THE CANADIAN DAIRY CASE

GROUP -2

Total Milk Production

Royal Dairy Commission

In-quota Production

Approx. C$52.92 Per hectoliter

Domestic Processor

Over Quota Production

Approx. C $ 28.06 Per hectoliter

Export Processor

Continued..

1995-9625%

1996-9725%

19997-9825%

1998-9925%

Market sharing Quota

1995-96 1996-97 19997-98 1998-99

INTRODUCTION THE ISSUE IN THIS DISPUTE WAS A GOVERNMENT

POLICY THAT ENABLED CANADA’S EXPORTERS OF CHEESE AND CHEESE PRODUCTS TO PROCURE MILK AT ADVANTAGEOUS PRICES.

THE PRICE WHICH THE EXPORTERS PAID FOR MILK WAS LOWER WHEN COMPARED TO THE MILK PRICES PREVAILING IN CANADA’S DOMESTIC MARKET.

ACCORDING TO THE US, ONE OF THE COMPLAINING COUNTRIES, THE AVERAGE MILK PRICE IN THE DOMESTIC MARKET WAS C$ 52.92 PER HECTOLITER, WHILE CANADA ITSELF THE DOMESTIC PRICE C$ 19.06 TO C$ 36.86 PER HECTOLITER.

Continued..Both the USA and New Zealand, another complaint argued that such a government policy was not in conformity with Canada’s subsidy commitments under the Agreement on Agriculture.

The panel reporters of July 11, 2001 and December 20, 2002, found that the Canadian system ensured that producers who sold milk at a lower price to export processors were compensated by a higher domestic price.

The panels concluded that Canada should bring its export subsidies in conformity with WTO Commitments.

Findings:

You are giving $ 52.92 to the producer in the domestic market sale. (Subsidy??) i.e 44.7 million hectoliter * $ 52.92 (1998/99) –

AS per AOA : Payments on the export of an agricultural product that are financed by virtue of govt. actions, whether or not a charge on the public account is involved, including payments that are financed from the proceeds of a levy imposed on the agricultural product concerned or an agricultural product from which the export product is derived.

Canadian govt. failed to explain that domestic market was market driven.