The Canadian dairy farmer lobby has lost another round in its battle to stop the import of millions of dollars worth of butteroil-sugar blends that replace domestic butter in ice cream making.
In a two-to-one vote, the Canadian International Trade Tribunal has ruled that a tariff classification that allows the product to enter the country tariff-free is the correct one.
Dairy Farmers of Canada will appeal that ruling.
And a DFC official said last week if it loses the appeal, the issue will land back on the desks of government members as a demand for political action.
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“This is not over,” said DFC executive secretary Richard Doyle. “We will appeal it to the Federal Court of Canada. After that, it is back to the government as a political issue. We will not concede this.”
The dairy farmer lobby has waged a two-year battle to convince the government that the tariff-free entry is a mistake, a bureaucratic error which can be corrected simply by changing the tariff classification.
The cheap imports displace Canadian butter, force production quota reductions and cost the dairy pool potentially tens of millions of dollars in sales.
An intense political lobby effort by dairy farmers last year failed to convince the federal government to make the tariff change on butteroil blends. Trade officials argued changing the tariff classification could be challenged at the World Trade Organization as a violation of WTO rules.
Instead of making the change, agriculture minister Lyle Vanclief asked that the issue be referred to the CITT for a ruling.
The tribunal has supported the government decision.
Two of the three CITT members ruled that since butteroil blends cannot be used as spread on bread or as a cooking oil, as well as an industrial ingredient, it cannot be considered a butter substitute.
“It is clear that what is being sought by the ice cream maker is not the unique flavor or texture of butter, but rather the milk fat contained therein,” decided the tribunal majority. “Therefore, to the extent that the blends are used in the manufacture of ice cream, the tribunal is of the view that they are not being used as butter substitutes per se, rather as economical and stable sources of milk fat.”
Tribunal member Patricia Close filed a minority report disagreeing. She argued that a butteroil blend need not be an appropriate substitute for all butter uses in order to be considered a butter substitute subject to tariffs.
Doyle said it is the minority report conclusions that will form the basis of the appeal to the Federal Court.
