The World Trade Organization says Canada hasn’t been living up to its international obligations.
In a July 6 ruling, a WTO compliance panel found that Canada hadn’t gone far enough in conforming with the requirements of an earlier decision. The March 1999 decision found the country guilty of exporting subsidized dairy products.
The latest decision could pave the way for millions of dollars of sanctioned retaliation from the United States and New Zealand, the two countries that launched the complaint. It could lead to a reduction in Canadian dairy exports.
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The Canadian government is appealing the ruling of the compliance panel, a move some feel could jeopardize exports of other agriculture products.
“We firmly believe that Canada has fulfilled its international obligations concerning dairy exports and that the approach we have taken fully complies with WTO rules,” said federal agriculture minister Lyle Vanclief.
International trade minister Pierre Pettigrew said Canada has worked with the dairy industry and the provinces to ensure exports of products like butter, cheese and skim milk powder comply with world rules.
“We will continue to make all necessary efforts, in consultation with the dairy industry and provinces, to defend our approach.”
The situation is far from finished, said Richard Doyle, executive director of Dairy Farmers of Canada.
“The process is not completed. Nothing will change for now,” he said.
“Everybody knows that the whole real issue is going to be dealt with at the appellate body level because they take a more legalistic approach to it.”
Doyle said the compliance panel comprises people like trade experts, economists and academics who might allow ideology to colour their decisions.
The appellate body is made up of lawyers who should offer strict interpretations of WTO rules. They could reverse part or all of the compliance panel’s July 6 decision.
Doyle said Canada has until the end of July to launch an appeal. The appeal process takes 90 days and Canada has another 60 days to implement the ruling of that body.
“Then and only then something will happen. So not much will happen before January basically,” said Doyle.
If the appellate body agrees with the findings of the compliance panel, Canada could face trade retaliation. The U.S. and New Zealand have listed Canadian products for possible retaliation, claiming they each have the right to “suspend concessions” on about $35 million worth of products.
That doesn’t sit well with the Canadian Agri-Food Trade Alliance, a national association of food exporters. The group is worried that the federal government’s appeal may jeopardize its sales.
“We are extremely concerned that to date we have not received any assurances from the government that our interests will not be compromised,” said alliance president Liam McCreery.
He said his members export about $4 billion of agriculture products to the U.S. annually and he doesn’t want to see those shipments compromised by a squabble over dairy subsidies.
Doyle said the retaliations would not be permanent.
“They will do that if we were to lose, until we bring our exports back within the limits of the WTO, at which time suspension of concession would have to cease.”
But he remains confident that Canada will not face retaliation or a reduction in dairy exports, which totaled close to $287 million last year.
