[Congressional Record Volume 140, Number 28 (Tuesday, March 15, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 15, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                       WHEAT IMPORTS FROM CANADA

  Mr. CONRAD. Mr. President, I rise today to talk about an issue that 
has been of concern to the occupant of the Chair and other Senators who 
represent the great heartland of the country, the places which produce 
the vast majority of the wheat and the barley for the people of this 
country and also for export around the world.
  We have been faced with an absolute tidal flood of grain coming in 
from Canada. We have been faced with that tidal flood, not because the 
Canadians are more efficient, not because they are more productive, but 
because of defects in the Canadian Free-Trade Agreement.
  As the Chair knows so well, the numbers really are striking. This 
first chart shows what has happened with total wheat imports from 
Canada. If you go back before the Canadian Free-Trade Agreement was 
passed, you can see that there was virtually nothing coming in from 
Canada, virtually no product coming across our border. The reason for 
that was very simple: The United States is a major producer of wheat, 
we are an efficient producer of wheat, so there was no reason for large 
volumes of grain to be coming in from Canada.
  That changed dramatically with the passage of the Canadian Free-Trade 
Agreement. As you can see, wheat products have been coming in at a 
greater and greater rate, so that in the 1992-93 marketing year, we saw 
a really alarming increase, a five-fold increase over what we saw 
coming into this country in the 5 years preceding the passage of the 
Canadian Free-Trade Agreement. That is the outlook for total wheat 
imports.
  This next chart shows what has happened in durum. For those who are 
listening and perhaps are not familiar with various wheat products, 
durum is the kind of wheat that produces pasta--pasta, which is very 
popular all over the country, indeed, all over the world. Many people 
perhaps are not aware that some 82 percent of the durum produced in 
this country comes from our State--the State of the occupant of the 
chair and my State, the State of North Dakota. We are very proud of 
that: a high quality product, an outstanding product, produced largely 
in our home State of North Dakota.
  Again, if we go back and look at the pattern, we see that there was 
no durum coming into this country from Canada before the passage of the 
Canadian Free Trade Agreement in 1987.
  But look what has happened since that time: A dramatic increase year 
after year as a flood of Canadian durum has come into this country, 
displacing the durum produced in our country, taking markets away from 
our producers, and depressing U.S. prices. Again, this is happening not 
because the Canadians are more efficient, not because they are more 
productive, but because of serious defects in the Canadian Free-Trade 
Agreement.
  I want to now talk about what those defects are. We can very easily 
see the central problem that we are having, because just last week we 
received the results of an audit that was conducted to examine whether 
or not Canada is selling below their acquisition price into our market. 
That becomes a very, very critical question because of the terms of the 
Canadian Free Trade Agreement.
  Mr. President, as you know so well, the language in the agreement is 
explicit and clear. It says:

       Neither party, including any public entity that it 
     establishes or maintains, shall sell agricultural goods for 
     export to the territory of the other party at a price below 
     the acquisition price of the goods plus any storage, 
     handling, or other costs incurred by it with respect to those 
     goods.

  That language is about as clear as it can be. It would seem very 
obvious to anyone that neither party can sell into the other's market 
at a price below the acquisition price of the goods. But that is not 
what has happened.
  And the reason the language does not lead to the result to which it 
would appear to lead is because our Trade Representative at the time, 
Mr. Clayton Yeutter, negotiated a secret side deal in which he told our 
friends to the North--

       Full acquisition price doesn't really mean that. Instead, 
     we will create a new definition, we will leave out certain 
     things: We won't count the transportation payment that you 
     make; we won't count the final payment you make to your 
     farmers; we won't count that as part of the total acquisition 
     price.

