WTO Appeal Body Declines Decision On Canadian Dairy Export Subsidy scheme

The World Trade Organisation's Appellate Body declined to make a ruling on New Zealand's complaint that Canada was providing illegal export subsidies to its dairy industry, Trade Negotiations Minister Jim Sutton said today.

Mr Sutton said the Appellate Body felt it had insufficient information at this stage to make any determination. However, the decision leaves the door open to New Zealand and its co-complainant, the United States, to pursue further proceedings against Canada.

"While we need to study the ruling closely, our preliminary view is that we will continue the legal challenge.

"This is an important case for New Zealand. Canada's illegal export subsidies cost New Zealand about $80 million a year because of their depressing effect on world dairy prices. That's more than $5500 per year for each New Zealand dairy farmer."

The current dispute concerns a replacement dairy export scheme the Canadians devised to replace a scheme already ruled illegal by the WTO in 1999. A disputes panel ruled in favour of the challenge to the scheme by New Zealand and the United States earlier this year.

"While the Appellate Body disagreed with some aspects of the Panel's legal analysis, the Appellate Body made it clear that it was not finding that the Canadian measures were consistent with Canada's WTO obligations. This is not a victory for Canada - far from it.

"I regret that this dispute has been further prolonged, but I think it's important for New Zealand to see the process through to resolution. It's essential that the integrity of WTO rules relating to export subsidies is not undermined.

"The WTO dispute settlement mechanism has proved extremely valuable for New Zealand. It has enabled better access for our butter to Europe and the removal of unjustified restrictions on our lamb exports to the US. It has also confirmed our challenge to Canada's original dairy export scheme, and protects our right to pursue a further challenge to the replacement scheme."

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