GRAIN TRADE & MARKET DEVELOPMENT COMMITTEE NOTES
OCPA SEMI-ANNUAL MEETING
Ontario Corn Producers’ Association
September 11, 2007

Grain Trade & Marketing Development Policy Committee

Canadian Corn Producers (CCP) Four-Pronged Approach Update

Historical

Over the past couple years in many different forums, you should have heard some reference to a multi-pronged approach being taken by the CCP to address the issue of unfairly traded U.S. grain corn. The four prongs can be defined as focusing in the following areas; Byrd Amendment retaliation, World Trade Organization (WTO), income support programs and antidumping and countervailing duty (AD/CVD) case. These four prongs were part of a strategic plan to address short term survival needs and the necessary support to successfully transition to the long term where the unfair trade situation would be resolved. While the 'self help' AD/CVD case remedy has received the most attention to date, CCP has also utilized substantial resources on the WTO and income support prongs as well.

Income Support

One of the most important pieces of the income support strategy has been the design and implementation of the Risk Management Program (RMP). The August 22 RMP announcement by Premier McGuinty at the farm of OCPA director Lloyd Crowe was a major step forward. Additional details on the RMP are included within the Safety Nets report.

Request For WTO Consultations

On January 8, 2007, 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 that the Government of Canada had 'requested consultations with the United States at the World Trade Organization (WTO) on subsidies provided to U.S. corn growers, as well as on the total level of U.S. trade-distorting agricultural support'. When Minister Strahl was asked why Canada was taking this action, he explained that Canada is concerned that these U.S. subsidies continue to cause economic harm to our corn farmers.

These consultations occurred in February 2007 with the United States and did not resolve Canada's concerns. As a result, on June 8, both Strahl and Emerson announced that the government of Canada was making a request to the WTO that a dispute settlement panel be established to resolve this issue of U.S. agricultural subsidies. As expected, the U.S. blocked Canada's request. Under WTO rules, a request can be blocked only once and the panel is automatically established at the time of the second request. Canada's intention was to make their second request for the panel at the next scheduled WTO Dispute Settlement Body meeting that was set to occur the end of July.

On July 11th, Brazil requested consultations with the U.S. on its domestic agriculture support and export credit guarantees. This is similar in process and targeted the same issues as the Canadian government January request. On July 20th, the government of Canada asked to participate as a third party in these consultations requested by Brazil. As a result of this action, Canada did not proceed with its second request for the establishment of a dispute resolution panel; the strategy being that if Brazil does not obtain satisfactory results from the consultations with the U.S., both Canada and Brazil could facilitate the possible alignment of cases should Brazil also proceed with requesting a panel.

OCPA, as part of the CCP, will continue to work with the Canadian government to monitor the developments with respect to the WTO Doha negotiations, as well as the drafting of the new U.S. Farm Bill. CCP will also continue to provide support to the WTO consultative process as it develops further.

Antidumping/Countervailing Duty Case

The update provided at the 2007 OCPA Annual Meeting explained how CCP was continuing with the Federal Court of Appeal challenge of the Canadian International Trade Tribunal's (CITT) 'no injury' finding. As a point of clarification, the CITT was not arguing that dumping and subsidization (at the substantial amounts which the Canadian Border Services Agency calculated) wasn't occurring, but that Canadian corn producers as a result of the dumping and subsidizing were not materially injured. CCP disagreed strongly with this initial ruling and still does today despite the Federal Court of Appeal's decision on June 5th to dismiss CCP's application for judicial review of the CITT ruling.

The Federal Court of Appeal's ruling essentially means 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 re-consideration. In terms of possible next steps with the AD/CVD case, CCP had 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.

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.

As was mentioned earlier, CCP had until September 5th to decide on the option to challenge the judgment through a motion for leave to appeal to the Supreme Court of Canada. After deliberation at the board of directors of the three associations that comprise CCP, it was decided not to move the case forward by seeking leave. CCP issued the following news release on September 6:

Canadian Corn Producers

For Immediate Release
Thursday, September 6, 2007

Canadian Corn Producers To Focus Fight Against Trade-Distorting U.S. Corn Subsidies on Supporting Canada's WTO Challenge

Guelph, ON. Canadian Corn Producers (CCP) announced today that they will not be seeking leave to appeal to the Supreme Court of Canada the Federal Court of Appeal's June 5, 2007 decision to dismiss their application for judicial review of the Canadian International Trade Tribunal (CITT)'s May 2006 "no-injury" finding.

"We still believe that last year the CITT got it horribly wrong," said Ryan Brown, a spokesperson for CCP. "While the Federal Court's decision not to return the case to the CITT for reconsideration is disappointing and unfortunate, we have made the business decision not to take any further legal action at this time," added Mr. Brown.

