The United States and New Zealand are celebrating once again. The World Trade Organization (WTO) has once again ruled that Canada’s two-tier dairy program provides illegal export subsidies.

Last year a WTO compliance panel ruled that Canada’s two-tier system ran by individual provinces provided an export subsidy that Canada used to exceed its WTO limits. Canada appealed the decision saying the panel did not have the correct information and therefore no ruling could be made. The WTO appellate body agreed. So, the U.S. and New Zealand asked the WTO compliance panel to re-hear the case using the required data. With that new information in hand, the WTO panel again ruled that Canada’s dairy program amounts to an illegal export subsidy under the Uruguay Round commitments.

The U.S. and New Zealand assert that Canada uses export subsidies that allow producers to sell cheese and skim-milk powder below cost. Under the ruling, the two countries could be allowed to retaliate against Canada with combined sanctions worth as much as $70 million.

Canada has said it will appeal the ruling again.

Much of what the U.S. dairy industry hoped to achieve in this series of challenges has already been achieved. The industry will consult with the U.S. government about the next steps, but industry officials stand by their continuing commitment to combating trade distorting practices and to working with the U.S. government to ensure Canada's compliance with its WTO obligations.

PRNewswire, Associated Press