dian exports of hard red spring and durum wheat products into the United States.67 In May 2003, it imposed an additional AD duty of 8 per- cent on Canadian durum wheat and 6 percent on Canadian hard red spring wheat products.68 Some studies estimate that total US subsidies per ton of wheat are three times higher than Canadian subsidies ($108 subsidies versus $31).69 However, the fact that the United States subsi- dizes the same product is no legal defense against a CVD petition.
While multinational grain companies may resemble state trading enter- prises, the Canadian government guarantees CWB loans and covers its losses. WTO negotiations are pointed toward the elimination of “trade- distorting practices with respect to exporting state trading enterprises,” according to the August 2004 decision of the WTO General Council. Specifically, the decision targets the elimination of “export subsidies pro- vided to or by them, government financing, and the underwriting of losses.” In addition, the “future use of monopoly powers” in state trading enterprises will be the subject of further WTO negotiations. 70
Given the draft WTO agriculture text, the Canadian government may need to substantially recast how the CWB does business. Our primary rec- ommendation is for Canada to follow the example of the Australian Wheat Board and gradually privatize the CWB.71 By deregulating the do- mestic wheat market over a period of up to 10 years, the CWB can move toward a producer-owned company. For example, the Canadian govern- ment might provide significant capital funds to set the CWB on the road to privatization.
If reforming the CWB is not feasible, our alternative recommendation is to negotiate a bilateral US-Canada memorandum of understanding that
67. In addition to CVD of 3.94 percent on Canadian durum and hard red spring wheat, the US Commerce Department imposed 8.15 percent AD duties on Canadian durum wheat and
percent on Canadian hard red spring wheat in May 2003. See BNA (2003d).
See “Canadian Wheat Hit with New US Tariffs,” Canadian Broadcasting Corporation,
May 2, 2003, www.cbc.ca/stories/2003/05/02/wheat_030502 (accessed in May 2003).
69. See Jeffrey Simpson, “The American Way of Trading,” Globe and Mail, January 22, 2003; and “Commerce Launches Cases on Canadian Durum, Hard Spring Wheat,” Inside US Trade, October 2002.
70. See the WTO General Council Decision, WT/L/579, Annex A, para. 18, August 2, 2004. www.wto.org/english/tratop_e/dda_e/draft_text_gc_dg_31july04_e.htm (accessed in June
In 1999, the Australian Wheat Board was privatized and is now known as the Australian
Wheat Board Limited. The Australian government provided significant funding for the board to reform itself within 10 years and also gave special levies to fund capital assets such as grain storage and handling facilities.