New Zealand to Take Canada to WTO

  • Dr Lockwood Smith
International Trade

New Zealand is taking Canada to the World Trade Organisation over its "special milk classes" scheme which we allege subsidises Canadian dairy exports, Trade and Agriculture Minister Lockwood Smith announced today.

"I have instructed our officials in Geneva to tomorrow give formal notice to the WTO that we believe the Canadian scheme is against Canada's World Trade Organisation obligations and that we are exercising our rights to request formal consultations on the matter," Dr Smith said. "Canada will have 60 days to agree to scrap the scheme or face a World Trade Organisation disputes settlement panel. As a trading nation, New Zealand insists that other countries stick to their world trade obligations."

Under the Canadian scheme, farmers receive an artificially low price for some of their milk in order for it to be processed for export so that Canadian dairy products can compete on world markets. Under WTO rules, this is an agricultural export subsidy. While Canada is allowed some subsidisation of its dairy exports, the scheme puts it above the level it agreed to in the Uruguay Round.

New Zealand and other countries have made extensive informal efforts this year to encourage Canada to drop its scheme, without success. Consequently, at the WTO in Geneva tomorrow, New Zealand will seek formal dispute settlement consultations with Canada. If agreement is not reached within 60 days for Canada to drop its scheme, New Zealand will be entitled to request the formation of a WTO dispute settlement panel to hear the case. The United States has also begun a separate challenge to the Canadian scheme.

This is not the first time New Zealand has been forced to resort to the WTO to require other countries to follow WTO rules. New Zealand is currently involved in a dispute against the European Union over spreadable butter. We have also been involved in action against the EU when it sought to ban food from hormone-treated animals, and against Hungary which exceeded its allowable level of export subsidies.