WTO rules in Canada’s favor

The latest ruling in a four-year-old trade dispute that pits Canada against the United States and New Zealand gives Canada reason to celebrate.

The World Trade Organization appeals judges ruled Monday that Canada’s dairy supply management program does not violate global trading rules. The ruling not only overturned an earlier finding by a WTO panel, but it removed the threat of $70 million in duties that the U.S. and New Zealand could have imposed against Canada if the Appellate Body had ruled in their favor.

The dispute started when the United States and New Zealand argued that Canada’s Special Milk Classes Scheme provided illegal subsidies for Canadian dairy exports. Canada lost that ruling in and appeal and said it would adjust the program to make it conform to WTO rules and announced that it had done so at the end of January 2001.

However the U.S. and New Zealand were not satisfied with the changes and asked that the original WTO panel be recalled to study their complaints. In July the panel ruled that both milk and cheese were still being exported with government financial support. Canada appealed that decision.

In the ruling announced Monday, the three Appellate Body judges said they could not see how the program forced milk producers to export in order to benefit from government subsidies — a key argument presented by the United States and New Zealand in the case. Canadian officials are hopeful that this will be the final word on the matter.

Reuters

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