NZ Seeks WTO Panel on Canadian Milk Scheme

New Zealand will tonight seek the establishment of a World Trade Organisation (WTO) disputes panel to hear our case against Canada's special milk classes scheme, Trade Minister Lockwood Smith announced today.

"In late December I announced that we were exercising our rights under WTO rules to hold formal consultations with Canada," Dr Smith said. "Those consultations were held in late January but failed to resolve the issue. We are therefore left with no choice other than to ask the WTO disputes settlement body to approve the establishment of a WTO disputes panel to rule on the matter. I have instructed our officials in Geneva to do so today."

Dr Smith expects the panel to be established at a meeting of the WTO disputes settlement body on 25 March. The United States is also expected to request the formation of a panel at the same meeting to consider the same issue. Panels usually take six months to complete their work.

The special milk classes scheme enables Canada to subsidise dairy exports by making milk available to processors at reduced prices when it is to be used to manufacture products for export, compared with domestic prices. Under WTO rules, this is an export subsidy.

While Canada is allowed some subsidisation of dairy exports, albeit at a reducing level, the scheme puts it above these levels agreed to during the Uruguay Round.

"While the direct effects of the Canada scheme are relatively minor for New Zealand at present, New Zealand is concerned about the precedent it could set for other nations," Dr Smith said. "If other major dairy exporters were to copy the Canadian scheme, it would have serious consequences for the New Zealand dairy industry in international markets and would seriously undermine the WTO's export subsidy disciplines. New Zealand insists that other nations honour their WTO obligations."