Canadian farmers in the prairies want change. This desire was voiced in the barley marketing plebiscite concluded March 2007, whereby 62% of farmers voted to have the grain removed from the single-desk authority of the Canadian Wheat Board (CWB). The Government of Canada has since committed to amending the board’s regulations accordingly by August of this year. Discussions pertaining to the CWB have largely focused on its impact for Canadian farmers and how they conduct their business. However, by its very nature, the board and any reforms thereof have international implications, particularly in the realm of Canada-US relations.
Sanctioned by the Government of Canada, the CWB is defined as a State Trading Enterprise under international law. Although no longer a crown corporation, Parliament is still committed to cover any of the board’s financial losses. As a result, the federal government has spent $1.3 billion since 1943 to cover CWB deficits. In 2003 alone the board suffered a shortfall of $85.4 million.
This subsidy to Canadian grain producers has understandably irked the United States, which accuses Canada of dumping in the market for wheat and barley. Subsequently, the United States has challenged the CWB on unfair trade practices in fourteen separate instances. A majority of these rulings have been favourable to Canada; the WTO ruling in 2004 marking the tenth time that a ruling has backed the CWB.
However, as seen with the recently resolved softwood lumber dispute, a trade irritant remains a trade irritant, regardless of the number of trade rulings to the contrary. The United States proceeded to impose tariffs on Canadian grains, which have since been either reduced or eliminated entirely. Not to be dissuaded, they continue at an international level to push for a change in State Trade Enterprise regulations.
Currently, only barley is being removed from the CWB monopoly. Wheat, of which the board’s trade is primarily composed, will still fall under CWB control. The removal of barley, however, is still significant and is a positive first step in changing the market for grains. Done in the name of market fairness for Canadian farmers, this reform to the CWB cannot help but further lessen trade tensions between the two countries.
This is in no way saying that a bettering of Canada-US relations was the driving impetus for reforming the CWB. It is merely an additional perk.
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