Trade Minister Lockwood Smith has welcomed today’s ruling from the WTO Appellate Body in Geneva which confirmed that Canada’s “special milk classes” scheme provided illegal export subsidies under the WTO Agreement on Agriculture.

In a case taken to the WTO by New Zealand and the USA last year, a WTO Panel ruled that aspects of Canada’s “special milk classes” scheme provided subsidies to Canadian exporters of dairy products in ways that contravened the WTO rules.

Canada appealed the Panel’s ruling, but after considering further submissions from all parties to the dispute, the Appellate Body confirmed the Panel’s key finding that Canada had breached its WTO obligations.

“This is an excellent result for New Zealand,” said Dr Smith. “This decision confirms once and for all that agricultural export subsidy regimes like the one Canada operates are not allowed under international trade law, setting an important precedent for the future.”

Dr Smith said that New Zealand’s legal analysis had been accepted by the Panel, and had now stood up to the test of an appeal. “New Zealand’s resolve in challenging this type of trade-distorting subsidy has been rewarded,” he said.

Dr Smith hailed the result as further proof that the WTO was working for New Zealand.

“The outcome of this case demonstrates the value to a small, export-dependent country like New Zealand of the WTO which has enforceable rules, and does not let economic or political weight dictate. It means that a little guy like New Zealand can take on the big guys and win.

“As a result of this decision, Canada will be required to bring its dairy export regime into conformity with WTO rules. The ruling should be promptly complied with, and I look forward to hearing what Canada’s intentions are in this regard,” he said.

“The longer Canada’s illegal regime remains in place, the more harm is done to the prospects for New Zealand’s dairy exporters. We will be following Canada’s implementation closely”.

The Appellate Body’s Report will be adopted by the WTO’s Dispute Settlement Body in the next 30 days. Under WTO rules, Canada must inform the WTO what its intentions are in respect of implementation of the ruling within another 30 days following adoption of the Report.

ENDS

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