"It is incorrect to suggest that pork producers in the United States are on one side and those in Canada are on the other," says John R. Block, former U.S. Secretary of Agriculture and senior advisor to the Pork Trade Action Coalition (PTAC).
Last week, he sent letters to pork producer associations in Minnesota, Illinois, Iowa and other states reiterating his opposition to an anti-dumping petition against live Canadian swine. He is urging the state associations to consider the needs of American family farmers who have built their operations on buying Canadian pigs.
The National Pork Producers Council (NPPC) and other groups filed the petition in early 2004 with the U.S. International Trade Commission alleging that Canadian hog producers were receiving illegal subsidies from the Canadian government and were dumping (exporting hogs at a price below their cost of production). The U.S. Department of Commerce (DOC) rejected the NPPCâ€™s allegations of illegal subsidies in August 2004, finding that all Canadian subsidies to its hog producers were legal under the WTO and U.S. law. However, in October 2004, DOC placed preliminary dumping duties on live swine from Canada ranging from 13.25% to 15.01%.
Why do U.S. hog producers buy Canadian pigs?
In his letter to the state associations, Block stated, "While it is rare for me to take a position which on the surface may seem contrary to that of some U.S. pork producers, please permit me this opportunity to explain my support of PTAC and its objectives."
Block continued, "PTAC represents American farmers â€“ some of whom are members of the National Pork Producers Council (NPPC) and state pork producer groups - and their suppliers in Canada. The family-owned farmers whose interests PTAC represents built their operations on buying Canadian pigs and feeding them in the United States on American grain. These farmers depend on the open border between Canada and the United States in agricultural goods."
"Placing a new tax on feeder pigs imported from Canada hurts many U.S. and Canadian pork producers. It is incorrect to suggest this is simply a matter in which producers in the U.S. are on one side and those in Canada are on the other."
Block pointed out that this dumping case is not about "wrongful" Canadian farm subsidies since the DOC has already ruled that payments to Canadian hog and other farmers did not break U.S. laws or world trade rules.
Donâ€™t take potshots at Canadian subsidies
"â€™Foreign government subsidiesâ€™ is a term that makes for strong rhetoric, but it has no application in this trade case," says Block. "When we take shots at trade-legal farm program payments in other countries we have to recognize that we invite other countries to do the same to us. With so much pressure in place to hack U.S. program crop payments, I sure donâ€™t want to issue such an invitation."
Block also sought to remind the state associations about the tremendous benefits to the pork industry from trade with Canada. "Trade in swine with Canada has helped pork producers in both countries, capitalizing on competitive advantages in the U.S. in feeding and slaughter, as well as advantages in Canadian farrowing," says Block. "As a result, the overall industry is more efficient. Swine imports from Canada are just 3.3% of the total U.S. market. More importantly, U.S. hog prices are near record levels, and the U.S. herd is growing."
"Swine industry trade with Canada has not caused injury to the U.S. industry; it has made for a more efficient swine industry that has contributed to current market strength," continued Block. "If prohibitive tariffs force construction of new, highly efficient Canadian slaughter facilities, a significant advantage may be created for expanded hog feeding and slaughter north of our border."
"This is a step backward in U.S. ag trade"
Block also asserted that cash payments to companies and groups supporting the case likely played a role in the filing of this trade case. The â€˜Byrd Amendment,â€™ a law that allows supporters of a trade petition to collect a share of the dumping duties paid, has already been ruled illegal by the World Trade Organization but Congress has yet to repeal the law. The NPPC Web site features a form letter for its members to submit to the U.S. government to express support for the petition, explaining that such a letter, "is the best way to ensure that you will be eligible for any potential distribution of duties."
In conclusion, Block states that, "â€¦this case is already hurting American feeders who purchase pigs from Canada. In the long term, it is a step backward in developing American agricultural trade."
The DOC will make its final determinations on margins in early March, and duties may increase or decrease from the preliminary determinations. The International Trade Commission (ITC) is expected to make a final determination on the question of whether imports have injured the U.S. industry in early April.
The goal of the Pork Trade Action Coalition is to assure that the U.S. government considers all the facts in the Canadian swine case fairly and objectively, with a full understanding of the ramifications of any decision. For more information, contact Dara Klatt at (202) 466-6210, Dara.Klatt@pbnco.com, or visit the Web site: www.porktradeaction.org.