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Canada Slaps Duty on U.S. Corn After Subsidy Finding

November 7, 1986

TORONTO (AP) _ Canada slapped a duty of $1.05 U.S. a bushel on imports of American feed corn today because of what the government alleged are unfair U.S. farm subsidies.

The federal Revenue Department in Ottawa said it was ″satisfied that there was a reasonable indication that the subsidized imports of grain corn have caused material injury to the production in Canada of like goods.″

It added that Canadian growers have seen a ″significant drop″ in prices and are incurring losses because of subsidized U.S. corn.

The department said the Oct. 31 cash price for U.S. No. 2 grade grain corn was $1.57 U.S. a bushel, and 99 cents of that was farm program subsidy.

The countervailing duty decision follows the Oct. 16 Washington decision to impose a 15-percent duty on Canadian softwood lumber, causing strong protests from Ottawa.

But Canadian government spokesman Denis Comeau told The Associated Press there was no relationship between the two decisions.

″The two are simply not linked. This decision was based on the merits of the evidence presented,″ he said.

The tariffs nevertheless set back efforts by the two countries to negotiate a comprehensive free-trade treaty, an initiative proposed by Prime Minister Brian Mulroney to President Ronald Reagan last year and begun in May 1986.

The corn investigation was based on complaints filed last May by the Ontario Corn Producers Association, which argued that American farmers received a subsidy of $1.11 U.S. a bushel through the U.S. Farm Bill, enabling them to flood Canada with cheap imports.

U.S. farmers are expected to ship about 20 million bushels of feed corn to Canada in 1986.

Canada’s 40,000 corn growers are mostly in the provinces of Ontario and Quebec and their harvest is worth some $500 million, or $360 million U.S., annually. It is almost entirely animal feed and corn sweeteners.

The Canadian farmers claim they are losing $1 million, $720,000 U.S., per day because of cheaper imported U.S. corn.

However, the president of a major Ontario grain company, Herb Heimbecker of Parrish and Heimbecker Ltd., has warned that Canadians may be shooting themselves in the foot by imposing a tariff to raise corn prices.

He said animal feed companies and liquor distillers may switch to other grains, or take advantage of duty refunds by exporting products made with U.S. corn.

The result could be a 40-million-ton Canadian surplus with no market, he said.

The Canadian Import Tribunal has 120 days to make a final determination in the case, but the duties will be effective immediately. Seed corn, sweet corn and popping corn are excluded from the tariff.

Canadian Trade Minister Pat Carney met with U.S. Commerce Secretary Malcolm Baldrige in Washington on Thursday and later told reporters that Canada sought to avoid retaliation or a trade war.

But she condemned ″trade-harassment measures″ from Washington in recent months, which include a 35-percent tariff on cedar shakes and shingles from British Columbia, a new customs duty on all Canadian goods and higher tax on Canadian crude oil.

Carney has said one aim of the free-trade talks, which resume in Ottawa next week, is mutual protection from countervail duties.

But U.S. Ambassador Thomas Niles, speaking today in Ottawa, said this goal was unrealistic. When negotiations fail in trade disputes, ″then ultimately you have to have the recourse to a countervailing duty case,″ he said.

Baldrige reassured Carney that despite Democratic Party control of both Houses of Congress following this week’s U.S. elections, ″the people in this country essentially don’t want protectionism.″

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