Initiation of Section 302 Investigation and Request for Public Comment: Wheat Trading Practices of the Canadian Wheat Board

AGENCY:

Office of the United States Trade Representative.

ACTION:

Notice of initiation of investigation and request for comments.

SUMMARY:

The United States Trade Representative (USTR) has initiated an investigation under Chapter 1 of Title III of the Trade Act of 1974 with respect to the wheat trading practices of the Canadian Wheat Board. The USTR invites written comments from the public on the matters being investigated, the methods to be used to conduct the investigation, and the determinations to be made pursuant to the investigation.

DATES:

This investigation was initiated on October 23, 2000. Written comments from the public are due on or before noon on Wednesday, December 20, 2000.

ADDRESSES:

Office of the United States Trade Representative, 600 17th Street NW., Washington, DC 20508.

FOR FURTHER INFORMATION CONTACT:

Sharon Bomer Lauritsen, Director of Agricultural Affairs, (202) 395-6127, or William Busis, Associate General Counsel, (202) 395-3150. For information concerning procedures for submitting public comments, please contact Sybia Harrison, Staff Assistant to the Section 301 Committee, (202) 395-3419.

SUPPLEMENTARY INFORMATION:

The Allegations in the Petition

On September 8, 2000, the North Dakota Wheat Commission filed a petition pursuant to section 302(a) of the Trade Act of 1974, as amended (the Trade Act) (19 U.S.C. 2412(a)), alleging that certain wheat trading practices of the Government of Canada and the Canadian Wheat Board (CWB) are unreasonable, and that such practices burden or restrict U.S. commerce. The petitioner filed additional explanatory materials on September 21, 2000, September 27, 2000, October 5, 2000, and October 10, 2000.

The petition alleges that the CWB is a state-trading enterprise with sole control over the purchase and export of western Canadian wheat for human consumption. Certain elements of the wheat trading system established by the Government of Canada allegedly provide the CWB with pricing flexibility not available to private wheat traders. According to the petition, those elements include: (1) CWB monopoly authority under Canadian federal law to purchase western Canadian wheat and to control the international marketing of western Canadian wheat; (ii) a purchasing system under which Canadian farmers are required to accept initial CWB payments based on only a portion of the price that the CWB anticipates it can obtain for the grain, with any subsequent payments to be received later in the marketing year; (iii) the provision by the Government of Canada of a full financial guarantee of the CWB's initial payments to Canadian farmers; (iv) special, preferential rail transportation arrangements which are made available to the CWB; and (v) a varietal control system which limits any foreign competition in the domestic Canadian wheat market. The petition claims that although the CWB operates in secrecy and information on the CWB's trading practices is difficult to obtain, available information indicates that the CWB exploits its pricing flexibility by engaging in certain allegedly unreasonable wheat trading practices. According to the petition, such practices include standing offers by the CWB to undersell U.S. wheat in certain third-country markets, and the targeting by the CWB of particular markets by consistently offering to sell wheat at less than the market value. The petition asserts that such practices have harmed U.S. wheat farmers by causing lost U.S. market share in the United States and particular third-country markets, by reducing the sales prices obtained by U.S. wheat farmers, and by causing a rise in unsold wheat stocks in the United States.

The petitioner does not allege that acts, policies, and practices of the Government of Canada or the Canadian Wheat Board are in violation of, or inconsistent with, the international legal rights of the United States.

Section 301

Section 302(a) of the Trade Act authorizes the USTR to initiate an investigation under chapter 1 of Title III of the Trade Act (commonly referred to as “section 301”) in response to the filing of a petition pursuant to section 302(a)(1). Matters actionable under section 301 include, inter alia, acts, policies, and practices of a foreign country that are unjustifiable, unreasonable, or discriminatory and burden or restrict U.S. commerce. An act, policy or practice is unjustifiable if it is in violation of, or inconsistent with the international legal rights of the United States. An act, policy or practice is unreasonable if the act, policy or practice, while not necessarily in violation of, or inconsistent with, the international legal rights of the United States, is otherwise unfair or inequitable.

Initiation of Investigation and Consultations

On October 23, 2000, the USTR determined to initiate an investigation to determine whether certain acts, policies or practices of the Government of Canada and the Canadian Wheat Board with respect to wheat trading are unreasonable and burden or restrict U.S. commerce and are, therefore, actionable under section 301.

Pursuant to section 303(a) of the Trade Act, on October 23, 2000 USTR requested consultations with the Government of Canada concerning the issues under investigation. USTR will seek information and advice from the petitioner and appropriate representatives provided for under section 135 of the Trade Act in preparing the U.S. presentations for such consultations.

Public Comment: Requirements for Submissions

Interested persons are invited to submit written comments concerning the issues raised in the petition and any other submissions to USTR in this investigation. In particular, comments are invited regarding (i) the acts, policies and practices of the Government of Canada and the Canadian Wheat Board that are the subject of this investigation; (ii) the amount of burden or restriction on U.S. commerce caused by these acts, policies and practices; (iii) the methods to be used to conduct the investigation; (iv) the determinations required under section 304 of the Trade Act; and (v) appropriate action under section 301 which could be taken in response.

Comments must be filed in accordance with the requirements set forth in 15 CFR 2006.8(b) and must be filed on or before noon on Wednesday, December 20, 2000. Comments must be in English and provided in twenty copies to: Sybia Harrison, Staff Assistant to the Section 301 Committee, Room 223, Office of the U.S. Trade Representative, 600 17th Street, NW., Washington, DC 20508.

Comments will be placed in a file (Docket 301-120) open to public inspection pursuant to 15 CFR 2006.13, except confidential business information exempt from public inspection in accordance with 15 CFR 2006.15. Confidential business information submitted in accordance with 15 CFR 2006.15 must be clearly marked “BUSINESS CONFIDENTIAL” in a contrasting color ink at the top of each page on each of 20 copies, and must be accompanied by a nonconfidential summary of the confidential information. The nonconfidential summary shall be placed in the file that is open to public inspection. Copies of the public version of the petition and other relevant documents are available for public inspection in the USTR Reading Room. An appointment to review the docket (Docket No. 301-120) may be made by calling Brenda Webb (202) 395-6186. The USTR Reading Room is open to the public from 9:30 a.m. to 12 noon and 1:00 p.m. to 4:00 p.m., Monday through Friday, and is located in Room 101.