"Often when one door closes another one opens. While we are surprised by the result from Canada's legal system, we are encouraged that within 3 days of the Federal Court's disappointing decision, the Canadian Government stepped up its fight at the World Trade Organization by requesting a WTO panel to investigate U.S. agricultural subsidies," said Benoit Legault, another spokesperson for CCP.

And Canada is not alone. Eight other WTO members (32 countries in all) have supported Canada's WTO challenge. In a June 8, 2007 Government of Canada press release explaining the rationale for Canada's WTO case, Minister of Agriculture and Agri-Food Canada Strahl said, "We are standing up for Canadian farmers by taking this concrete action against harmful U.S. agricultural subsidies." This sentiment was echoed by Minister of International Trade Emerson who said, "We remain concerned that the U.S. is providing agricultural subsidies in breach of its WTO commitments."

CCP is also encouraged that on July 11, 2007, Brazil took the first step toward its WTO challenge of U.S. agricultural subsidies. "We understand that Canada and Brazil will likely coordinate their efforts so that their challenges can be heard together," said Theresa Bergsma, another CCP spokesperson. "Many of the subsidies in the WTO challenges brought by Canada and Brazil are the same subsidies that CCP challenged last year in its domestic trade remedy complaint to the CITT," added Ms. Bergsma.

Supporting Canada using its international trade rights at the WTO to combat trade-distorting U.S. farm subsidies has been part of CCP's multi-pronged strategy for over two years. "With CCP's fair-trade resources now focused on Canada's WTO prong, we hope to do what we can to help Canada win the case. That said, as surprising and frustrating as the CITT's 2006 "no injury" finding has been, we will continue to do all we can to be sure that Canada applies its domestic trade remedy laws, enforces its rights under international trade agreements and provides Canadian farmers with relief from trade-distorting U.S. agricultural subsidies through effective WTO-compliant safety net programs," cautioned Mr. Brown.

Canadian Corn Producers (CCP) is a coalition of Canada's main corn producer associations - namely the Ontario Corn Producers' Association (OCPA), the Federation des producteurs de cultures commerciales du Quebec (FPCCQ), and the Manitoba Corn Growers' Association (MCGA). Together they represent over 26,000 corn farmers who last crop year produced 364 million bushels of grain corn (valued at roughly $CAD 1.4 billion).

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For more information, please contact:

Ryan Brown, General Manager
Ontario Corn Producers' Association
rbrown@ontariocorn.org
519-767-4135

or

Benoit Legault, Directeur - Général or
La fédération des producteurs de cultures commerciales du Québec
blegault@fpccq.qc.ca
450-679-0530

or

Theresa Bergsma, Secretary-Manager
Manitoba Corn Growers Association, Inc.
Theresa Bergsma
mbcorn@mts.net
204-745-6661

Spokespersons for Canadian Corn Producers

or

Bill Hearn, Partner
McMillan Binch Mendelsohn LLP
bill.hearn@mcmbm.com
416-865-7240
International Trade Law Counsel to Canadian Corn Producers

Ethanol Update

Since the Annual Meeting in March, the Collingwood Ethanol plant has started production, with expectations that they will be running at full capacity by the end of September, and the Integrated Grain Processors Cooperative (IGPC) held a ground breaking ceremony at their Aylmer location in August. We have had reports that progress is being made at other ethanol plant locations as well.

With the current and proposed ethanol plants (shown in the map below as of March 2007) provided by the Ontario Ministry of Agriculture, Food and Rural Affairs, it is estimated that Ontario may be producing as much as 1.93 billion litres of corn-based ethanol by 2009.

ecoAgriculture Biofuels Capital Initiative (ecoABC)

In April 2007, the federal Minister of Agriculture and Agri-Food launched the ecoAgriculture Biofuels Capital Initiative. This initiative, announced in December 2006 under the name of Capital Assistance Formation Program, is a federal $200 million four-year initiative that will provide repayable contributions of up to $25 million per project to help farmers overcome the challenges of raising the necessary capital for the construction or expansion of biofuel facilities. Additional information can be obtained through Agriculture and Agri-Food Canada.

ecoENERGY for Biofuels

The federal government announced ecoENERGY for Biofuels in July 2007. This initiative will invest $1.5 billion over 9 years to boost Canada's production of renewable fuels such as ethanol and biodiesel. It will make investment in production facilities more attractive by partially offsetting the risk associated with fluctuating feedstock and fuel prices. Additional information can be obtained through Agriculture and Agri-Food Canada.