Trade judge orders Canadian wheat tariffs returned

An international trade judge says the U.S. Commerce Department must return some import tariffs collected on Canadian spring wheat during the 2 1/2 years they were in place.

The Winnipeg, Manitoba-based Canadian Wheat Board, which controls wheat exports from Canada's western provinces, called the decision a victory for Canadian farmers, even though a spokeswoman said the amount involved is less than $100,000.

"This case was not fundamentally about the money ... it was about the principle and precedent and money that might theoretically be involved in the future," spokeswoman Maureen Fitzhenry said.

The North Dakota Wheat Commission, which was not a defendant in the case, said the ruling does not change its position that the Wheat Board trades unfairly in the world wheat market.

The tariffs were approved in the fall of 2003 because of a trade complaint filed by the North Dakota Wheat Commission against Canada a year earlier. The commission said Canada was dumping wheat on the U.S. market at less than the cost of production, to gain market share.

The U.S. International Trade Commission initially ruled in favor of the North Dakota group. In October 2005, it reversed course and concluded U.S. farmers were not being harmed by Canadian wheat sales south of the border. A North American Free Trade Agreement panel affirmed that decision, and the tariffs ended in February 2006.

Fitzhenry said about $500,000 in tariffs were paid. A small portion went to the North Dakota Wheat Commission as an injured party in the trade case and some of the money was deposited with the Commerce Department.

U.S. Court of International Trade Judge Richard Eaton in New York ruled that the U.S. has no right to keep the deposited duties.

"Because the subject imports caused no injury during any time relevant to this inquiry, (the Wheat Board) should owe no duties," Eaton wrote in his decision, dated Oct. 20.

"The purpose of collecting (tariffs) is to level the playing field so that producers can compete fairly in the marketplace," the judge wrote. "That purpose would not be advanced by allowing the United States to keep (the Wheat Board's) deposits when it has been conclusively established that the domestic industry has suffered no material injury."

The Commerce Department, named as the defendant in the case, had no immediate comment Thursday on the ruling.

The ruling did not stipulate an amount to be returned, but it is "in the tens of thousands of dollars," Fitzhenry said.

"Very little wheat actually went into the U.S. from Canada during that period ... because the tariff was prohibitive and became a wall," she said.

The tariff on Canadian spring wheat initially was set at 14.15 percent, or about 50 cents per bushel, and later was lowered to 11.2 percent, or about 40 cents.

The North Dakota Wheat Commission said the tariffs increased revenue for U.S. spring wheat growers by an estimated $102 million per year while they were in place, through higher market prices caused by less available cheaper Canadian grain.

Jim Peterson, the commission's marketing director, declined to say how much of the tariff money the commission received, but he said it was a small amount and was used to offset legal bills from the trade case.

Larry Hill, a Saskatchewan farmer and chairman of the Wheat Board, said Eaton's ruling "sets a valuable precedent for anyone who trades into the United States."

"There are now clearer rules about what happens at the end of the process when a trade dispute is settled," he said. "It gives more meaning to our rights under NAFTA."