  This leads to a very odd result. This next chart shows what would 
happen if you had the plain language of the agreement in force. It 
shows the true acquisition cost for Canadian durum in 1993-94 is about 
$4.98 a bushel. That includes a transportation subsidy that Canada has 
of some 45 cents a bushel; and it counts the final payment that is made 
to Canadian farmers by the Canadian Wheat Board of $2.21 a bushel. But 
under the terms of the agreement that was entered into by Mr. Yeutter, 
those first two things do not even count. They are not part of the 
calculation of the acquisition price. They do not count as part of the 
true acquisition cost for the Canadians.
  So instead, what we have for true acquisition price under the terms 
of the treaty, as negotiated by Mr. Yeutter, is this red line that only 
counts the initial payment to Canadian producers. Sales below the line 
are those which would be considered dumping at below cost. That is only 
$2.32 a bushel this year, Mr. President.
  People who are watching may be confused at this point and say, ``This 
is hard to understand. We have a treaty that says Canadians cannot dump 
below their true acquisition price into the United States market; we 
have a chart that shows very clearly their true acquisition cost is 
nearly $5 a bushel. Yet, under the terms of the agreement as negotiated 
by Mr. Yeutter what counts is only a price of $2.32 a bushel. How can 
that be?''
  That is a question we have been asking ourselves, those of us who are 
on the front lines of this economic war that is occurring, this 
economic battle in which this flood tide of Canadian grain is coming 
into our country.
  We are stuck with an unfair result. We are stuck with a result that 
gives these kinds of absurd outcomes, Mr. President. And now we have an 
audit covering the period from January 1989 through July 1992, and that 
audit of 105 sales shows that 3 were below the red line. Only 3 of the 
105, according to the secret side deal negotiated by Mr. Yeutter, would 
constitute dumping below cost into our market--only 3 of the 105. But 
look at the absurdity of this, Mr. President and colleagues.
  There were 3 of the 105 below what would be the $2.32 price today--
the Yeutter definition of acquisition price, but the rest of the sales 
average only 58 cents above what would be a $2.32 price today. That 
would be somewhere in this range here--well below the true acquisition 
cost of the Canadian Government.
  In other words, it is very clear that our competitors are dumping 
huge amounts of grain into this market, below their true acquisition 
cost. That constitutes unfair trade. No one who is a free trader would 
say that anyone should be able to dump below-cost goods into a 
competitor's marketplace. That is recognized by everyone as unfair 
trade. And that is precisely what this audit reveals.
  Our neighbors to the north say, ``Well, this audit proves that we are 
doing it the right way. This audit proves that we dumped below 
acquisition cost in only 3 occasions out of 105.''
  Mr. President, that assumes that you accept the definition of 
``acquisition cost'' that was negotiated by Mr. Yeutter, a definition 
that clearly is far below the true acquisition cost for the Canadian 
Wheat Board and the Canadian Government. And the result is our farmers 
are competing not against Canadian farmers but against the Canadian 
Government because the Government controls the Wheat Board and the 
Wheat board can set its own acquisition price. Our farmers are put in a 
position that is untenable, that is unacceptable; that must be changed.
  Mr. President, how can we get a different result when our Trade 
Representative went up and negotiated away the plain language of the 
agreement? How can we recover from a situation in which our Trade 
Representative, again, in a secret side deal, sold out the American 
producer? Because Mr. Clayton Yeutter took the plain language of the 
agreement, and, in a secret side deal, told the Canadians, ``This does 
not mean what it says. We are not going to really look at the full 
acquisition cost. We are only going to look at part of it. We are going 
to forget about your transportation subsidy; we are going to forget 
about your final payment''--the combination of which equals more than 
half the value of the product--``we are just going to forget about that 
in terms of a true acquisition cost.''
  What do we do to recover? Mr. President, we have found that in the 
1940's the United States imposed section 22 restrictions on wheat 
imports from Canada. That is 50 years ago. Many of us have been arguing 
that we ought to take action now to impose an emergency section 22 
against our Canadian neighbors to make them come to the table to 
resolve this problem. An emergency section 22 simply means that you 
could put limits on what is coming into this country; we could place 
limits on unfair imports from Canada.
  Mr. President, as you so well know, we have had difficulty convincing 
the administration to take that action. We have now discovered the 
administration does not have to file a new section 22 action. We do not 
need a new action. We have an action that was approved 50 years ago. 
However, in 1974, when there were virtually no imports of wheat and 
wheat products, the ITC recommended that the section 22 restriction on 
wheat and wheat products be suspended for 1 year--for 1 year. 
Unfortunately, the President instead suspended that section 22 action 
indefinitely--and it has been suspended for 20 years now.
  But now, Mr. President, the facts have changed. Wheat is flooding 
into our market and interfering with our farm programs. What we ought 
to do is unsuspend that section 22 action and impose this limitation on 
our neighbors to the north so that we can get them to come to the table 
to fix what is clearly an egregious mistake in the so-called Canadian 
Free-Trade Agreement.
  Mr. President, unsuspending an existing section 22 would have many 
advantages. It would have significant advantages with respect to the 
new rules under the GATT agreement. It would have significant 
advantages because the restrictions that are in place in that existing 
section 22 that has been suspended are more stringent than any we are 
likely to get under a new Section 22 action.
  Mr. President, I am making these remarks today because a number of 
us, including the occupant of the chair--the Senator from North 
Dakota--and I, will be meeting tomorrow with representatives of the 
administration with respect to the administration's response to our 
call to take immediate action.
  Mr. President, we believe we have found a new door for the 
administration to open, to walk through, and to take our trading 
partners with them. We can go back to the section 22 that is in place 
but that has been suspended; we can unsuspend it, and we can put 
enormous pressure on our friends to the north so that they are willing 
to renegotiate an agreement that is clearly unfair.
  I hope the administration is listening. I hope our friends to the 
north are listening. There simply must be a resolution of this problem 
before we can open discussions about how we coordinate our farm 
policies, so that we are not engaged in this beggar-thy-neighbor policy 
in which they cut price; we cut price; and we all wind up with less 
money.
  That is the path we are on today. We should not stay on that path. We 
should get off it. We should get off it in a cooperative and collegial 
way that would be in the best interests of both countries. We cannot do 
that until we have resolved this difficulty.
  Mr. President, I am hopeful we are able to achieve that kind of 
breakthrough in the coming days.
  I thank the Chair and I yield the floor.
  Mr. ROCKEFELLER addressed the Chair.
  The PRESIDING OFFICER (Mrs. Murray). The Chair recognizes the Senator 
from West Virginia [Mr. Rockefeller].
  Mr. ROCKEFELLER. I thank the Presiding Officer.

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