OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Executive Office of the President
Washington, D.C.
20508

March 6, 2003

United States Requests WTO Panel in Dispute on Canadian Wheat Board

WASHINGTON - The Office of the United States Trade Representative announced
today the United States would seek formation of a World Trade Organization
dispute settlement panel to examine the wheat trading practices of the
Government of Canada and the Canadian Wheat Board (CWB).

The United States' panel request also challenges Canada's requirements to
segregate imported wheat in the Canadian grain handling system and Canada's
discriminatory policy that affects the access of U.S. grain to Canada's rail
transportation system. The request for a WTO panel is the next step in the
U.S. case against Canada, which was announced last December, and continues
the Administration's aggressive pursuit of ensuring a fair trading system
for U.S. farmers.

Background

Under WTO procedures, the first step in the dispute settlement process is
for both parties to hold formal consultations. The United States requested
those consultations with Canada on December 17, 2002, and the consultations
were held on January 31, 2003. During the consultations, Canada expressed
no willingness to make any modifications to its wheat trading practices.
Accordingly, the United States is proceeding with the next step in the
process, which is the request for the establishment of a panel of
independent experts to determine whether the defending Party is acting
consistently with international trade rules.

On February 15, 2002, U.S. Trade Representative Robert B. Zoellick released
an affirmative finding after an investigation under section 301 of the Trade
Act of 1974. In the finding, Zoellick described the multiple avenues USTR
would take to seek relief for American wheat farmers from the unfair trading
practices of the CWB, a government state trading enterprise. In April 2002,
U.S. Chief Agriculture Negotiator Allen F. Johnson went to North Dakota to
hear directly from wheat farmers on the CWB's unfair competition.

There are four prongs to the February 2002 plan, which the Administration is
pursuing aggressively.

First, the plan called for the examination of a possible WTO challenge,
which USTR is pursuing with today's action.

Second, the Administration committed to work with the U.S. industry to
examine the possibility of filing antidumping and countervailing duty
petitions. The North Dakota Wheat Commission filed petitions on September
13, 2002. On March 4, 2003, the U.S. Department of Commerce issued a
preliminary determination in the countervailing duty investigation,
announcing a 3.94 percent countervailing duty to be applied provisionally
while the dumping and countervailing duty investigations continue.

Third, USTR announced that it would work with the U.S. industry to identify
impediments to U.S. wheat entering Canada. The elements of the WTO case
regarding Canada's grain segregation requirements and rail transportation
rules is a direct result of those efforts.

Fourth, the United States committed to seek reform of state trading
enterprises through the adoption of new rules in the WTO agriculture
negotiations, which are part of the Doha Development Agenda launched in
November 2001. The United States is aggressively pursuing this negotiating
objective. In particular, the United States has proposed eliminating export
monopolies so that any producer, distributor, or processor can export
agriculture products. The United States has also proposed ending special
financial privileges which are granted to state traders and expanding their
WTO transparency obligations.

The United States is pleased that U.S. proposals to reform export state
trading enterprises, such as the Canadian Wheat Board, have been
incorporated into the initial negotiating framework issued in February by
the WTO Chairman of the agriculture negotiations (Stuart Harbinson). This
initial framework reflects the broader concerns within the multilateral
trading system regarding state trading enterprises, including the need to
eliminate monopoly powers, eliminate special government financing, and make
operations of such entities transparent. The United States is continuing to
build a coalition of other WTO member countries in the ongoing trade
negotiations who support this position.

The North Dakota Wheat Commission and the broader U.S. wheat industry
support the Administration's decision to file a WTO case on the wheat
trading practices of the CWB.