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Issue #583 | Forest Products

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2014 Media Kit
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US, Canada at odds over farm trade

By: | at 07:00 PM | Channel(s): International Trade  

The United States and Canada have the world’s largest trading partnership, but frictions have erupted over various agriculture products.

President George W. Bush and Canadian Prime Minister Paul Martin, meeting in Ottawa on Nov. 30, were expected to discuss some of the following trade disputes:

BEEF

The United States closed its border to Canadian live cattle and beef on May 20, 2003, immediately after Canada discovered its first domestic case of mad cow disease in Alberta. Canadian farmers lost an estimated $4.2 billion (C$5 billion) in revenues during the past 18 months because of trade bans, according to the Bank of Montreal.

The discovery of the first US case of mad cow disease in December 2003 slowed Washington’s plan to reopen the border.

During the past year, the United States has opened its border to a significant amount of Canadian beef that is from cattle slaughtered at a young age. Young animals are thought to have the lowest risk of the brain-wasting disease.

On Nov. 19, the US Department of Agriculture proposed a final regulation that would end the trade ban on cattle and beef from older animals and sent it to the White House budget office for review. It can take up to 90 days to review the plan, under federal rule making procedures.

In 2002, Canada exported 1.7 million head of cattle to the United States, valued at C$1.8 billion, according to Canadian government statistics. Nearly all of Canada’s cattle exports went to the United States.

LUMBER

After a decade-long dispute over softwood lumber trade, the US government in 2001 found Canadian provinces gave unfair subsidies to their lumber industry and imposed duties on some $6 billion in annual Canadian shipments. The United States also said the Canadian wood was being sold south of the border at below-market prices.

On Aug. 31, a NAFTA panel ruled in favor of Canada and said the US lumber industry was not threatened by exports of Canadian spruce, pine, fir and other softwoods used to build homes. Washington is appealing the ruling. Separately, the United States has won some key rulings by World Trade Organization panels.

The US government has so far collected some $3 billion in duties on the lumber shipments. American companies want some of the money under a law known as the Byrd Amendment that has been deemed illegal by the World Trade Organization. While Washington has said it would comply with the WTO ruling, it also has threatened to stand in the way of returning the money to Canada.

HOGS

Live hogs shipped from Canada to the United States were slapped with anti-dumping duties of up to 15% in October, after the US Commerce Department said in a preliminary decision that the shipments injured American farmers.

In 2003, about 7.4 million hogs, valued at $389 million, were exported from Canada to the United States. Most are young animals destined for US farms in the Midwest to be fattened before slaughter.

The Commerce Department is scheduled to issue a final decision in the case in March 2005.

WHEAT

The United States has challenged the Canadian Wheat Board, saying the farmer-controlled organization has a monopoly on wheat exports that violates international trade rules.

In a mixed decision in February, a World Trade Organization panel ruled the board was a legal state-trading enterprise, but Canada must change some of its grain handling and shipping policies. Washington is appealing the ruling.

Separately, a US trade panel found one year ago that rising Canadian exports of hard red spring wheat were depressing the US wheat market. The panel ruling allowed the US Commerce Department to continue imposing a 14% anti-dumping and countervailing duty on Canadian shipments.

But the US trade panel also found that Canadian shipments of durum wheat did not hurt American farmers and it ended 13.5% duties that had been in place. (Reuters)