Proceedings of the Standing Senate Committee on
Foreign Affairs
Issue 16 - Evidence
OTTAWA, Wednesday, May 14, 2003
The Standing Senate Committee on Foreign Affairs met this day at 3:45 p.m. to examine and report on the Canada- United States of America trade relationship and on the Canada-Mexico trade relationship.
Senator Peter A. Stollery (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, the importance of this meeting is that we have on record the response to observations about the Canadian Wheat Board made by Mr. William Lash, U.S. Assistant Secretary of Commerce.
As we are in the final stages of completing our report and recommendations on some of the trade disputes between Canada and the U.S., we thought it would be appropriate, Minister Goodale, if you gave us your thoughts in response to the observations of Mr. Lash, who we met with in Washington. It was a good meeting, I might add.
Please proceed Mr. Goodale.
The Honourable Ralph Goodale, P.C., M.P., Minister of Public Works and Government Services and Minister responsible for the Canadian Wheat Board: Mr. Chairman, thank you very much for the opportunity to appear on a very important subject matter, that is, the Canada-U.S. grain trading relationship.
First, I would want to note, as I am sure Mr. Lash would want to note, the huge value of overall Canada-U.S. trade in all goods and services that flow back and forth across our mutual border. On a two-way basis, it is worth close to $2 billion per day. From the Canadian point of view, our exports amount to about 45 per cent of our GDP, and of those exports, about 85 per cent go to the United States. Obviously, this is hugely important and it is important both ways for both countries.
Specifically in relation to agriculture and agri-food, the annual value of our two-way trade is in the neighbourhood of $30 million per year. It is, roughly speaking, in balance both ways. It ebbs and flows from year to year, but in macro terms it is roughly in balance. It is growing on a year-over-year basis.
For the most part, that agricultural trade flows back and forth across our common border trouble-free except for various obvious problem areas, one of which is the subject of your discussion tonight — the wheat trade.
My home town in southern Saskatchewan is a few miles north of the Montana and North Dakota borders. In a coffee shop in Minot, I hear the rumour that the Canadian Wheat Board is heavily subsidized. In Wolf Point, Montana, there is an assertion that the Canadian Wheat Board undercuts U.S. prices and is therefore dumping. In Bismarck, there is the anecdote about Canadian grain flooding into the United States or, depending on the season, it might be an avalanche into the United States, while at the same time, the anecdote goes, not a bushel of American grain can move north into Canada. Each one of those four allegations — subsidization, dumping, flooding and no reciprocity — is factually wrong. I repeat: They are not true. However, they get repeated and are clung to as if they are gospel, creating anger and bitterness on both sides of border and wasting time, effort and money chasing a false bogeyman, while the cancer that is really damaging world grain markets goes untreated and grows more malignant. We need to clear away the myths. A healthy and mutually satisfying bilateral relationship in trade cannot be sustained on a foundation of anecdotes and rumours. It must be based on facts.
What are the facts about Canadian grain sales into the United States? The facts have been investigated and reported upon exhaustively over the last 10 to 15 years by the United States International Trade Commission in 1990, 1994 and 2001; by the United States General Accounting Office in 1992, 1996, and 1998; by a binational panel and then by an independent international auditor under the Canada-U.S. Free Trade Agreement beginning in 1993 and then in 1994; by the Economic Research Service of the United States Department of Agriculture in 1999; and again by the U.S. Department of Commerce in 1999. Add that all together and we have 10 previous detailed, excruciating U.S. examinations and 10 consecutive favourable report cards for Canada, each confirming that the Canadian Wheat Board is, in fact, a fair trading entity operating within the rules of the NAFTA and the WTO.
You can appreciate, I am sure, the frustration that is caused by the most recent U.S. actions against Canadian wheat, begun last year and continuing this year, alleging both subsidization and dumping, being pursued by the U.S. Department of Commerce and the U.S. International Trade Commission.
Another source of evidence that tends to vindicate the Canadian Wheat Board and Canadian farmers in world markets can be found in an independent survey of global grain buyers that was conducted in the 1990s. It looked through the eyes of customers at Canadian grain marketing performance in comparison to American, European, Australian, and Argentinian supplier competition. The survey found the highest ratings for Canada, leading the pack in the world on such factors as intrinsic quality, cleanliness, consistency, technical support, dependability, contract execution and customer service.
