CANADIAN DAIRY EXPORT SUBSIDIES AND THE WTO APPELLATE DECISION: DAIRY MARKET EXPANSION IN LIMBO

The dairy industry in Canada was turned on its ear by the release of the WTO decision last fall that Canada's Special Milk Classes constitute an export subsidy. Dairy processors fear the loss of established export markets. At the same time, the decision threatens the role of supply management authorities as the sole marketers of farmers' milk. Will farmers market milk for export directly to processors? What consequences could renewed marketing board involvement in exports have in the international trade arena? The industry is preparing for conflict as it reorients itself in the international market. That conflict is embedded in proposals made by some of the milk marketing agencies and by some processor members of the National Dairy Council(NDCC). Because of the immediate importance of this case and the issues it spawns, the George Morris Centre is releasing this special report. It addresses the following topics: - The nature of the challenges to the Special Milk Classes scheme - The WTO decision Implications for the dairy industry - Marketing boards' proposal for export pricing reform - NDCC proposal for export pricing reform - Evaluation of the alternative