Potato Commission to battle dumping duties

British Columbia order impacts local growers, business

PHOTOS:

1-2. Columbia Potato owner Lew McCullough examines some potatoes coming in to his company Monday afternoon. McCullough said that tariffs on Washington potatoes in British Columbia are not fair trade.

3. Trucker Gerardo Garza watches the potatoes he's been shipping enter Columbia Potato Monday afternoon. Columbia Potato's owner would like to see free trade instead of the British Columbia tariffs on Washington potatoes.

4. Columbia Potato owner Lew McCullough said that tariffs on Washington potatoes in British Columbia are not fair trade.

ALSO Pat Boss mug

There's a fight a-brewin' at the Washington State Potato Commission.

In the coming months, the agricultural organization will be calling on attorneys and witnesses for an expiry review of the current regulations for shipping potatoes into British Columbia.

WSPC executive director Pat Boss explained that the province's anti-dumping order is in effect every year between Aug. 1 and April 30, putting a tariff on potatoes from Washington, Idaho, Oregon and California.

The three months that the order is not in effect are really months that there are not a lot of potatoes left over, Boss said.

"Apparently British Columbia's potato industry, in its infinite wisdom, felt that, by putting the order on us nine months a year, that those months (August through April) would be months where we would have a lot of potatoes, and they felt those would be the months they would be protecting (themselves)," Boss said.

Boss said a notice of implementation of procedures goes out every year, with but every five years allows for an expiry review.

"During that window we can appeal the order or we can challenge the order," he said.

The order has been in effect since 1984. Boss said the Potato Commission didn't really do anything about it until about 1996. The organization filed a lawsuit to challenge the duties in 2000 at a Canadian international trade tribunal, or CITT, but lost in a two to one decision.

The next expiry review will take place in 2005.

WSPC attorney Joel Junker said that the tribunal will be in front of the Canadian Borders Services Agency.

"They will look at the basic issue of if the order is terminated, whether the dumping will recur," Junker said. "So they look at whether or not low prices would start again and if they started, if they would cause injury to the B.C. potato industry."

Junker said the basic, underlying issue is that in an agricultural commodity context, a grower has good years and bad years, and makes up for the bad years in the good years.

"The fact that a grower has one bad year or two bad years because of low prices does not mean for an agricultural commodity that they have been 'injured,' under the legal definition," Junker said.

Junker said an earlier tribunal about onion dumping duties recognized the agricultural commodity concept for injury, and that he is hopeful that the CITT will adopt the approach for potatoes.

Boss said the Commission hopes to have the order thrown out for the period of 2005 to 2010. Not only does the order put a tariff on the four states, but it also puts tariffs or duties on the different sizes and taxes, he said.

"The tariff in Washington for a certain size may be $2, whereas the same exact potatoes coming out of Idaho may be $4," he explained. "We have some real issues with how they calculate the tariffs because they're different for the states, but they're also different by size, color and variety."

It makes it difficult for average exporters and growers to pay the tariffs, which double or triple the price of the potatoes, and to understand them, because the tariffs change weekly, Boss said.

Boss said the WSPC also has an issue with the basis of the anti-dumping duties, because the province is essentially accusing Washington's potato industry of selling below cost.

"They're claiming that we're selling at a different price in their market than we do down here, which we find to be an absurd accusation," Boss said. "… They're saying by virtue of that, we're dumping — we're selling potatoes at below cost up there."

British Columbia's potato industry has also conducted their own study of the cost figures for growers. Boss said their numbers do not match the numbers of the industry.

Boss said that the WSPC will have to have its own economic figures in order to go before the court, refute the figures of the British Columbia potato industry and prove that its numbers are correct and that growers are not dumping. This includes factoring in the cost of fuel, cost of energy, cost of fertilizer and any input a farmer or grower would use as part of growing or packing potatoes.

The WSPC's model is showing that the cost structure is less than the Canadians say it is, Boss said.

"We're trying to prove that their numbers are incorrect and our numbers are more correct," he said. "It's a game of numbers, estimates, costs and expenses."

"If there's a market in Canada, it doesn't allow (process growers) to market their potatoes there in a free market," said Allen Floyd, chairman of the WSPC. "Some of the major processors that have plants on both sides of the border, they can't buy them from Washington. They have to buy them from other provinces in Canada if the potatoes are available, if those provinces so declare."

Floyd said he would like to see free trade on both sides of the border.

"They can come this way, we should be able to go that way," he said.

Because the British Columbia potato industry is so small — Boss said it consists of five growers — they have to import their potatoes.

"They've come up with this whole order as a way to keep these four to five growers in business, and they've been doing this since 1984," he said, noting that dumping duties are meant to be a temporary mechanism to protect an industry from imports.

"The anti-dumping orders are supposed to allow a person, a grower or a company some time to get back on its feet," Boss said. "It's a temporary protection measure that a country uses. Canada's abused this by making it permanent … which triples our price of the potatoes we sell up there. They basically get guaranteed a floor price in their market and they're guaranteed a profit."

It raises the cost of potatoes in the British Columbian markets for consumers, Boss said. It also takes away sales that would help the local economy.

"We're going to fight to remove any impediments that our growers face when they try to export, whether it's British Columbia, Mexico, Japan or whatever country we're looking at for export purposes," he said. "We think this is a very bad situation right now for our people who want to export to that market."

"If (it) prices us out of the market, it's not fair trade," said Lew McCullough, owner of Columbia Potato, Inc.. "There's no reason for British Columbia tariffs. As far as I know, we don't have any tariffs on the potatoes they send down here."

Del Christensen, owner of Wahluke Produce in Mattawa, who testified at the tribunal in 2000 said that his company does a lot of business in Vancouver during the time of year that the order is ineffective, and very little when it is in effect.

"In this modern day and age of free trade talk, I'd like to see free trade," he said. "Their dumping duties are just a method to protect their growers from the very same competitive forces the rest of their country and our country both create."

Christensen and McCullough both said that they would be willing to testify at the next tribunal.