International Trade Minister Pierre Pettigrew calls the new punitive duties the U.S. government slapped on Canadian wheat imports "quite indecent," and vows to fight them.

CTV.ca News Staff

International Trade Minister Pierre Pettigrew calls the new punitive duties the U.S. government slapped on Canadian wheat imports "quite indecent," and has vowed to fight them.

"We will continue to challenge the North Dakota Wheat Commission. We believe their allegations are wrong. We do not subsidize our wheat," Pettigrew told CTV Newsnet Wednesday.

He added the tariff isn't as bad as the one levied on softwood, and notes that it could have been worse, since some U.S. farmers had been hoping for tariffs of up to 25 per cent.

"We were pleased that the secretary of commerce decided on only 3.9 per cent. But anything is too big," Pettigrew said.

The U.S. Commerce Department -- the same body that imposed punishing duties on Canada's softwood lumber industry last year -- announced the expected move Tuesday.

The department slapped on a preliminary tariff of 3.94 per cent, explaining that grain shipments to the U.S. are unfairly subsidized by the Canadian Wheat Board.

Pettigrew said Canada still intends to fight the preliminary duties. "We're going to challenge it, absolutely. We'll stand by our farmers.''

"Canadian wheat exports are not subsidized, so we disagree with the U.S. Department of Commerce finding of subsidy, no matter how small," Pettigrew said.

Later at a press conference, Pettigrew argued that U.S. farmers receive a lot more government assistance than Canadian farmers.

"I find it very strange, that after the year of drought, the very difficult time we've had, the support they're (U.S. farmers) getting on their side of the border, that this year they've been going after our Canadian farmers. I find that quite indecent. The (commission) should not have done what they've done."

The tariffs will be levied on durum and hard red spring wheat -- Canada's two biggest exports -- and are effective immediately, although a final decision on the matter won't be made until July.

Under trade laws, countervail or so-called anti-dumping duties can be imposed on imports when prices are reduced by illegal subsidies.

The U.S. says Canada provides subsidies through the provision of government-owned railcars, and through loan guarantees to the Canadian Wheat Board.

"Some of these subsidies are cleverly hidden in the policies regulating grain transportation and marketing in Canada, which go hand in glove with the monopoly Canadian Wheat Board," said Larry Lee, a wheat farmer who serves as chairman of the North Dakota Wheat Commission.

American trade officials say these hurt American wheat farmers by driving wheat prices down.

Ken Ritter, chair of the Canadian Wheat Board, told reporters during a teleconference on Tuesday that the board was unhappy with the decision.

"We do not believe that our wheat exports are unfairly subsidized under any rule of international trade," Ritter said. "This trade challenge should never have been launched."

Wheat Board officials also noted the penalty of 3.94 per cent is far below rates of 14 to 25 per cent sought by U.S. interests in the case.

The Wheat Board controls the sale of all wheat destined for human consumption grown in Canada. Of the 18 million to 20 million tonnes of wheat that Canadian farmers produce in an average year, about 1.6 million tonnes is exported to the U.S.

Ottawa now has up to two months to respond to Washington's allegations. Canada essentially has three options. It could: