The U.S. Department of Commerce has now placed tariffs on imported Canadian mushrooms, claiming the Canadian industry is being unfairly subsidized. A fact sheet released by the Commerce Department showed that Canadian mushrooms will face graduated tariffs of up to five percent, citing unfair government support.
In September of last year, several American mushroom growers filed a petition with the U.S. Ag Department requesting that a countervailing duty be placed on Canadian mushroom imports, and that an anti-dumping investigation also take place.
The petition by U.S. growers argued that a Canadian sales tax exemption status equates to Canada’s mushrooms receiving an unfair subsidy. What has people scratching their heads in this instance is that American mushrooms, like most other farm products, also receive similar sales tax exemptions.
Kelvin Hepner is a Canadian agrifood analyst. He says the sales tax exemption received by the mushroom producers in Canada is much like the same exemption received by U.S. producers.
“The allegation here is that Canada’s mushroom producers are subsidized. They’re pointing to sales tax exemptions that apply to all of agriculture. It’s a very similar tax policy to what the U.S. farmers have. It looks like a protectionist effort to protect the U.S. mushroom-producing area that’s highly concentrated in Pennsylvania.”
The tariffs being imposed on Canadian mushrooms are called countervailing duties, and are the same measures used to tariff Canadian softwood lumber. That’s a dispute that’s been going on for decades now, where such tariffs are imposed on imported goods that the U.S. claims are being unfairly subsidized.
The Canadian mushroom industry has seen a lot of growth in the past 25 years, and exports have increased substantially into the U.S. marketplace over the past decade. Ryan Koeslag is the executive vice-president of the Canadian Mushroom Growers’ Association. Koeslag says a tax exemption is unprecedented as a justification for countervailing duties.
“They’re the same in the United States as they are in Canada. We’ve always been operating under the rules and regulations of the free and fair trade between Canada and the US. And so, the reason that they identified this, I think, is really because they’ve not been able to find anything else.”
Ontario and British Columbia produce most of those mushrooms, and about 40 percent of Canada’s annual production goes to the U.S.
William Peleran, a Canadian international trade lawyer, believes that the duty on Canadian mushrooms is targeting Canada’s agricultural sector.
“What this tells us is that industries are becoming very, very aggressive to look at import competition. There’s a broad trend to look at agricultural products flowing into the United States, to have duties imposed at the border, to offset that alleged unfair trade.”