Our customers' biggest criticism of Canada is that the Canadian Wheat Board wants prices that are too high. I repeat: too high, not too low. That is hardly the reputation of a marketer that is undercutting the marketplace.
By contrast, those same global grain buyers rank the United States, not Canada, as the leading source of lower priced grain. The Wheat Board seeks to market Canadian wheat and barley as a differentiated high-quality product tailored to specific customer needs rather than just homogeneous bulk commodities. Our target is the top end of the market, not the bottom, especially in today's market circumstances.
To drive home this point, let me quote a recent comment by Mr. John Gilchrist, the chair of North American Millers Association, based in Washington, D.C. His organization represents most of the major milling operations in the United States. On May 2, 2003, in response to the most recent countervailing duty and anti-dumping proceedings of the U.S. administration, Mr. Gilchrist said:
Alleging dumping at this time is just silly. Wheat stocks are at or near the lowest levels in decades and in some cases the smallest since the late 1940s when wheat stocks were drawn down as a result of U.S. food aid to post- war Europe. But we will, of course, cooperate fully by providing our data to government on government request. We are confident that when the data is analyzed, the administration...
— that would be the U.S. administration —
...can only draw one conclusion, and that is wheat is traded fairly in the North American market. After all, the U.S. International Trade Commission reported last year that U.S. millers had to pay higher prices, not lower, for Canadian wheat than for U.S. wheat in 59 out of the 60 months that were studied.
That is the view of the most important association of U.S. grain buyers, and they have repeated it over and over again.
If you look back at the evidence that was presented to either the U.S. Department of Commerce or the U.S. International Trade Commission over the last couple of years on this topic, from American millers and from American pasta producers, you will find similar sentiments to those expressed by Mr. Gilchrist. Let me read several of them into the record. These are individual American milling companies or pasta processing companies:
At no time has there been a situation where I have been offered wheat at a discount. In fact, on several occasions I have willingly paid a premium.
Quote:
When we worked with the Canadian Wheat Board, these are professionals, sophisticated marketers of grain. They are not giving anything away. If they are dumping into the U.S. market, then I am the worst pasta durham buyer in the country because we have never seen values below Minneapolis values on a head-to-head comparison, never.
Quote:
Why do we and other millers buy Canadian wheat? One is customer perception. There is perception of Canadian wheat having qualities that may be a reality. The second is a higher degree of consistency.
Another quote:
The U.S. does not produce enough quality durham to support our needs. We absolutely need Canadian durham. We buy for quality when we go to Canada, and Canada in turn is not dumping those values. We are here to tell you this.
Finally:
What we found is, in four or five characteristics of quality, Canada is consistently higher. It is very consistent. It is a very steady supplier of grain, which is what we need for our markets.
Those are quotes from a variety of people who represent about 90 per cent of the U.S. milling industry and more than half of the total pasta production in the United States. They want Canadian grain. They buy Canadian grain and they are prepared to pay a premium for it because they need it for its quality. It is not subsidized and it is not dumped.
On the Wheat Board fundamentals, there is no great mystery. The Wheat Board functions largely like a large marketing cooperative on behalf of farmers. It is not a supply management agency. It is financed by farmers themselves out of the proceeds of what it sells. After all handling, transportation and marketing costs have been deducted, the net returns are passed through to farmers, and farmers make their individual cropping decisions based upon direct market signals without subsidization. Those signals lately, as I am sure you know, have not been particularly happy ones. They have reflected the global supply situation, some wheat-buying power in certain traditional markets, and the depressing impact of international trade distortions, flowing largely from European subsidies and, with all due respect, also from American subsidies.
Canada completely eliminated all our grain export subsidies back in 1995 when our former rail transportation program was terminated. Since then, we have been out of the export subsidy game lock, stock and barrel. We wish we could say the rest of the world was too, but they are not, unfortunately.
Without subsidization, a Canadian seller of grain has only one overriding objective and that is to get the best possible market price, not to leave any value on the table. The CWB has no interest in depressing prices anywhere. All wheat sold by the Canadian Wheat Board into the United States is effectively priced off U.S. commodity markets, primarily the Minneapolis Grain Exchange, as was indicated in the quotations that I read to you earlier.
Let me deal for a moment with the criticism that the Canadian Wheat Board is not as transparent as its private sector competitors. It is, in fact, fully audited financially every year by the well-known and much-respected international accounting firm of Deloitte and Touche. Full audit reports appear publicly every year in each Canadian Wheat Board annual report. I table that report in Parliament, but it is available publicly, nationally and internationally.
