Potato disputes with Canada continue

WSPC gearing up for July trade tribunal

GRANT COUNTY — The Washington State Potato Commission is still preparing to combat British Columbian anti-dumping duties that it says have become a permanent trade barrier instead of a temporary fix.

Pat Boss, WSPC executive director, explained that the Canada Border Services Agency recently ruled that it would recommend that the Canadian International Trade Tribunal impose duties on potatoes shipping from the United States.

"We had some major problems with the (CBSA)," Boss said, noting that the agency would not allow the Commission to submit new data, so its decision was based on 1984 data instead of more current information. In addition, when the WSPC did submit data, the confidential information was given to British Columbian potato growers, Boss said.

The WSPC will be at the July hearing with the Canadian International Trade Tribunal, which occurs once every five years.

Anti-dumping duties have been imposed on the United States since 1984, Boss explained.

"Our whole case really involves the fact that anti-dumping duties are supposed to be a temporary measure, and this has turned into a permanent trade barrier," he said. "We're going on 20 years now, and so that's one of the arguments we're going to be making in July."

Another argument will be that the Canada Border Services Agency decision is flawed because it's based on old data.

"The whole crux of this is that they're claiming that we're selling under cost of production," Boss said. "They're saying, basically, that our farmers are taking a loss to sell up there … We would have had to have lost money for every year since 1984, according to their theory. I think a reasonable person on the street would ask, 'How can a business exist for 20 years if they're selling at a loss every year?'"

The goal is to get the duties thrown out, as they are costing the industry between $3 and $5 million every year.

"It's pretty hard to sell potatoes in a marketplace when you're being taxed or tariffed at 100 to 200 percent on top of the price," Boss said. "It doubles and triples the price of the potatoes."

The state is the closest growing area in the U.S. to the market in British Columbia, so shippers in Moses Lake, Quincy, Othello and Mattawa would have good access to the market if no duties were in place.

"They only grow about 4,000 to 5,000 acres in all of British Columbia," Boss pointed out. "They can't even supply their own local market, yet they're keeping our potatoes out by slapping us with these huge duties."

The duties are in effect nine months out of the year, taken off in May, June and July. When the duties come off May 1, Boss said, the state ships more potatoes into the market than anywhere in the world.

"It's our number one export market when the duties come off," he said, noting that in a three-month period, last year, the state shipped about 50,000 metric tons to British Columbia. "The price of potatoes is so high, that it makes it unaffordable to buy them. If we could sell at a competitive price up there, and not have these big duties being tacked on to our potatoes, we'd sell more potatoes."

The Commission is investing a number of resources in international trade attorneys, having hired lawyers in Canada and U.S., in the interest of increasing growers' sales and help move product and help the local economy.

At the 2000 hearing, the WSPC challenged the anti-dumping duties, but two judges ruled in favor of Canada. Those judges are no longer on the tribunal.

"This time, we're preparing ourselves in case we get an adverse ruling, to then take it to the next level," Boss said, explaining that the next tier is the North American Free Trade Agreement (NAFTA) panel. "We're obviously setting the stage for a final challenge, if we have to go that far."

Boss said that the onion industry won a major case in 1997 at the tribunal, and one of the WSPC's lawyers was involved that case. The apple industry was able to negotiate an arrangement with British Columbia to no longer pay duties and the Florida and California tomato industries also were able to resolve a dispute.

"Clearly, tomatoes, apples and onions have all gone down this path," he said, adding that the potato industry in British Columbia is small but very powerful. In the same vein, so is the tomato industry in British Columbia, but the U.S. tomato industry was able to prevail. "Given the fact that other commodities have had similar issues and prevailed, we don't think we have a bad chance here. If we thought we only had a 1 percent chance, we wouldn't be in it. We definitely believe we have at least a 50 percent chance of winning this."

Boss said the Commission did not know until 2000 whether it had legal authority from the state to represent the potato industry in front of an international trade court.

"We were new to the game in 2000, but we know a lot more than we did five years ago, and we think our arguments are going to be better honed-in, we think our facts are going to be better presented, and we're ready for a back-up plan if we have to go to the NAFTA level," he said, estimating that the Commission will probably end up spending several hundred thousand dollars. In the end, however, it may end up saving the industry $4 to $5 million a year, or at least end up with a chance to sit down and negotiate a reasonable arrangement with its strong offense.

The tribunals are open to the public.