R-CALF Head Says Organization
Still Growing Despite NCBA Snub

By David Bowser

COLUMBUS, Mont. — The head of a newly-formed cattlemen's trade group says the organization is continuing to grow despite the National Cattlemen's Beef Association's refusal to support its efforts.

"What we're doing is continuing to try to raise funds to pay for our litigation," says Leo McDonnell, Jr., a Columbus, Mont., cattleman and president of the Ranchers-Cattlemen Action Legal Foundation (R-CALF).

R-CALF filed three petitions with U.S. agencies in Washington D.C., on Oct. 1, seeking relief from what its supporters say are unfair trade practices by Canadian and Mexican cattlemen.

The three cases, filed with support of the National Farmers Union and more than 20 other state and local organizations, are expected to cost about $1.7 million in legal fees.

"We've gathered up nearly $700,000 so far since the middle of July," McDonnell says.

He says other cattlemen have been supportive and seem to understand what they are trying to do, though NCBA voted not to support the Montana-based group.

On Oct. 13, the NCBA executive committee voted nine to five not to support the R-CALF petition requesting the U.S. government to file a countervailing duty case against Canada. The committee did not vote on the petitions requesting the U.S. government to file anti-dumping cases against Mexico and Canada.

In a prepared statement, NCBA said it continues to support its own calling for bilateral negotiations instead of legal action as a way of controlling live cattle imports from Mexico and Canada.

"Fair trade is vitally important to the future of the U.S. beef industry, and its importance becomes greater during the poor market conditions we're enduring now," said NCBA president-elect George Swan.

The papers creating R-CALF were filed in May. The group started forming in January.

"That's following a couple of years studying the trade laws," McDonnell says. "We probably have three years of research in this."

McDonnell insists the legal system is about the only way to address unfair trade practices.

"The U.S. steel industry has used this quite a bit," McDonnell says. "The wheat gluten people won one here this spring against Europe."

McDonnell says the two cases in which R-CALF has filed petitions against Canada and Mexico concerning anti-dumping are similar to a case in which U.S. tomato growers filed petitions against Mexico in 1996.

"They're very similar cases," McDonnell says. "U.S. tomato growers did win. In fact, theirs happened pretty quick."

He says Mexico settled quickly after U.S. tomato growers filed their complaints.

"That's the neat thing about this," McDonnell says. "It's not like a lawsuit that can drag on for years. Congress has mandated a timetable that these agencies have to respond to. Generally, it takes eight to 12 months, but I guess the Mexican government stepped in early and got things worked out with the tomato growers."

At that time, McDonnell says, Mexico was dumping tomatoes into the United States at from a dollar to three dollars a box despite previous trade cases which established that Mexico could not sell tomatoes in the United State for under $5.14 a box, a figure that is still under breakeven.

"That's what dumping is; selling under the breakeven price," McDonnell says. "It's pretty interesting. That case actually benefited the Mexican growers and the U.S. growers."

In the first year after the settlement, gross revenue sales to producers improved somewhere between $60 and $80 million, he says.

The tomato growers’ suit was successful despite the relatively insignificant size of their industry, McDonnell says.

"They're very small compared to the cattle industry," he notes.

McDonnell says he sees very little "down" side to the actions taken by his group.

"The only down side, I would say, is that maybe some of those who have benefited from unfair trade practices may be hurt, but the industry will benefit," McDonnell insists.

Although it is unusual for a matter of this nature to be considered outside its normal policy-development process, NCBA's International Markets Committee met by conference call Oct. 9 to consider the R-CALF petitions. The committee voted 69 to 17 against recommending NCBA support.

NCBA international markets committee chairman Dana Hauck, Delphos, Kan., says to win such an action as that taken by R-CALF, the petitioning U.S. industry must show that the subject imports are being either dumped or unfairly subsidized and that the imports are causing or threatening the domestic industry with material injury.

The remedy provided by law is the imposition of an offsetting duty on the import at the time it is brought into the United States, but the law provides no direct relief to U.S. cattlemen, Hauck says.

