Reproduced with Permission
April 2006 - Ethanol Producer Magazine - "CITT removes U.S. corn tariff"
CITT removes U.S. corn tariff
By EPM Staff Writer Anduin Kirkbride McElroy
The Canadian ethanol industry is breathing a sigh of relief since the Canadian International Trade Tribunal (CITT) issued a decision April 18 "that the dumping and subsidizing of [unprocessed grain corn] originating in or exported from the United States of America have not caused injury and are not threatening to cause injury to the domestic industry."
With the decision, the preliminary US$1.65 per-bushel duties imposed Dec. 15, 2005, by the Canada Border Services Agency (CBSA) on imports of U.S. corn are removed, and all duties already assessed will be returned, thus ending the case.
Canada has three ethanol plants currently under construction, and a dozen more have been proposed. If made permanent, some of the proposed plants may have relocated south of the border. Northern Ethanol Inc. is in the permitting stage of two 100 MMgy ethanol facilities in Ontario and another in upstate New York. Had a permanent duty been imposed, "we could have switched and built two in the United States and one in Ontario, just using Ontario corn," said CEO Gord Laschinger. However, he told EPM the CITT hearings "didn’t slow us down because we were confident that it wouldn’t stick."
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Integrated Grain Processors Cooperative Inc. (IGPC) is another proposed plant in Ontario. Tom Cox, a corn farmer and chair of the co-op, told EPM that the temporary duty had certainly delayed the progress of the plant. "We didn’t know what it would add to the price of corn," he said. "It’s impossible to run a financial model with uncertainty. You need to have a market for your ethanol before you can commence construction, but we didn’t know who we’d be selling to. For that reason, we’re pleased that the duty was overturned. Now we can get on with getting the plant built and adding value to the corn, which, in my opinion, is the best way to support farmers."
Investigation into the issue began in November in response to requests from the Canadian Corn Producers (CCP) and its affiliates in Ontario, Quebec and Manitoba. Their claim that the United States was dumping and subsidizing its corn was backed up by a final determination from the CBSA on March 15. "We do not agree with [the CITT's final decision] and are considering all our options," said Brian Doidge, spokesman for the CCP. "Canadian corn farmers are being pushed out of the business by unfair and illegal U.S. subsidies. We will not give up as our future and the future of the Canadian grain and oilseed sector is at stake."
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Laschinger said the CCP has been pursuing a duty for many years. He noted that farming is not an easy business to be in, but lifting the tariffs works to the advantage of promoting corn-based ethanol in North America. "I think ethanol in North America is only going to strengthen corn prices for farmers," he added.
Cox agreed that ultimately the tariff would have been detrimental to Canadian corn producers, as well as ethanol producers. "We might get temporarily higher prices, but ultimately you’ll drive out your market," he said. "You just get further behind." He explained the complaint was with the U.S. Treasury, but the duty is paid by Canadian businesses with no way to pass on the costs to the consumers.
Instead of a tariff, Cox believes the Canadian government must give its corn producers some level of parity with U.S. producers by equally subsidizing them. "Put us on a level playing field," he said. "If we can make it, great. If we can’t, that’s business."
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