New Zealand has joined with the United States in protesting the way Canada prices its exported dairy products.
In late December, the New Zealand government called for consultations with Canada, claiming the so-called “special milk classes” system of setting exported milk prices is just another way of subsidizing exports.
“Canada will have 60 days to agree to scrap the scheme or face a World Trade Organization disputes settlement panel,” said New Zealand agriculture and trade minister Lockwood Smith.
“Under the Canadian scheme, farmers receive an artificially low price for some of their milk in order for it to be processed for export so that Canadian dairy products can compete on world markets.”
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Canadian officials should have their defensive lines down pat.
Late last year, the Americans asked for consultations to complain. Their 60 day period has ended and the U.S. government has not yet announced if it is calling for a World Trade Organization panel investigation of the issue.
Canadian officials speculate the U.S. could wait to call for a panel until New Zealand is finished its preliminary stage. Then the two countries could join.
Canadian dairy producers suggest the complaint is another attempt by the Americans to undermine Canada’s supply management system for milk.
Under the special milk classes policy, processors making product for export can buy milk at lower prices to make their products competitive abroad.
Returns from this “special classes” milk are pooled so farmers across the pooling area share the losses on those sales, as well as the profits on higher-priced sales for the domestic market.
Just another levy
Foreign critics suggest this is a new version of an old policy that covered losses from export sales and surplus removal through farmer levies, or paid rebates to processors that exported.
Under world trade rules which took effect in 1995, those practices were declared subsidies and outlawed. Canada changed the rules and insists that special class pricing is similar to policies in other countries, which price differently for domestic and export products.
