February 27, 2006

 

No consensus on effects of Canadian duty on US corn

 

 

The jury is out on whether recently imposed countervailing duty on US grain corn entering Canada has had desired effect of slowing shipments or significantly hiking values for feeds, according to industry sources.

 

Mike Jubinville, an analyst with ProFarmer Canada, said there has been talk among the corn industry about companies being exempted from duties on imported US grain corn.

 

He added that such "exemptions essentially defeat the purpose of the tariff being implemented".

 

The Canada Border Services Agency (CBSA), made a preliminary determination on Thursday, Dec 15, that US grain corn imports to Canada are dumped and subsidised.

 

Under the CBSA's decision, duties totalling US$1.65 per bushel were imposed to prevent further injury to Canadian corn growers. A provisional anti-dumping duty was set at 58 US cents per bushel on unprocessed US corn, while a provisional countervail duty was set at US$1.07 per bushel, announced the CBSA.

 

A final determination from the CBSA regarding anti-dumping and countervailing duties on US corn is due March 15. The CITT will make its final decision on injury by April 15, 2006. If the CITT makes a final injury finding, the provisional duties will become definitive.

 

"The duty to date has done little in terms of anything for the Canadian corn producer," Jubinville said.

 

He said there was an initial small upward climb in feed wheat and feed barley values in Western Canada when the duty was first introduced.

 

US corn, landed in Winnipeg, is presently about C$113 per tonne, which is about the same as it was before the duty was imposted, Jubinville said.

 

He said imports of US corn into Canada were coming in at a faster rate than before the duty was implemented.

 

"Part of that is because of these duty rebates or exemptions," he said.

 

There is currently legislation in place that allows for the drawback of 100 percent of duties paid out, confirmed Cara Prest, a spokeswoman for CBSA.

 

"Under terms of the Special Import Measures Act (SIMA), Canadian companies can apply for relief of these duties," she said, noting this includes Canadian firms that import US grain corn.

 

"Basically a company can bring in US corn, and not pay duties as long as they meet the requirements laid out under SIMA," Prest said. "The companies have to give evidence, that all criteria has been met, including the export of the grain within four years, or that the goods are being used in the consumption or production of other goods which are exported within four years of the date of importation."

 

"There is no doubt that corn producers in Manitoba and Ontario are competing against subsidised US corn and the current duty is doing little to change that," Jubinville said.

 

Theresa Bergsma of the Manitoba Corn Growers Association, meanwhile, argued that the duty had increased values for corn in the province since its implementation.

 

"Our records show that corn values in Manitoba have climbed about 40 to 60 cents a bushel since the duty was imposed, Bergsma said.