When was the last time you saw the publication of a fully audited financial statement for any other grain trader's revenues and costs? When was the last time you saw any of the private grain companies providing the kind of detail publicly that the Canadian Wheat Board is required to provide?
When was the last time you called any of them before your committee or any other committee of the Senate or the House of Commons? If you call, or if a member of the other place calls, to hear the Canadian Wheat Board in a setting like this, the Canadian Wheat Board will come and respond to your questions. The others will not.
The Canadian Wheat Board, in fact, discloses more information about its operations than any of its commercial competitors, the largest of which are privately held and disclose little or nothing.
It is also important to note that in terms of governance, the Canadian Wheat Board is a very different organization today than it was four years ago. We amended the applicable law, effective January 1, 1999; the most significant changes in half a century. Specifically, with respect to the United States, under that law, the Canadian Wheat Board is now explicitly obliged by the law of Canada to adhere to the principles of NAFTA.
However, the new law does more than just that. The Canadian Wheat Board is no longer a government Crown corporation. A lot of people think it is. It is not. In our parliamentary language, it is no longer an agent of Her Majesty. The old government system of a government appointed set of commissioners is gone. For the first time in its history, the Canadian Wheat Board is run by a modern, corporate style 15-member board of directors, and 10 of them, a full two thirds controlling majority, are farmers elected directly by other farmers. Of the other five directors, they are not government officials. They are drawn from the private sector, much like outside directors are drawn from other corporations, reflecting a broad range of expertise in the grain trade, the legal profession, the oil industry, the mining business, international finance and so forth. All of the powers of the Canadian Wheat Board are vested in the hands of its directors with, obviously, new lines of direct accountability to farmers because of the electoral system.
The new law also provides the Wheat Board with more market-oriented flexibility. For example, the directors may authorize cash trading for wheat and barley, different pooling periods, early cash payouts, negotiable producer certificates and new fixed-price contracts. These are among the innovations we have introduced in the last few years. These are among the facts that need to be taken into account in the grain trade relationship between Canada and the United States: the long record of studies and investigations which have repeatedly vindicated the Canadian Wheat Board; the absence of trade distorting subsidization in Canada; Canadian Wheat Board's focus on the high end, not the low end of the market; its new governance system; its public accountability; and, its legal obligation to adhere to trade agreements.
Also factually important is the volume of grain shipments involved here between Canada and the United States. Roughly speaking, as a rule of thumb, the United States annual wheat production averages in the neighbourhood of 65 million tons. On the Canadian side, ours is less than half that. It is about 20 to 25 million tons. The United States typically exports 45 per cent of its production in the neighbourhood of 30 million tons or so. We must export more than 70 per cent of our production in the neighbourhood of 18 million tons.
The Canadian Wheat Board conducts business in 70 different markets worldwide, most of them in Asia and Latin America. Only a small volume is sold into the United States, and that constitutes only a tiny fraction of either U.S. production or consumption. I mention this to underscore that you could not fairly describe this relatively small Canadian volume as any kind of ``flood'' or ``avalanche,'' as it is sometimes characterized. It is a modest volume, and it moves quite properly in response to the normal ebbs and flows of supply and demand and, particularly, quality specifications.
The simple fact that our Canadian Wheat Board system is different from the American one does not mean that it is wrong or unfair or antiquated, as some might say, nor does it means that it or other systems cannot operate effectively under equivalent international disciplines under the trade regimes we have in place. The structure of a particular trading entity is surely not the crucial point, nor is ideology the crucial point. Actual market behaviour is the key issue. We are ready to have a rational discussion with countries in the world about so-called state trading enterprises, but it must be based upon real facts, not just often-repeated myths. It must not put marketers like the CWB at an unfair advantage compared to other types of marketers who exercise similar or even greater and more secretive market power.
I have tried to touch upon many of the rumours, myths and allegations we hear all too often about the Canadian grain trade and the Canadian Wheat Board: Subsidization, no; dumping, no; a lack of transparency compared to others in the business, no; and a flood of grain flowing south to injure the U.S. market, no.
What about that one other U.S. complaint about reciprocity that U.S. grain never, ever flows north into Canada — wrong, again. It defies all the uninformed anecdotes I know, but U.S. grain does indeed flow north into Canada — corn, barley, wheat on occasion, and others. More importantly, Canada is also a big customer for U.S. grain-based value-added food products: pasta, breakfast cereals, bakery products — we are the biggest export market for American sales of these goods.
