Has the World Trade Organization soured on the way Canada prices its milk?
A panel examining complaints from the United States and New Zealand released its first thoughts on the subject Feb. 5.
The interim report is confidential and Canadian dairy officials won’t comment on what it contains.
But an unnamed source in a
National Post newspaper story out of Washington, D.C. implied the panel’s ruling is unfavorable for Canada.
Charles Birchard, spokesperson for the Canadian Dairy Commission, would not say whether the story was accurate.
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He emphasized the panel has released only its interim report.
The government has already started consulting the industry and provincial governments on what actions to take now, said Birchard.
“We think everything we do is complying with Canada’s trade obligations,” Birchard said.
Richard Doyle, executive secretary of Dairy Farmers of Canada, said the interim report gives both sides a chance to check the panel’s findings for errors in fact or law.
“It’s highly confidential, but it’s an opportunity for the countries to comment on the findings,” said Doyle.
The panel is expected to come out with its final report in April. The final report is also confidential for two weeks, said Doyle.
Then, either party can appeal the decision. “This can drag on well into the summer,” said Birchard.
Most agricultural WTO panel decisions have been appealed in the past, said Doyle.
Kempton Matte, president of the National Dairy Council, which represents Canadian processors, did not respond to an interview request.
The United States and New Zealand complained to the WTO that Canada’s special class pricing system is an export subsidy.
Three categories
The special class, called class 5 milk in Canada, covers three kinds of pricing situations:
- Milk going into further-processed items, like cheese for frozen pizzas or baking, is priced based on U.S. milk prices. The finished goods have to compete with U.S. goods.
- Milk going into traditional planned exports, such as aged cheddar cheese to the United Kingdom, and milk powder to Libya, Algeria and Cuba.
- Exports of “structural surplus,” dairy products like milk powder and butter left over from processing other products.
Producers share returns when milk from the quota system goes into the special classes. But farmers are free to produce as much milk as they want above their quota, said the Canadian government’s presentation to the WTO panel.
This milk gets world market price. Producers don’t pool these returns.
The U.S. also argued Canada is not letting in enough American milk under WTO minimum access requirements.
But Canada argued cross-border shoppers and tourists bring in more milk than specified in the trade agreement.
