Maurice Doyon doesn’t know the interim ruling of a World Trade Organization panel on Canadian dairy products.
But the agricultural economist at Laval University in Quebec City said a loss for Canada may not be a bad thing. Much depends on what parts of Canada’s special milk class pricing system, if any, the WTO panel takes issue with, said Doyon.
If the panel rules the entire group of class 5 dairy products are illegal, Canada would be in trouble.
This class includes Canada’s structural exports, the butter and milk powder and other low-valued products left over from processing, and surplus to what Canada can consume.
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But Doyon believes United States and New Zealand trade lawyers were concentrating their efforts on class 5(d), milk priced for export and sold to traditional Canadian markets, such as aged cheddar cheese sold to the United Kingdom.
The Canadian submission to the WTO panel said these traditional exports accounted for 1.2 million hectolitres of milk in 1998.
“If we won (on class 5(d)), it would not be such a good thing,” said Doyon.
He explained the U.S. and Europe could use a positive ruling of 5(d) to disguise export subsidies.
“It could be a way to export by … not using your ceiling on the export subsidies,” he said.
That’s why New Zealand joined the U.S. in its complaint, said Doyon. New Zealand, a major world exporter of milk, cares little about Canada’s relatively paltry exports. But New Zealand is afraid Europe will set up a system similar to Canada’s, he said.
World prices for dairy products would plummet, hurting New Zealand. Canadian producers would also be hurt. They have been trying to grow exports and production through the new optional export program. (This program is not the subject of the WTO complaint.)
Low world prices would stall Canada’s export growth. But a loss on 5(d) exports could be accommodated in other parts of Canada’s milk pricing system, he said.
