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The perception amongst the CWB's foreign competitors that it has some kind of unfair advantage could prove costly for them.(600 words).

The tide of international opinion seems to have temporally turned in favour of the Canadian Wheat Board (CWB) within the rarefied atmosphere of World Trade Organization's (WTO) negotiations. Or at least the Canadian government and other supporters of Canada's centralized system for marketing western wheat and barley hailed last month's WTO "text" as indicating this.

It is the use of trade-distorting practices of State Trading Enterprises (STEs), rather than these national monopolies themselves, that seemingly is the concern of most WTO members, see footnote.

The deeper you dig into the text, however, the less clear cut this seems. The incidence of the euphemism, divergence or only conditional convergence, meaning, horror of horrors, disagreement is all too frequent in the paragraph devoted to STEs in the text's agricultural annex, see footnote.

The lack of agreement evident in the text,while negotiations continue, may, of course, exaggerate differences. Withholding agreement, for no other reason than reserving it as a proverbial pawn, is a time honoured negotiating strategy.

All this suggests that the CWB survived, not because there was agreement that it should, but because there was divergence, no agreement, as to what constituted unacceptable monopoly practice - a hung jury.

The CWB has, of course, won the battle with the North Dakota Wheat Commission which should go some way to dispelling the belief in some US quarters that there is some kind of umbilical cord stretching from Ottawa to 400 Main Street, Winnipeg through which life blood of uninterrupted funding is pumped.

But even with the marginal but undeniable benefit of the federal government's guarantee of initial payments out of the way out, the CWB troubles may not be over. If it is to be left to live a quiet life which it surely requires if it is to be an effective marketer, it will need, not only to be clean, but seen to be clean.

It probably matters little that, with the possible exception of durum, the CWB is a long way from the sort of dominance on international markets needed to exercise monopoly powers. And without this or government funding it is difficult to define specific benefits for centralized marketing.

Perhaps the CWB's best defence to the international community can be found in a long forgotten 1990 report on the US oat market to the US Congress and undertaken by the US Department of Agriculture. It noted:

"With the Canadian and U.S. free trade agreement, major changes are not anticipated in the importation of Canadian oats. However, as of August 1,1989, the Canadians will remove the marketing of oats from their Wheat Board and turn it over to private industry which would appear to ease the process of importing Canadian oats."

It proved prophetic as Canadian oats exports gapped higher and are now typically about double what they were in the days of CWB oats marketing. The moral here would be that overseas competitors seeking the demise of the CWB should be careful about what they ask, as they may end up getting it.

"As a means of ensuring that trade-distorting practices of STEs are eliminated, disciplines relating to exporting STEs will extend to the future use of monopoly powers so that such powers cannot be exercised in any way that would circumvent the direct disciplines on STEs on export subsidies, government financing and the underwriting of losses." - from paragraph 6.

"Exporting State Trading Enterprises

13. There has been material convergence on rules to address trade-distorting practices identified in the July 2004 Framework text, although there are still major differences regarding the scope of practices to be covered by the new disciplines. Fundamentally opposing positions remain, however, on the issue of the future use of monopoly powers. There have been concrete drafting proposals on such matters as definition of entities and practices to be addressed as well as transparency. But there has been no genuine convergence in such areas." - Annex A, Agriculture, Report by the Chairman of the Special Session of the Committee on Agriculture to the TNC.

January 17, 2006