Devaluation of the Canadian dollar has reduced the price of Canadian cattle in terms of U.S. dollars. The Canadian dollar has been devalued from approximately 82 cents U.S. in 1989, when the U.S./Canadian Trade Agreement was signed, to approximately 67 cents U.S. today, according to the NCBA.

NCBA says filing antidumping and countervailing duty cases would likely cost more than $1 million each, take seven to 14 months to resolve and stand less than a one in two chance of success.

"We did not see merit in the R-CALF request at this time when the risks and the costs are so high," Hauck says. "We feel aggressive efforts already underway are the best alternatives to resolve the issues and to maintain good relations with important trading partners."

Hauck cites implementation of revised rules on Oct. 1 to allow U.S. cattlemen to ship more feeder cattle to Canadian feedlots. The rules waive specific animal testing requirements to make cross-border shipment of live cattle more accessible to U.S. cattle producers.

"This is a perfect example of how diligence and hard negotiations can result in fair trading practices," Hauck says. "This success was the result of coordinated efforts of state and national industry representatives, Montana and Washington state officials, U.S. government officials and Canadian officials."

Swan says Mexico has long been a supplier of feeder cattle to U.S. cattlemen and is now the second-largest and fastest growing export market for U.S. beef.

"We co-sponsored with the Mexican cattlemen a symposium for retailers and distributors to increase demand for beef in Mexico and worked with USDA to provide GSM-103 credit guarantees for Mexican cattlemen to purchase U.S. breeding cattle following severe drought," Swan says. "NCBA will continue to work with the Mexican cattle industry and government officials to assure that this vital two-way trade continues."

Swan says the U.S. cattle industry has made significant strides in trade issues with Canada and Mexico.

"We prevented cattle from Australia entering the U.S. through Mexico, beef exports have increased to Mexico, and we made progress in getting country-of-origin labeling on beef imports considered by Congress," Swan says.

Swan says NCBA is working with USDA and Congress to determine possible options on rescinding U.S. quality grades on Canadian imports and implementing country-of-origin meat labeling on imports.

He also wants to assure that Mexican feeder cattle meet U.S. animal health standards, and he wants to expand the movement of cattle north to Canada.

Swan says NCBA must ensure that Canadian Wheat Board practices do not provide cost of gain advantages to the Canadian livestock industry.

There are also plans to host a trade team from Mexico to increase understanding of U.S. feedlots, packing plants and border inspection processes, and expedite rulemaking that will allow Canada to recognize "Disease Free Regions" in the U.S. that can ship cattle to Canada and solve animal drug issues.

At the request of Canadian cattlemen, a summit between the two countries was held this week in Denver to discuss trade issues between Canada and the United States, but McDonnell and R-CALF representatives weren't there.

"We weren't invited," McDonnell says, adding, "I don't know why we'd go."

McDonnell is philosophical about NCBA’s vote not to support R-CALF's petitions.

"It was disappointing," he says. "We've been long time members. But we have had tremendous support from a lot of other state associations. Just since July, I bet we have 19,000 producers signed on already."

R-CALF vice president Kathleen Kelley of Colorado has been in Texas this month talking to ranchers and seeking support.

"R-CALF's mission has been to talk to ranchers around the country to alert them to self-help steps we can take to protect our families, our homes and our communities," Kelley says. "The response from individual ranchers and from many producer associations has been immediate — let's do what it takes to eliminate unfair trade practices."

The first petition filed by R-CALF is an antidumping petition on live cattle from Canada, alleging dumping margins of $50 to $150 per head. The second is a countervailing petition on live cattle from Canada, alleging subsidies of roughly $100 per head. The third is an antidumping petition on live cattle from Mexico alleging dumping margins of more than $200 per head.

R-CALF is also asking the government to initiate consultations with the Canadian government to explore feed barley prices in Canada, which the organization says provide an artificial cost advantage to Canadian cattlemen.

"The harm from these combined forms of unfair trade practices to U.S. ranchers is believed to be between a billion and two billion dollars per year," McDonnell says. "Imports from the two countries of live cattle were two million head in 1997 with a value in excess of $1.1 billion."