To put the relative positioning into some proper overall context, Canadians spend on average about $220 per person per year on U.S. agricultural products. Americans spend, on average, about $30 per person per year on Canadian agricultural products. On a per capita basis, that is a sevenfold advantage in favour of the United States.
Let me provide one further rather telling comparison having to do with publicly funded support programs in both of our countries. Using as an independent source of information, the Organization for Economic Cooperation and Development, the OECD, the level of government support programs provided to wheat producers in the United States in the year 2001 was more than three times higher than that available in Canada. Given that hard and undeniable fact, one can appreciate Canadian frustration at the repeated harassment of Canadian farmers and their marketing systems by U.S. lobbyists and their lawyers. It is not just unseemly, it is also truly damaging, not just to Canada, but even more seriously to struggling farmers living in abject poverty in lesser-developed countries around the world. The gross level of subsidization in the United States and also in the EU depresses commercial grain markets worldwide, and it also depresses the life chances of the most needy and desperate people on the face of this earth. They are condemned to less than a subsistence existence, while American and European agricultural subsidies remain where they are today.
The Canadian Wheat Board is not the real problem for the U.S. administration or for U.S. farmers. The true problem for all of us is trade-distorting government programs. Rather than hammering away at Canada, the U.S. government would be more successful, and I suggest, it would be far more appropriate to join forces with Canada in tackling the issue of gross subsidization, improving markets for farmers everywhere and also, if I may say so, by tackling with Canadians the challenges of African development to help put a real dent in that most disgraceful statistic that 800 million people are going to bed hungry tonight, while we have this rather arcane argument about marketing systems in North America.
Senator Austin: Minister, thank for you presentation, and I accept without qualification the case that you have presented. I would like to ask a few questions just to develop the process that is going on.
I understand that there was an interim ruling and that a final ruling — is it by the International Trade Commission in the United States — is expected in the late summer? Could you give us an outline of the process by which the Americans are moving?
Mr. Goodale: Yes, Mr. Chairman, I would be happy to do that.
We are now dealing with the end game of a process that began several years ago as a result of a complaint that was filed by the North Dakota Wheat Commission with the U.S. administration alleging a whole range of things, many of which I referred to in my remarks tonight. That was investigated thoroughly by the U.S. ITC. The U.S. ITC concluded in 2001 that there was no evidence before it; no case had been made on the part of the North Dakota petitioners to justify any action at that time by the U.S. administration.
At the same time, wishing I suppose to show some kind of support to their domestic wheat producers, the U.S. administration undertook to further look into the possibility of a countervailing duty proceeding that would be alleging subsidization by way of government policy, and therefore requesting a countervailing duty to be imposed. The U.S. administration also undertook an anti-dumping investigation alleging in this case, not government conduct causing the problem, but under-pricing, if you will, by the Canadian Wheat Board itself.
Earlier this spring there was a preliminary finding in the case of the countervailing duty proceeding where the U.S. ITC proposed a preliminary duty of 3.94 per cent on both spring wheat and durham. The North Dakotans and others had been asking for 30, 40, 50 per cent, so after all the investigative work the American arithmetic came out at 3.94. That is relatively small compared to what the original request was. That was in the case of CVD, countervailing duty, in response to subsidization. Obviously on that arithmetic they found, in their view, a certain amount of subsidization but obviously a relatively small amount.
About two or three weeks ago we had the preliminary finding in the case of the dumping allegations, and in that case they imposed a preliminary duty of about 6.18 per cent in the case of spring wheat, and roughly 8.18 per cent in the case of durham. If you add the two together, the countervailing duty that was applied earlier and the anti-dumping duty that was applied a couple of weeks ago, the duty now that applies on spring wheat is roughly 10 per cent and the duty that applies on durham is roughly 12 per cent.
Those are preliminary findings. The U.S. ITC-Department of Commerce process will determine whether or not they should be made final in about the middle of July. Then there is an important consideration that needs to be settled and we would expect it to be settled sometime during the month of August as to whether or not, these findings notwithstanding, there has been actual injury in the U.S. market. We would of course argue strongly, number one, that these duties should not be made final, and second, even if they are, that there is no valid basis upon which to find injury.
