An Ontario dairy farmer who has been battling the province’s supply management system for four years in a bid to export product outside its restrictive rules is threatening to use international trade law to sue Canada for damages.
Last week, a lawyer for Barrie farmer Chris Birch and his American financial backers and customers filed a notice of intent to use a controversial clause of the North American Free Trade Agreement to sue Canada for at least $78 million. Calgary lawyer Todd Weiler said a judgment could come within a year.
Read Also
Farmers urged to be grain-safe this fall
Working around grain bins comes with risk, from farmers falling to drowning in grain: Experts have five tips to help avoid grain-related accidents this harvest.
Birch is also before Ontario courts, trying to block an attempt by Dairy Farmers of Ontario to close down his export business.
He said in an interview that DFO wants to eliminate the evidence his company has provided that an Ontario farmer can make a living outside the price setting supply management system if he is not saddled with high quota costs.
“The dairy industry is facing challenges and it will happen globally whether Dairy Farmers of Ontario wants it to happen or not,” said the 48 year old who once held quota but sold it in the 1990s because returns were not high enough to pay for the quota debt.
“If we are going to have a dairy industry, we have to expand, find new products and markets and keep processors in this country. The only way we can do that is to export and to create a parallel system outside supply management that is not subsidized.”
The World Trade Organization has ruled that milk or products created within the protected supply managed system and then exported are subsidized. There are restrictions on how much subsidized products can be exported and WTO negotiators have committed to eliminating export subsidies by 2013 if there is a new deal.
It would mean the end of exports from within the system.
However, the WTO did not comment on Canadian exports from farmers outside the quota system. Birch said the 24 farmers who sell up to 1.3 million litres of milk to his Georgian Bay Milk Co. do not hold quota and therefore are not affected by the 2002 WTO ruling.
However, DFO insists a parallel operation of non-quota holders would undermine the Ontario supply management system and with the support of the Ontario government, has limited the company to handling no more than 1.3 million litres. It could close down the business if an Ontario appeals court upholds lower court rulings later this year against the farmers.
Birch said turning to NAFTA was the last avenue left to save the business and allow it to grow.
Weiler said the “not less than $78 million” figure was arrived at by calculating losses and costs already incurred and impending losses while the case drags on.
He said the motion of “intent” to ask for arbitration under NAFTA Chapter 11 gives the federal government 90 days to respond. Both sides would then select a representative for the NAFTA panel, a chair would either be agreed to or imposed and arguments would be heard.
The formal complaint would kick in only when the Georgian Bay operation was formally closed down.
“I would anticipate we could expect some decision (under NAFTA) sometime in spring of 2007,” he said. “It could be costly for Canadian taxpayers if we win and the government could make all this go away simply by allowing Georgian Bay to do what they want to do and that would be legal under the WTO.”
NAFTA Chapter 11 is a controversial section that allows companies that feel they have been unfairly treated under NAFTA rules by another country to the detriment of their equity, investment or potential earnings to sue the national government.
