Canada’s dairy industry back in New Zealand’s crosshairs

Minutes recently released from an World Trade Organization agriculture meeting in October show New Zealand pressed Canadian officials for more information about the $350 million innovation fund – $250 million of which was earmarked for producers, with $100 million set aside for processors.

“Based on publicly available information, these programmes appear to be domestic support measures designed to directly help dairy processors, and which are intended to be exempt from reduction commitments,” a New Zealand representative told the Canadian delegation at the meeting, according to written documents.

“Can Canada provide more detail about the nature of each programme, to enable WTO members to understand whether the programmes have nil, or at most minimal, trade-distorting effects or effects on production?”

“Detailed information on these two programs is available on Agriculture and Agri-Food Canada’s website,” the Canadian delegation replied, according to documents. Notice to the WTO would be provided in “due course” officials said – a response confirmed by Agriculture and Agri-Food Canada.

New Zealand found out about Canada’s two new dairy innovation programs via media reports, a spokesperson for that country’s Ministry of Foreign Affairs and Trade told iPolitics in an email. “We therefore sought information from Canada to ensure it was meeting its obligation under the WTO Agreement on Agriculture to notify the WTO membership of all new and modified programmes.

“New Zealand therefore believes that a DS:2 notification, which details members’ domestic support spending, should be submitted soon. We have asked similar questions of other members in the past, and will continue to encourage other WTO members to lead by example when it comes to submitting timely notifications.”

Under international trade rules, all member countries are required to notify the WTO of changes to domestic supports. Agriculture and Agri-Food Canada told iPolitics in an email the two programs will be included in Canada’s 2017 domestic support notification when it is presented to the WTO Committee on Agriculture. Canada’s last domestic support notification was in 2013, the department said.

The status of the new domestic innovation funds wasn’t the only dairy issue raised at the October WTO agriculture meeting, where Canada has long been pressured to eliminate its quota-based supply management system. The system regulates the domestic production of eggs, poultry, and dairy.

At the October WTO meeting, Canada also fielded questions from the United States, New Zealand and Australia about its pending national ingredient strategy – a policy still being negotiated between Canadian farmers and processors.

Ottawa has said the pending national ingredient strategy is an industry initiative.

One piece of the strategy, which created the new Class 7 pricing rules for milk ingredients, has been in place since February 2017. The new classification is vehemently opposed by the United States dairy industry.

American dairy farmers insist the new class, which applies to goods like milk proteins, has priced them out of the Canadian market. Canadian officials insist the new classification is not impeding dairy trade and meets international trade requirements.

American trade negotiators have demanded the class be eliminated within a renegotiated North American Free Trade Agreement as part of its larger dairy demands, which includes the elimination of all tariffs on supply managed goods within a decade. Canada has firmly rejected those demands.


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