We expect a decision on finality in July and on injury in August. In the meantime, we, and hopefully our good customers in the United States, will be making the strong argument that both those findings when they come in July and August should be in the negative, not the affirmative.
Senator Austin: On the assumption only that they are in the negative and there is a final ruling in both countervail and dumping, and/or, is there next a NAFTA process or a WTO process that you believe should be followed by the Wheat Board?
Mr. Goodale: We are keeping all our options open and actively alive under both the NAFTA and the WTO. There are WTO proceedings that are actually under way also at the behest of the United States. There is, of course, the Doha round that is considering the new agreement on agriculture. It is, as you know, a round that has been a little bit sluggish in gaining momentum and is not far along. Part of the reason why it is not far along is that there is not much agreement in the world on agriculture. Some of the preliminary drafts of texts have, we think, gone way beyond the agreed-upon terms of reference for Doha in the way, for example, that they attempt to attack an institution like the Canadian Wheat Board. We think that what is being attempted there in some of the draft texts supported by the United States and others is just outside the mandate of what Doha has agreed to pursue. We will see how that unfolds, but we will obviously vigorously defend our interests there.
More specifically, I said when the ITC made its essentially negative finding in 2001, the U.S. administration said, ``Okay, there is not a basis upon which we can proceed at this time, but we will look at anti-dump and at countervail.'' They said also at the same time that they would see if there was some basis upon which they could have a dispute settlement panel before the WTO, and that process is one that is in the preliminary stage of getting launched.
They are going after us with CVD, they are going after us with anti-dump and they are going after us with a dispute settlement panel at the WTO. It is a sort of battle on all fronts on an argument that we believe is fundamentally misplaced, especially coming from the United States which, depending on how you look at it, is either the first or the second biggest subsidizer in the world.
Senator Austin: With respect to the tariffs collected on the countervail, is it your understanding that the monies will be held pending the outcome of either NAFTA or WTO processes, or do you see part of the reason for the claim by the North Dakota farmers and their institution an attempt to use the Byrd amendment to see cash distributed to them?
Mr. Goodale: I do not know if this is related to the Byrd amendment or not, Senator Austin. I hope not. If there is a finding that there is no injury in August then anything accumulated at that point must be paid back. We went through a rather painful process a few years ago, as you may recall, on hogs and a claim that the stabilization program that had existed with respect to hogs was a form of subsidy. Huge dollar values were collected in countervailing duties at that time. Eventually we were successful in persuading the powers that be that we were right and the duty should be paid back. Ultimately they were, but it took an awfully long time. The most important thing we can do is to try and avoid the problem in the first place.
Senator Di Nino: Mr. Minister, your eloquent presentation forcefully put on the record positions that obviously we in Canada are quite familiar with, at least mainly familiar with. Hopefully we can distribute your thoughts to a larger audience that will set the record straight. I am quite impressed with your presentation and I have a couple of questions.
First, we heard that during hearings on this issue over the past number of weeks that we in Canada may not be doing enough to promote ourselves in the U.S. We also may not be doing enough to set the record straight in the right places in the U.S., particularly when, as you so eloquently outlined, we have some stakeholders, U.S. partners if you wish, those organizations that purchase our products.
Do you have any comment on that? Is that criticism valid and should we be doing something about it?
Mr. Goodale: That is a valid concern, senator. Perhaps it is our rather passive Canadian nature. We tend to spring into action in response to a crisis but then get a bit dozy between crises. We must recognize that this trading relationship with the United States is huge. It is incredibly valuable, both to us and to them, as is our broader relationship here in the North American continent. We need to work at this, not just when there are trouble spots but all the time so that we better understand each other. We have to work at it at all levels, the most senior levels of government in Canada and the United States, but also states and provinces, farm organizations on opposite sides of the border, and business people who flow back and forth across the border.
One would hope that might happen spontaneously, but the fact is it does not. We must find the opportunities for Canadians and Americans to communicate better with each other, to fully understand the facts, to get rid of some of those silly myths and anecdotes that persist. They are so factually erroneous, they are almost laughable on the Canadian side but yet passionately believed on the American side.
I remember addressing an organization called the North American Wheat Growers in the United States a few years ago. It is the biggest farm organization representing wheat producers in the U.S. They were taking me to task heavily for a particular Canadian subsidy program that they did not like and they thought it was the root of all evil. As the questioning kept going, I finally identified what program they were talking about. It was the Western Grain Transportation Act. When I met with them, it was about 1997. We abolished that legislation in 1995. However, this largest, most sophisticated representative organization of American wheat growers did not know it. They thought the old freight rate subsidies were still in place and actively being paid by Canada.
