18 May 2010

Dairy trade case tipped against Canada

6:47 am on 18 May 2010

New Zealand and other dairy exporting countries are discussing possible action against Canada for restrictive trade practices.

The dairy industry here and its counterparts in the United States, Australia and Europe are upset at Canadian measures designed to restrict imports and protect its own dairy farmers from competition.

They are asking their respective governments to put pressure on Canada to remove its trade barriers and to consider a complaint to the World trade Organisation if it won't oblige.

The Dairy Company Association says the milk supply management system that Canada operates is at issue.

Executive director Simon Tucker says Canadian milk is very expensive and food producers prefer to import products instead.

He says Canada already has some of the highest tariffs on the world on dairy imports and is looking at indirect subsidies as well.

If New Zealand and other countries do take WTO action against Canada, it won't be the first time.

New Zealand and the US won a joint case against Canada a number of years ago over an illegal subsidy that allowed it to export dairy products at below the production cost.

But it was a drawn out process and it took appeals and threatened trade sanctions to end the dispute.