now.

                              In the big picture, Canada possesses a clear and obvious advantage in softwood lumber: we have a lot of trees and a lot of territory with no better use than to grow them.

                              "Free Trade" was supposed to let the respective countries excel in the areas of their maximum relative competitive advantage. Selling cheap two-by-fours was supposed to be one of Canada consolations under "free trade."

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