I had a devil of a time persuading them we had repealed the act, that the program was gone and there was no subsidization of freight rates, period. They probably still believe today — if you read some of the petitions filed — that there must be a hidden subsidy in here somewhere.
We have to work at improving the level of communication and the level of understanding and rapport with our American colleagues. We should not regard them as our problem and they should not regard us as their problem.
The real problem is international subsidies. The real culprit is primarily Europe, but the Americans almost match them dollar for dollar. The Americans have some cleaning up to do on the subsidization, too.
We would both get further if, rather than battering each other over the head across the 49th parallel, we join forces on this issue of the grain trade in the world, and have other allies like Australia and Argentina, other countries that were or are in the Cairns Group, to go after the real culprit when it comes to subsidization, and that is the European Union.
Senator Di Nino: There are other facts that we must make known to our American neighbours, our best friends, as you said. There is much ignorance in the U.S. about the benefit of Canada and Canadians to the U.S. As an example it comes mostly as a surprise to people when you tell them that 38 states look to Canada as their biggest export customer and that Canada is the American's best export market, as well as being its largest provider of energy. That is something of which they are unaware.
Mr. Goodale: There was $50 billion worth of energy last year.
Senator Di Nino: Have you any more specific suggestions to help us in preparing our report? As you know, in the last while there has been a small number of grain farmers who wish to have the ability to trade directly with other countries, principally the U.S., et cetera, which has perhaps muddied the waters as well.
Mr. Goodale: On your latter point, clearly, there is some difference of opinion within Canada about farmers' preferences when it comes to marketing systems. Our whole point when we amended the Canadian Wheat Board Act back in 1998, and the amendments took effect on January 1, 1999, was to transfer the vast bulk of decision-making authority about the mandate and operating procedures of the Canadian Wheat Board from governments, politicians and bureaucrats, into the hands of farmers themselves. If you will, this was to democratize the Canadian Wheat Board to make it more accountable, flexible and to give it a modern kind of corporate governance. Thus, we abolished the old commissioner system. The Wheat Board used to be run by five commissioners, appointed entirely by the Government of Canada and entirely accountable to the Government of Canada. That system is gone. They now have a board of directors which numbers 15. Out of that 15, 10 are elected directly by farmers on four-year terms. It is staggered so that there is an election every two years. There was one last fall, which was very well participated in. Five of the producer directors were elected or re-elected as the case may be.
This has fundamentally changed the Canadian Wheat Board so that all the power and authority of the board is now not in the hands of government but in the hands of farmers. If farmers in Canada wish to change their marketing system, they are perfectly entitled to do so by the democratic means that are now in their hands.
People will sometimes observe that farmers in Ontario have some different marketing flexibilities under the Ontario Wheat Producers' Marketing Board that are not available under the Canadian Wheat Board. Those marketing flexibilities were achieved in Ontario by the democratic decisions of the directors of the Ontario Wheat Producers' Marketing Board. Since we changed the law that governs the Canadian Wheat Board, farmers in Western Canada now have that same democratic authority, if they wish to exercise that authority.
My feeling is that rather than having these decisions driven largely politically, it is far better to have them driven by farmers themselves. That is why we democratized the legislation in 1999.
If farmers want a change, that is up to them. Their wishes in that regard ought to be respected. What I am pleased with is that the majority of those farmers who wish to see domestic change in the Canadian Wheat Board at the same time make the point that this is a decision for Canadians to make for themselves and it should not be driven by pressure from a foreign capital.
The chairman of the Western Canadian Wheat Growers Association, for example, took that position. He believes passionately that the Canadian Wheat Board ought to change, but he believes that decision should be made domestically in Canada by Canadians for our good Canadian reasons and should not be forced upon us either one way or the other by international pressures.
I pay tribute to that organization for taking what I think is the right policy position. They can be for or against the Canadian Wheat Board domestically, but that is for us to decide within Canada. We will decide in our own Canadian way. It will not be an imported decision from another country.
With respect to your report, that is up to you to decide. I appreciate that you will make a report, and that you have provided an opportunity for some information to be put on the record as a counterbalance to what Mr. Lash had to say earlier.
It would be important to encourage our grain trading relationship with the United States and indeed with the rest of the world, based upon hard facts and real evidence rather than myths, rumours and innuendos.
