Hang On For The Ride

To make the comment that the week of June 4, 2007 contained highs and lows for the Canadian Corn Producers (CCP) would be an understatement. The start of the week was set to begin a hearing at the Federal Court of Appeal that would re-evaluate 2 years of hard work by the coalition, via direction given by its membership across the country, to prove they were being injured by the significant dumping and subsidization of the United States’ corn industry. No one would have guessed an anticipated grueling 2.5 day scheduled hearing would be finished in a mere few hours.

Many missed opportunities over the past couple years have compelled CCP to initiate the anti-dumping and countervailing duty (AD/CVD) case against imports of U.S. grain corn, and continue with its Federal Court of Appeal challenge of the Canadian International Trade Tribunal’s (CITT) perverse no-injury finding on April 18, 2006. Part of CCP’s argument against this ruling targeted three main areas; the most significant being the tribunal confused the concept of price suppression with that of price depression, and refused to consider suppression as a separate head of injury as required by law. The second area focused on the CITT refusing to consider the 44% magnitude of dumping and amount of subsidy as a separate head of injury as required by law. Lastly, and most thought-provoking was the CITT based its decision on the supposedly widening price ‘gap’
between American and Canadian corn. In doing so, the CITT based its decision on an issue that was never raised by anyone before it found its way into the CITT’s reasons, and thus breached the rules of natural justice.

The CCP litigator presented the aforementioned arguments in greater detail, re-enforcing them with further information and other precedent-setting examples to the three judge panel. To the surprise of CCP, this component of the hearing was completed in a fairly short timeframe, with little engagement from the Court. The Court also decided it was not necessary to hear from the respondents and they ruled the application for judicial review was dismissed. Obviously, CCP was very disappointed with this ruling.

So, what does this ruling mean? Essentially, the Court concluded the CITT did not make any reversible error in reaching the conclusions it did. The CITT is entitled to make a mistake; however, in most cases that mistake must be a ‘patently unreasonable error’ for the Court to intervene and remand the case to the tribunal for reconsideration. In terms of possible next steps with the AD/CVD case, CCP does have the option to challenge the judgment through a motion for leave to appeal to the Supreme Court of Canada. Appeals to the Supreme Court of Canada do not exist as a right and therefore, permission from the Court is required. At this point in time, CCP is considering all its options in order to formulate the proper ‘next steps’ strategy.

Something CCP needs to continue to offer as a reminder is that the AD/CVD case was one prong in a 4 pronged strategy designed to provide immediate and long term relief to producers in the face of a significant income crisis. The other 3 prongs addressed retaliation against the Byrd Amendment, asking the Canadian Government to commence WTO proceedings by requesting consultations with the U.S. regarding the illegality of U.S. corn subsidies, and asking both the Federal and Provincial governments to provide additional funding for income support programs (ie. Risk Management Program) to deal with trade injury. The last two points is where the ‘highs’ for the week of June 4, 2007 come into play.

The Honourable David Emerson, Minister of International Trade, and the Honourable Chuck Strahl, Minister of Agriculture and Agri-Food and Minister for the Canadian Wheat Board announced on June 8, 2007 the Government of Canada would request that a World Trade Organization (WTO) dispute settlement panel be established on the issue of U.S. agricultural subsidies. Earlier media reports had suggested that such an action would not occur any sooner than the end of the year after WTO consultations held in the U.S. in February 2007 failed to resolve these issues. There are two main objectives; to address the total level of U.S. trade-distorting agricultural subsidies (total Aggregate Measurement of Support or AMS commitment) and to address export credit guarantees to certain agricultural products. The original January 2007 WTO announcement also included ‘serious prejudice to Canadian corn growers by significantly suppressing Canadian prices’ piece that will not be pursued at this time. It is felt the total AMS issue will include the same programs causing problems under the serious prejudice issue, and it is the full intent of CCP to closely monitor the situation to make sure it receives the appropriate attention.

Also on June 8, 2007, Leona Dombrowsky, Minister of Agriculture, Food and Rural Affairs announced the McGuinty government’s intention to provide $55 million to Ontario farmers as a match to the recently announced federal Cost of Production Program. More importantly, the Ontario government also announced a commitment to a 3 year Risk Management Program (RMP) pilot to support the grains and oilseeds sector. The details are still sketchy at this point; however, this is a program that OCPA has worked very hard at over the last few years to secure on behalf of its membership. There is still much to be done, as the RMP as designed by the Grains and Oilseeds Safety Nets Working Committee included a federal funding match
which, at this point in time has not been committed.

Even though both the CITT and Federal Court of Appeal rejected CCP’s request for a domestic trade remedy, both the WTO and income support announcements late in the week are positive steps forward in CCP’s multi-pronged approach which we will persistently continue to move forward. CCP’s latest defeat is certain to raise questions and concerns; with the strength of the CCP case, is seeking a ‘self help’ domestic trade remedy case under Canada’s Special Import Measures Act (SIMA) really an option for relief? On an interesting note, Canadian anti-dumping and countervail cases are at their lowest number since the SIMA was enacted in 1984. There are no active investigations currently underway by the Canada Border Services Agency and no new inquiries by the CITT scheduled for the remainder of 2007 or into 2008.

In the meantime, CCP will work hard to support Canada’s WTO request given the current drafting stage of the U.S. farm bill. OCPA will also work diligently with the Ontario government to develop the Risk Management Program for its members.