Canada renounces dairy scheme

New Zealand welcomed Canada's action in dismantling its WTO-inconsistent "Commercial Export Milk" programme, Trade Negotiations Minister Jim Sutton said today.

"This enables this longstanding trade dispute to be brought to an end."

New Zealand has had a long-running dispute with Canada over its dairy export subsidy schemes. In December 2002, the World Trade Organisation Appellate Body issued a ruling in which they had confirmed that Canada continued to provide export subsidies to its dairy exporters, contrary to its WTO commitments.

Notification of a solution to the dispute was lodged by New Zealand and Canada with the WTO in Geneva on Friday. The United States, which joined New Zealand in challenging the Canadian export subsidies at the WTO, also reached a similar settlement with Canada.

Mr Sutton said Canada had taken prompt steps to abolish the illegal programme and had given an undertaking that it would keep to its export subsidy commitments in the future.

"That's a good outcome for New Zealand's dairy industry and proves yet again the value of the WTO dispute settlement system to a small trading nation like New Zealand. Canada's export subsidy scheme was estimated to cost the New Zealand dairy industry around US$35 million a year in lost returns, and the losses would have been even greater if other countries had adopted similar policies."

The resolution reached last week was the culmination of almost five years of litigation by New Zealand and the United States to challenge Canadian export subsidy schemes. Since the Appellate Body ruling last year Canada has acted to dismantle its "Commercial Export Milk" scheme. From 1 August 2003, Canada has committed itself to fully comply with its WTO obligations.

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