[Congressional Record Volume 148, Number 1 (Wednesday, January 23, 2002)]
[Extensions of Remarks]
[Page E14]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                          CANADIAN WHEAT BOARD

                                 ______
                                 

                           HON. BOB SCHAFFER

                              of colorado

                    in the house of representatives

                      Wednesday, January 23, 2002

  Mr. SCHAFFER. Mr. Speaker, I rise today regarding the Canadian Wheat 
Board (CWB) and the ongoing investigation of its policies and practices 
under Section 301 of the Trade Act of 1974. The administration should 
aggressively pursue this investigation and work toward resolving the 
longstanding trade problem with Canada. This House should insist on 
fair trade from our neighbor to the north.
  According to the U.S. International Trade Commission (ITC) report 
released on Dec. 21, 2001, the CWB is empowered with both monopsony and 
monopoly power in the marketing of Canadian wheat. Unlike the U.S., 
where there are many producer cooperatives and grain traders to buy 
wheat, the CWB is the sole buyer of Canadian wheat in Canada. The sheer 
volume of wheat available through the CWB allows it to dominate the 
Durum wheat market, where it has all but ended U.S. participation in 
the futures market of Durum wheat. No single U.S. company trading in 
Durum wheat can afford to take the risks that the behemoth CWB can 
take.
  The ITC report also concludes that the CWB also enjoys Canadian 
government approval and backing of its borrowing and other financing, 
thus reducing the CWB's costs and insulating it from commercial risks 
faced by large and small U.S. grain traders. The Canadian government 
also provided CWB with a cap on proceeds railways can receive for 
shipping CWB grain; shipments to the eastern and western ports for 
overseas export are below comparable commercial rates. In the U.S., 
railways are deregulated and shippers of grain are charged the same 
commercial freight costs as anyone else. Furthermore, producers in 
Canada are forced to pay a flat location-based rate for shipment of 
their wheat regardless of whether it actually costs the CWB that amount 
or not. Any money made from these ``phantom'' charges by the CWB can 
then be used as a bargaining chip in trading wheat with the U.S. or 
other countries.
  Finally, the ITC report concludes that the Canadian trade policies 
and programs, particularly the varietal registration program and end-
use certificates for U.S. wheat, have been reported by U.S. exporters 
as adversely affecting the level of U.S. wheat exports to Canada. In 
2000/01 the U.S. imported $212 million worth of wheat from Canada, 
while it exported only $50,000 worth of wheat to Canada. The Wheat 
Access Facilitation Program, which was implemented by the U.S. and 
Canada as part of the Record of Understanding in 1998 to facilitate 
exports of U.S. wheat directly to Canadian elevators, is no longer in 
use.
  The report makes clear that the CWB and the Canadian government 
continue to use trade-distorting practices. The CWB's monopoly is 
unfair to our nation's wheat farmers, and the administration should 
seek remedies under Section 301 and hold the CWB accountable for its 
unfair trade practices. This House should insist that Canada halt the 
secretive and harmful behavior of the CWB and act as a good neighbor by 
practicing fair trade.

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