Released on October 15, 2004
Today's preliminary determination by the U.S. Department of Commerce (DOC) in its live swine antidumping investigation represents yet another disappointing development in Canada-U.S. trade relations.As a result of today's preliminary determination, Canadian exporters of live hogs will be required to post bonds at the level of duty – 14.06 per cent, on all shipments to the U.S. other than breeding stock. It is expected that our exporters will need to start posting bonds sometime next week when the findings are published in the U.S. Federal Register.
"Although significant, this ruling is preliminary and we believe Canadian hogs are traded fairly," Agriculture and Food Minister Mark Wartman said. "This antidumping investigation represents yet another example of an unwarranted U.S. challenge to legitimate trade in an integrated North American market"
A final determination in this investigation, and the parallel countervailing duty investigation, is expected by March 2005, with a final injury determination due 45 days later. Any deposits from Canadian exporters will be held in an account by the DOC pending the outcome of the final determinations and until such time as a NAFTA panel establishes the legitimacy of the case. If the deposits are not returned to the Canadian exporters, the DOC will liquidate the accounts and distribute any funds to the U.S. industry petitioners.
"The threat of an antidumping investigation is particularly problematic for primary sectors like live swine, where you have both highly cyclical prices and a highly integrated market," Government Relations Minister Len Taylor said. "The province is committed to working with the federal and other provincial governments and the Canadian industry to overturn this ruling and to secure more appropriate trade remedy rules in NAFTA and the WTO."
This is not the first such action taken by the U.S. against Canadian, live swine exports. In 1985, the U.S. imposed CVD duties on Canadian exports of 4.85¢/kg. The CVD was eventually lifted in 1999.
An antidumping investigation looks at whether or not foreign producers are dumping (i.e., selling goods into the domestic market below a "fair" market price which is calculated as either the market price in the foreign country, a third country market or a calculated cost of production). North American hog prices are established in the U.S. based on the price in the Southern Minnesota-Iowa region. Prices in other regions, including Saskatchewan, reflect that U.S. price, less freight and transportation costs. During 2003, U.S. price levels were somewhat depressed by the fact that many U.S. hog slaughter facilities were operating at full capacity.
In 2003, Saskatchewan exported a total of 201,131 live hogs to the U.S. (2.7 per cent of the Canadian total), with a value of $23.9 million.
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