While the United States was handing out subsidies to its farmers, it was launching a fresh attack on the Canadian Wheat Board, saying it gives Canadian farmers an unfair advantage on the world market. In a reversal of the rhetoric most Canadians are used to hearing – that the much-larger Americans can outgun us in any market – North Dakota congressman Earl Pomeroy has argued for years that the wheat board gives Canada too much clout on the world market. “The wheat board takes better care of farmers than can be done in the U.S.,” he told me. “It is an enormously big player.” Pomeroy, whose home state draws 40 per cent of its income from agriculture, mostly grain farming, is the congressional face of the attack on the wheat board. He insists he has nothing against Canadian farmers themselves. Growing up in Grand Rapids, North Dakota, Pomeroy was a regular visitor to Winnipeg –the nearest big city and home of the wheat board – as a boy. “I played rugby against a lot of big Canadian farm boys,” he said.

But however fondly he remembers the farm boys of his youth, it is the North Dakota farmers in his home constituency whom he represents in Congress, and they are in direct competition with Canadian farmers like Bouchard and Godenir, whose farms are only forty kilometres from the border with North Dakota.

The soil and weather conditions are the same in Saskatchewan and North Dakota. The seed varieties, the pesticides, and the fertilizers are the same. The only difference is the wheat board, and Pomeroy blames it for the tough times the farmers in his home state are facing.

The problem with the wheat board, from the U.S. perspective, is that it is good at its job and is not privately run. The wheat board’s sales account for about 20 per cent of the world’s grain exports, according to the best estimates, less than half the market claimed by the wheat trading division of the large U.S. grain company Cargill and slightly less than Archer Daniels Midland’s (ADM) grain division. That clout allows the board to lure buyers away from American grain, including buyers in the United States, Pomeroy said. A 2001 complaint filed in Washington by the North Dakota Wheat Commission, which represents 28,000 farmers, claims Canada uses its market power to secure contracts with American pasta companies that would otherwise buy North Dakota wheat. “We’ve just been absolutely buried in a flood of Canadian wheat,” Pomeroy said.

The argument is that the wheat board, because of its strong presence in the international market, drives down the price of grain and hurts U.S. farmers. In the jargon of trade politics, this is known as a “Section 301 case,” so-­named because Section 301 of the U.S. Trade Act of 1974 authorizes the U.S. trade representative to retaliate against any trade practice deemed unfair by the International Trade Commission, a quasi-­judicial agency in Washington that advises the White House, the trade representative (the American equivalent of Canada’s trade minister), and Congress on trade matters. Its job is to assess the effect imports have on American industries, to determine whether other countries are trading unfairly, and to recommend what action to take. In the case of the wheat board, it determined that, if anything, the wheat board drove up the price of durum wheat by negotiating better deals for Canadian farmers. American farmers were also able to take advantage of the higher prices, the ITC found. For other types of wheat, the price negotiated by the wheat board was sometimes lower than the U.S. price, but was most often higher.

Despite its own findings, the ITC ruled that the wheat board gave Canadian farmers an unfair trade advantage, since it gave farmers clout in the market and operated with government backing. The wheat board’s loans were guaranteed by the government, ensuring it got a good interest rate, and there is a minister responsible for the wheat board sitting at the federal cabinet table. As a government-­sponsored agency, the Americans argued, the board’s dealings should be open to public scrutiny. No such requirement was suggested for its private competitors, however.

As the United States was putting its massive Farm Bill into place, it was preparing to launch a WTO challenge to the wheat board that could spell the end of one of the best programs Canadian wheat farmers have. “The administration is committed to ensuring fair treatment for U.S. farmers, and this investigation addresses important issues concerning Canadian Wheat Board sales practices,” U.S. trade representative Robert Zoellick said in a statement a few weeks before the launch of trade talks in Doha.

A week earlier, Zoellick testified before the House Ways and Means Committee in Washington that he believed the wheat board was engaging in “unfair pricing” and that the United States should push for an elimination of these practices, or at the very least force an end to the board’s control of grain exports. He told the committee, which was deliberating on whether to give Bush a free hand to negotiate a WTO trade deal, that he was a “strong supporter” of the North Dakota case. At that point, the ITC was still three months away from ruling on the case, but Zoellick was ready to declare that the wheat board gave Canadian farmers an unfair advantage.

