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Canadian Swine Producers Focus on Building Stronger Alliances to Smooth Canada U.S. Trade Relations
Farmscape Staff

Canadian Swine Producers Focus on Building Stronger Alliances to Smooth Canada U.S. Trade Relations

Farmscape Article 1952-October 29, 2005

 

Canadian swine producers are making every effort to strengthen alliances with their U.S. based business partners in hopes that it will be American producers that will head off the next U.S. challenge to imported live Canadian swine.

 

Since April, when the U.S. International Trade Commission (ITC) ordered an end to preliminary antidumping duties on live Canadian swine, several cross border initiatives have been undertaken on both sides of the 48th parallel to strengthen trade relations but the tensions have not yet been entirely erased.

 

Duties Based on Accusations of Illegal Canadian Subsidies and Dumping

The preliminary import duties were imposed by the U.S. Commerce Department (DOC) in October, 2004, and were the result of exhaustive countervail and antidumping duty investigations conducted by the DOC and ITC in response to complaints filed by the National Pork Producers Council (NPPC).

 

Although the DOC had dismissed the countervail investigation, having found no evidence of illegal subsidies, it had determined Canadian pigs were sold into the U.S. at prices below their cost of production and imposed a range of duties on the imports, including an “all others rate” which took in the majority of Canadian pigs shipped south.

 

The matter concluded with the ITC's final injury determination, in which it ruled the imported Canadian swine had not caused harm and did not threaten to cause harm to American producers and ordered the tariffs revoked and duties already collected refunded.

 

Canada U.S. Trade Discussed During Trilateral Discussions

The issue resurfaced earlier this month when officials of the Canadian Pork Council, the U.S. based National Pork Producers Council and the Mexican Pork Producers Association met in Banff.

 

The trilateral meetings are held every six months and this time around they covered everything from traceability to food safety and animal health to international trade.

 

“We had a very frank direct honest open discussion about trade,” states Canadian Pork Council (CPC) President Clare Schlegel.

 

“The United States leaders continued to indicate that they aren’t interested in punishing Canada. But they are interested in what they perceive to be a level playing field, as we are as well. Canada wants to mitigate and reduce the risk of potential trade actions in the future. I believe the United States is willing to take that perspective as well but there is still a disagreement over stabilization programs on both sides of the border.”

 

Subsidization Remains Central Concern

“We certainly perceive some dollars going to U.S. farmers that don’t come to Canadian farmers and likewise they perceive dollars going to Canadian farmers that they feel they do not have available to them on the United States side of the border.”

 

Despite the disagreement, Schlegel is convinced the Canadian and U.S. pork industries each want a level playing field when it comes to trade. He is quick to stress, “The [Canada-U.S.] relationship is as sound as it has always been. It’s not a relationship question. It’s a perception of level playing field question.”

 

Manitoba Pork Council to Expand Mid-west Pork Dialogue

As part of Manitoba Pork Council’s effort to cultivate greater U.S. producer awareness of the Canadian swine industry and foster improved trade relations, a delegation from the agency will embark on a tour of three key U.S. pork producing states at the end of January and beginning of February next year.

 

The visit, which will include stops in Iowa, Minnesota and Nebraska is a follow-up to an April 2005 visit and will give the organization an opportunity to participate in annual state pork association meetings and trade shows.

 

Manitoba Pork Council General Manager Andrew Dickson says the response to the initial visit was so positive it justified a return trip. This time around representatives will address a wider audience and set up a display designed to tell the story of pig production in Manitoba and in Canada.

 

“The main theme will be partners in North American pork production,” Dickson states. He explains, “We’ll have some information on the various programs that Canadian farmers have available to them so that we can try to explain some of these. What we’re trying to do is create an atmosphere of positive relationships and try to avoid the 20 year history of confrontation that seems to have reigned.”

 

“Hopefully with a better understanding of how we do business, they will see that there’s a true partnership in terms of carrying on pig production in a North American market place.”

 

Dickson suggests, “The similarities between Canada and the U.S. are enormous and easily outweigh the differences.”

 

Washington, D.C. based trade lawyer Dan Porter , who represented Manitoba Pork Council in the case the ended in April, is confident it will be difficult for the Americans to successfully bring a trade case in the near future.

 

He observes, “Prices are still good. The profitability therefore is up with U.S. producers and if you look at the futures market it looks like the higher prices are expected to continue in the reasonable future.”

 

He says, “It’s going to be somewhat difficult for them to bring a case until prices come down and the data seems to suggest they’ll be up well into 2006.”

 

Canadian Industry Encouraged to Be Prepared

Nonetheless, Porter is advising his clients to be prepared, in advance, for the next challenge. He suggests, in the event a new complaint is filed Canadian producers will need to be ready to hit the ground running.

 

He stresses, “You have to make [some of] these arguments, these claims, within the first 20 days after a case is filed.”

 

“What we need to do is to be ready to go on day one, contacting the customers, contacting those in the industry that will oppose it, making sure the opposition is known to the U.S. commerce department and hopefully cutting this off at the pass and defeating it from the get go.”

 

Manitoba Pork Council Chair Karl Kynoch agrees, “There's a lot of mixed feelings down there.” He notes, during the first trip, it was made clear that many U.S. producers rely on the supply of live hogs out of Canada to make their businesses viable.

 

Schlegel adds, “Market access around the world is an important issue, particularly to the United States and Canada. Between the United States and Canada we represent about 45 percent of the world pork trade.”

 

He notes, “I do think the dynamic is changing and Canada is becoming less of a factor in the minds of Americans. The U.S. pig herd is beginning to increase in size and the Canadian pig herd has stopped increasing.”

 

“We believe that the reality that the U.S. dollar Canadian dollar differential, with the U.S. dollar weakening, the Canadian dollar strengthening, that that changes the competitiveness between our two countries. That is indicated by the United States being now the world’s number one pork exporter. They overtook Canada in 2004, and are continuing to increase at a very quick pace.”

 

He says, “The reality that ten yen buys more U.S. pork today than it does Canadian pork, thus Japanese buyers are buying more kilograms of U.S. pork than they are Canadian pork. Obviously that makes a difference.”

 

Continued Communication Encouraged

Schlegel encourages stakeholders in the two industries to continue to talk with each other and understand the opportunities and barriers on both sides of the border.

 

He maintains, “From a North American perspective, we all stand to gain by working together and not against each other.”

 

Staff Farmscape.Ca

Keywords: tradecountervailantidumpingfood safetytraceabilitymarketprice
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