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The USA v . The CWB Does NAFTA work? Does it matter? Telecon-Presentation

The USA v . The CWB Does NAFTA work? Does it matter? Telecon-Presentation CBA Int’l Law Section December 5, 2005 James E. McLandress General Counsel, Canadian Wheat Board. Context Major Producers. Durum. Context Major Exporters. Durum wheat * (including semolina). Wheat *. E.U. 7%.

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The USA v . The CWB Does NAFTA work? Does it matter? Telecon-Presentation

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  1. The USA v. The CWB Does NAFTA work? Does it matter? Telecon-Presentation CBA Int’l Law SectionDecember 5, 2005 James E. McLandress General Counsel, Canadian Wheat Board

  2. ContextMajor Producers Durum

  3. ContextMajor Exporters Durum wheat* (including semolina) Wheat* E.U. 7% Argentina9% Canada**14% U.S. 17% Australia14% E.U. 15% Canada51% Others25% Others22% U.S. 26% * five-year average from 1999-00 to 2003-04

  4. ContextGlobal Pricing

  5. Context Getting to Market Prince Rupert Churchill St. Lawrence Vancouver Thunder Bay

  6. ContextMajor customers 2003-04 Thousand tonnes Wheat Durum Barley Italy 672 Saudi Arabia (f) 561 Canada 2 200 USA (m) 414 China 1 800 Morocco 459 Japan 1 029 Algeria 378 China (m) 369 Philippines 705 Venezuela 332 Canada (m) 360 Mexico 693 Canada 292 Japan (f) 259 f = feed barley; m = malting barley *In total 16. 3 million tonnes were sold to customers in 71 countries/regions.

  7. ContextGlobal Concentration

  8. Why?Canadian success

  9. What?Thirteen U.S. actions since ‘89 • Jun. 1990 -- ITC , s. 332. • Jun. 1992 -- GAO. • Feb. 1993 -- CUSTA Bi-National Panel (Durum audit). • Jul. 1994 -- ITC, s. 22 Agricultural Adjustment Act of 1930. • Oct. 1995 -- Canada-U.S. Joint Commission on Grains. • Jun. 1996 -- GAO. • Nov. 1998 -- GAO. • Oct. 1999 -- DOC, Live Cattle CVD. • Nov. 2001 -- ITC, s. 332 (as part of USTR s. 301). • Feb. 2002 -- USTR, s. 301 • Sept. 13, 2002 -- DOC/ITC, AD/CVD petition re Durum • Sept. 13, 2002 -- DOC/ITC, AD/CVD petition re Hard Red Spring Wheat • Aug. 2004 -- WTO AB dismisses U.S. appeal in Art. XVII challenge (DS 276)

  10. AD/CVD • Sept. 2002 - NDWC files AD/CVD petition re HRS & Durum. • Aug. 2003 - DOC Final AD/CVD tariffs determined: • 14.16% on HRS (8.87% AD + 5.29% CVD (4.94% gtees + .35% railcars)) • 13.55% on Durum (8.26% AD + 5.29% CVD ( “ “ “ )) • Oct. 2003 - ITC Final Injury ruling (4-0 neg. on Durum & 2-2 aff. on HRS) • Jul. 2004 - CIT dismisses NDWC appeal of Durum Injury ruling • Mar. 2005 - NAFTA c. 19 Panel overturns CVD guarantee determination • Apr. 2005 - Byrd injunction filed (w/ Softwood Lumber & Magnesium) • Jun. 2005 - NAFTA c. 19 Panel overturns HRS Injury ruling • Aug. 2005 - DOC lowers CVD rate (2.19% gtees + .35% railcars = 2.54%) • Sept. 2005 - CWB & GOC challenge DOC remand on CVD • Oct. 2005 - ITC remand determination on HRS (4-1 negative on injury) • Oct. 2005 - NDWC challenges ITC remand

  11. WTO - DS276 Dec. 17, 2002 - U.S. panel request under DSU • CWB is genetically incapable of acting commercially and therefore must, per se, violate Art. XVII requirement to act “solely on the basis of commercial considerations”. • Share cap model is only acceptable model. April 6, 2004 - Panel dismisses U.S. claim re Art XVII: • Farmer control means CWB’s incentive is to maximize returns. • CWB is commercially driven. August 30, 2004 - AB dismisses U.S. appeal: • rejects U.S. attempt to impose competition regime via Art. XVII

  12. DohaFramework Agreement re CWB “18. The following will be eliminated by the end date to be agreed: … Trade distorting practices with respect to exporting STEs including eliminating export subsidies provided to or by them, government financing, and the underwriting of losses. The issue of the future use of monopoly powers will be subject to further negotiation.” Doha Framework Agreement -- July 31, 2004

  13. Noteworthy Quotes... Powerful interests from N. Dakota don’t like NAFTA ... • “Before the passage of the U.S.-Canada Free Trade Agreement, the U.S. imported virtually no Canadian grain. None. Since the negotiation of the Canadian Free Trade Agreement, imports of Canadian durum have grown to 20 to 25 percent of the U.S. market.” • -- U.S. Senator Kent Conrad to U.S. ITC, Sept. 4, 2003 • “I was in the U.S. House when the U.S.-Canada Free Trade Agreement was passed. I think it was incompetently negotiated, and I think the interests of American farmers were largely sold out in that negotiation.” -- U.S. Senator Byron Dorgan to U.S. ITC, Sept. 4, 2003 • “North Dakota wheat farmers' problems with the Canadian Wheat Board date back to the negotiations for the Canada-U.S. Free Trade Agreement and later NAFTA.” -- Jack Dalrymple, Lt.. Governor, N. Dakota to U.S. ITC, Sept. 4, 2003

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