25 June 2002

New Zealand Wins WTO Case Against Canadian Milk Subsidies Again

The World Trade Organisation Panel considering the latest complaint by New Zealand and the United States against Canada's dairy export subsidies has again ruled in favour of New Zealand and the United States, Trade Negotiations Minister Jim Sutton confirmed today.

He said the details of the report remained confidential to New Zealand, Canada and the United States until it was more widely released to WTO members.

"Accordingly, it would be inappropriate to comment at any length on the outcome."

However, responding to overseas media reports on the panel result, Mr Sutton said it seems that once again Canada has been found to be providing illegal subsidies to its dairy exporters.

"This is an extremely welcome outcome. These illegal export subsidies cost the New Zealand dairy industry $80 million each year."

The current dispute concerns a replacement dairy export scheme put in place following a 1999 WTO ruling on the illegality of an earlier Canadian scheme. The Panel's decision resolves issues left outstanding by a report of the WTO's Appellate Body late last year by confirming that Canada's replacement schemes are - like its original export subsidy programme - also contrary to Canada's WTO obligations.

"This decision once again confirms the value of the WTO system to New Zealand. The dispute settlement system has already enabled New Zealand to ensure better access to Europe for our butter and the removal of unjustified tariffs on our lamb exports to the United States.

"This is an extremely positive result which highlights the strength of the WTO export subsidy disciplines. It will be welcomed by all countries, like New Zealand, that are working for the removal of remaining distortions to agricultural trade, particularly coming, as it does, at a critical phase of the WTO agriculture reform negotiations."

Mr Sutton said he hoped Canada would reflect closely on this result.

"While there is a right of appeal, today's decision represents the fifth occasion on which Canada has been unable to demonstrate that its dairy export pricing regime complies with WTO subsidies disciplines. I would hope that Canada will realise this time that the writing is on the wall and withdraw this illegal support to its exporters."

Office of Hon Jim Sutton

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