It was beginning to look like the Bush administration had already decided that it did not like anything that cut into the business of big American companies and was dressing up its objections in a veneer of commission rulings it knew it could count on to decide in its favour. Testifying before the same committee five months earlier, before the ITC had even begun holding hearings, Neal Fisher of the North Dakota Wheat Commission said his group’s complaint would “serve as a model for solutions to the unfair trading practices of export trading enterprises in the WTO.” In November 2002, the ITC gave the U.S. government the ammunition it needed to launch a WTO challenge to the wheat board when it contradicted its ruling of eleven months earlier by declaring that the wheat board sold grain in the U.S.A. at “less than fair value.”

A year before the North Dakota farmers started making noises around Washington about the wheat board, the United States Department of Agriculture, in one of its regular publications, took a look at U.S. – Canada trade in wheat and decided that American imports of Canadian wheat had nothing to do with wheat board practices. “Geography and market economics, not governments, are the most fundamental determinants of current U.S. – Canada wheat trade.” According to the USDA document, Canada’s elimination of the Crow Rate, which for almost a hundred years subsidized the cost of getting Canadian grain to overseas markets, had forced the wheat board to look for markets closer to home. That meant more exports to the United States.

The USDA assessment found that any advantages the board had in its marketing were “small or negligible in the highly competitive commercial world wheat markets” since the board had no control over production besides offering farmers money to grow wheat instead of other crops. In short, the USDA in the summer of 1999 reported that the wheat board was not stealing American markets, was not undercutting American prices (and might even be raising the price of wheat), and was selling more wheat to the United States because it was right next door and because American companies wanted to buy it. The fact that officials in Washington one year later came up with a contrary assessment shows just how politically driven the current objections to the wheat board really are.

That’s certainly the opinion around the board’s headquarters near Portage and Main in downtown Winnipeg. Staff there have grown weary of the constant attacks from midwestern U.S. politicians hoping to score a few points and a few votes by attacking the wheat board. “A political dance between influential American senators and U.S. president George W. Bush could have serious consequences for western Canadian wheat farmers caught in the middle,” the wheat board wrote in its bimonthly publication Grain Matters as it waited for the trade commission to make its decision on the North Dakota complaint.

Brian White, the board’s vice-­president of commodity analysis, says big American companies like Cargill and ADM wield far more influence on the world stage than does the wheat board. Cargill alone has twice the world export grain trade, and ADM about the same as the board; they also both deal in other crops, livestock, shipping, and feed manufacturing with dozens of countries. The wheat board, by contrast, deals only in Canada with Canadian farmers and only sells wheat and barley for export or domestic human use. Its power pales by comparison to Cargill and ADM, which do not attract the same attention from our trading partners. “What we really should be concentrating on is the influence of trading enterprises, whether state trading enterprises or not,” White says.

The board has been through nine trade challenges with the United States and survived them all. But however politically driven American attacks on the wheat board might be, the fact remains that the board has become a bargaining chip at the world trade talks. That much was made clear a year before the current round of trade talks began in Doha. The Cairns Group – a loose group of eighteen countries that tend to support each other at trade talks, including Canada, Australia, New Zealand, and Brazil – had just concluded a meeting in Banff which included a visit from Franz Fischler, Europe’s trade commissioner. He made jokes all week about “walking into the lion’s den” by attending the meeting where his defence of farm subsidies was the main topic of conversation and much derision. After the meeting, Fischler said Europe was being demonized in trade talks because it paid its subsidies directly to the farmer, while other countries used more roundabout methods.

Europe, he said, would cut its subsidies if Canada would do the same by gutting the Canadian Wheat Board and the marketing boards for milk, eggs, and poultry. “We ­don’t accept, really ­don’t accept, that only the European form of subsidization is trade distorting, and the others are not,” he said. “It seems to me sometimes there are camps arguing that trade liberalization is a good thing for others, but not for themselves.”