Potato defenders optimistic after Canadian trade tribunal

Agency to render decision Sept. 12

MOSES LAKE — That sound you hear is the state's potato industry crossing its collective fingers for good luck.

Potato growers, industry experts and economists returned last week from presenting historical, scientific and economic evidence through lawyers on behalf of Washington's potato industry to a 3 1/2 day hearing before the Canadian International Trade Tribunal (CITT) in Vancouver, British Columbia.

The British Columbia Vegetable Marketing Commission (BCVMC) is seeking a continuance of anti-dumping duties that have been levied on Washington potatoes for the past 21 years. The WSPC has maintained that the duties are typically meant to be a temporary aid to a struggling industry, and are having an adverse impact on the state's potato industry.

"I think we had a very objective tribunal, and they wanted to listen to what we presented as facts in the case," said Matt Harris, Washington State Potato Commission director of trade. "It was exciting to see our attorneys methodically look at how (the BCVMC) case was built, and basically tear it apart."

The BCVMC conceded that dumping of red, yellow and exotic potatoes has not taken place, and that those varieties should be removed from the dumping order. The WSPC still contended that the entire dumping order be removed on white and Russet varieties as well.

"The evidence that we filed was excellent, (it was the) very best presentation that the WSPC has ever made," said international trade and customs attorney Darrel Pearson of Gottlieb and Pearson in Toronto, Ontario, who represented Washington with Seattle-based Joel Junker. "Our expert witnesses were outstanding, and the growers who represented growers of Washington state performed very well. We are optimistic that the tribunal will get it right this time, and will terminate the dumping order."

Pearson referred to the last CITT five years ago, where it was decided to continue the anti-dumping duties. Trade tribunals occur every five years.

Growers offering evidence included Allen Floyd of Othello, Jack Wallace of Skagit Valley and Del Christensen of Mattawa.

The WSPC case included testimony presented by Joseph Guenthner, an agricultural economist from the University of Idaho, that fresh potato profitability has historically followed a six year cycle in which some years show a profit, some are a loss and some barely break even.

Economic evidence presented by Nick Young, an agricultural economist and president of Promar International, revealed that Washington potato exports to B.C. typically increase only when prices are up. The data gathered by Young contradicted the B.C. growers' claims that the province is a dumping ground for low-priced U.S. potatoes that cannot go anywhere else. Young also found that even in the lowest price cycle for potatoes, price returns for British Columbia potato growers are considerable.

Moses Lake consultant Dennis Conley was retained by the Washington State Potato Commission to testify on the merits of the United States potato industry, and gave a history of the last 22 years.

Conley said he spent a fair amount of time arguing about substitution issues, where Canadian growers in British Columbia say that American growers dump their excess processing potatoes into the fresh potato market. That argument is no longer a valid reason to have anti-dumping duties, Conley said, pointing to different storage practices between processing and fresh potatoes, and the different varieties grown.

"I think we presented our case very well and convincing, but then, we had done this before and the Canadian politics had not listened to reason, but made their decision on other factors besides the facts," Conley said. "We did feel better about the tribunal judges because of their experience. I think they looked at things a little more globally."

There are two reasons to be called on dumping, Conley said. The first is if the industry sells its products into a foreign country at a lower price than it does domestically, which Conley said does not happen. What does happen occasionally is the second way, selling below the cost of production. It happens because the potato industry works in that aforementioned six-year cyclical fashion, Conley explained.

Harris said that the argument made by the BCVMC was based on loose economics, submitting newspaper clippings and articles as evidence and basing arguments on misquotes.

"To me, it wasn't that strong of a case, but in history, we had a very strong case and yet it did not come in our favor," Harris said. "But this time, the tribunal I think really was intent on what we had to say, and we gave them a lot of factual information on how the North American potato industry operates and how it functions, and they really wanted to listen to that."

If the CITT tribunal judges elect to continue the anti-dumping duties, there are steps the WSPC might use, Harris added, including appeal of a Canadian Border Services Agency determination made prior to the CITT, in which they will continue to use information that the WSPC believes is dated and incorrect.

"There are outs," Harris said, noting that the CITT determination can also be appealed.

Conley said he was asked what impact removal of the duties would have on British Columbia growers. Conley responded that they would have to make adjustments, as they are not able to compete with the state's Russet potatoes, and said a similar situation arose in Mount Vernon, which switched to red and yellow varieties and found financial success.

"I think B.C. growers would make the same thing, if they are stimulated to do it," Conley said.

Given the fact that the duties have been in place for 22 years, Pearson said many may doubt the possibility of getting a fair hearing in Canada.

"I believe — and we still have to see the decision — we got a good hearing," he said. "The panel of tribunal members was very strong in their understanding of the law and the agricultural economics of the business."