I hope that some of the statistics available to you would be convincing in making the point that there is no subsidization or dumping here. There is no avalanche or flood crossing the border. There is normal, proper trade that is fully within all of the rules that apply to Canada and the rules that apply to the United States.
We need to work harder to fully understand each other, to appreciate the facts on both sides of the border to see where our common interest lies and to tackle the real problem in the world, which is trade distorting international subsidization. That is the root of the problem; it is not the Canadian Wheat Board.
Senator Corbin: Thank you, Mr. Minister, for spelling things out. I certainly appreciate your indignation, but I also note your positive attitude towards solutions.
I should like to know the cost of the wrangling over the years. Would you have even an approximate figure, a ballpark figure of the costs involved in these disputes?
Mr. Goodale: When you are dealing with the countervail, the allegation is a government program is at fault; therefore, the government leads the defence.
If you are dealing with anti-dumping, the allegation is that a commercial entity is underpricing and, therefore, that commercial entity leads the defence; in this case, it would be the Canadian Wheat Board. There is a government defence involved. There is a Canadian Wheat Board defence involved. Very often, individual producers are called upon in one way or another to participate. The cost would be in the millions of dollars that have been absorbed in the lobbying and legal exercises over the course of the last decade. Just exactly how many millions, it would be hard to estimate off the top of my head, but it has been expensive for American farmers to pursue these actions. It has been even more expensive for Canadian farmers to defend against these actions. These actions are totally unproductive, pursuing a scapegoat that is not the real source of the problem.
I would love to make the case to American farmers that if they have a few million and we have a few million, we could find many better ways to spend that money than by getting into these false fights with each other.
Senator Corbin: In terms of countervail responses the government handles that. According to the long list of incidents that you have given us, I suspect that you now have a budget item, the man years and what have you, to respond to these untimely and unfounded allegations.
Mr. Goodale: You are probably right, Senator Corbin. Your question will inspire me to ask the officials if they can actually calculate the costs for the defence here.
I know the Canadian Wheat Board, for its part, must find its own resources to pay for this. They are quite concerned about the cost burden that farmers, in their view, must so unnecessarily pick up.
Senator Corbin: It is important to bring this out to the public. If you could supply the committee with those figures soon, it would be appreciated.
Did you know, for example, that for the softwood lumber issues, it has cost Canada globally, since 1987, over $800 million in legal fees, plus another $200 million at the WTO? I am afraid of what kind of figure you will come up with.
Mr. Goodale: It is a shocking amount of money. Let me say this: Having a rules-based, multilateral trading system is a good thing. However, pursuing your rights under the rules, or defending yourself under the rules, can sometimes be a pretty expensive proposition.
I put a significant amount of credence in the suggestion made by Senator Di Nino and others, that we need to invest much more time and effort in preventive maintenance, to build and to have a good relationship so that we do not get into these costly, time-consuming, counterproductive, aggravating and harassing procedures. They serve no useful purpose for anybody.
Senator Austin: Minister, on the last point you were making, I am curious to know why you kept the word ``board'' when you took the government out of the board. It is a problem. The word ``board'' suggests a government agency. If you called it the Canadian wheat corporation, the perception of what it does would be more accurate; do you have a comment on that?
Mr. Goodale: You have a good point. Some attention was given to that at the time. The strong advice came from our customers in the world, in China, Japan, Korea, Indonesia, countries in northern Africa, south Asia and in Europe, that there was intrinsic value in ``CWB.'' It has been there since 1935. It has had most of its existing marketing power since 1943. It is a respected title in international grain markets.
However, we may be arriving at the point where Canada Grain Inc. might be more reflective of the reality.
The Chairman: We really appreciate your responding to Mr. Lash on the record. We were in Winnipeg and spoke to the Wheat Board. We had the Wheat Board before us, but it was important that you come to give our staff a chance to put something in our report reflecting, in our opinion, the very correct arguments that you have made.
Honourable senators, before we go, I have a quick motion, which is, pursuant to the budget authority adopted by the Senate on April 3, 2003, that the committee retain the services of an English and a French editor to assist in its consideration of the special study on Canada's trade relationship with the United States of America and Mexico within the limits of the said budget. This is all in the budget and it is a good thing.
Senator Corbin: I so move.
The Chairman: Is it agreed, honourable senators?
Hon. Senators: Agreed.
The committee adjourned.