President Clinton’s decision last Friday to add Poland to the list of countries which are subject to a United States quota on imports of wheat gluten “sends a clear message that the abuse of our country’s safeguard measures involving global trade will not be tolerated,” said Ladd Seaberg, president and chief executive officer of Midwest Grain Products, Inc. That measure, along with President Clinton’s decision to allocate imports of wheat gluten on a quarterly rather than an annual basis becomes effective tomorrow with the start of the third year of the three-year-long quota.
The President’s proclamation came at the behest of the U.S. International Trade Commission (USITC). In a report to the President, the Trade Commission notes that in the 12-month period prior to the imposition of the quota, 440,000 pounds of wheat gluten entered the U.S. from Poland. During the first year of the quota, which began June 1, 1998, imports from Poland surged to 5,004,000 pounds and accounted for 2.9 percent of total U.S. wheat gluten imports. Further data supplied to the President by the U.S. Customs Service indicate that during the first 10 months of the second quota year, imports from Poland amounted to approximately 9 million pounds, accounting for almost 7 percent of total gluten imports. Due to those dramatic increases, the determination was made to no longer exempt Poland from the quota.
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In his proclamation last Friday, President Clinton stated: “After taking into account the information provided in the USITC’s report, and after receiving advice from the Secretary of Commerce and the Secretary of Labor, I have determined, on the basis that increased imports of wheat gluten the product of Poland have impaired the effectiveness of the action that I proclaimed in 1998 under section 203 of the Trade Act, that changed economic circumstances warrant a modification in the action. Accordingly, I have decided to include in the action imports of wheat gluten the product of Poland, beginning June 1, 2000.”
The President further proclaimed that “Pursuant to section 203(g) of the Trade Act (19 U.S.C. 2253(g), I have further determined to provide for the efficient and fair administration of the quantitative limitation on imports of wheat gluten by allocating on a quarterly basis the quantitative limitations applicable during the third year of the action.”
Seaberg, who also serves as president of the Wheat Gluten Industry Council (WGIC) of the U.S., said these most recent actions “are essential to upholding the intent of the quota.”
The quota was established in an effort to bring greater balance, fairness and stability to the U.S. wheat gluten market. For the past several years, a complex subsidy scheme has allowed European Union producers to sell surpluses of their artificially-priced gluten in the U.S. at values below U.S. production costs, Seaberg explained. Low U.S. tariff rates on wheat gluten compared to the E.U.’s prohibitively high tariffs on gluten and its co- product, wheat starch, have compounded this situation.
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By GlobalDataBetween 1992 and 1997, imports of subsidized wheat gluten from the E.U. increased from about 17.5 percent of the U.S. market to more than 30 percent of the market, forcing a significant decline in U.S. production.
Nearly three years ago, in an effort to seek relief from injury caused to domestic producers, the Wheat Gluten Industry Council filed a petition with the USITC under Section 201 of the Trade Act of 1974. As the result of this filing, and a subsequent investigation and hearing, the USITC on January 15, 1998 unanimously determined that increased imports of subsidized wheat gluten are a substantial cause of serious injury to the U.S. industry. With that determination, the USITC issued a recommendation for a quota, which was approved and put into effect by President Clinton in June 1998.
Wheat gluten is the natural protein portion of wheat that is extracted after wheat is milled into flour. In its finished unmodified form, wheat gluten is a fine tan powder consisting of 75 to 80 percent protein. Its principal uses are in breads, cereals, pasta, processed meats and meat substitutes, batter mixes and pet foods.
