Canada will appeal March WTO dairy decision

July 16,1999

Canada has filed an appeal of a March World Trade Organization ruling that found the country's dairy pricing system included export subsidies. The United States brought the complain in the fall of 1997 and was joined some months later by New Zealand. U.S. dairy industry officials say it's unlikely the WTO appellate body will overturn the earlier decision.

"This appeal demonstrates our firm commitment to Canada's dairy industry," said Trade Minister Sergio Marchi. "We have been working closely with the provinces and the industry to prepare Canada's submission which we are delivering to the WTO on July 19." The appeal is expected to be heard on Sept. 6 with a decision expected in mid-October.

The WTO dispute settlement panel ruled in March that Canada must scale back its use of subsidized dairy exports and allow increased commercial access for fluid milk to its own market. The U.S. government had challenged Canada's dairy export pricing scheme and market access barriers at the request of the U.S. Dairy Export Council, International Dairy Foods Association and National Milk Producers Federation.

Since 1995, Canada has used a two-tiered export pricing system to exceed dairy product subsidy limits that it had agreed to accept in international trade agreements, the U.S. claimed. Under the system, Canadian dairy processors pay farmers a higher price for milk used domestically and a much lower price for milk that is exported, giving Canadian dairy exports an unfair price advantage in world markets, according to the claim. Canada maintains the export scheme is not a subsidy and therefore not subject to the limits agreed on in the Uruguay Round.