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The Office
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Home
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Document Library /
Press Releases /
2001 /
February /
02/16/01 | Canada Dairy
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U.S. Requests WTO Panel to Review Canada's Dairy Export Subsidy Regime |
Contact: Amy Stilwell (202) 395-3230 |
02/16/2001 |
Today the
United States requested that the World Trade Organization (WTO) reconvene a
dispute settlement panel to examine whether Canada has complied with WTO rulings
on its export subsidies on dairy products. The United States does not believe
that Canada has taken the necessary steps to bring its dairy export subsidy
program into compliance with WTO agreements because Canada has merely introduced
new programs that do not fulfill the export subsidy reduction commitments
undertaken in the WTO Agreement on Agriculture.
In
accordance with WTO procedures, the United States also will request
authorization from the WTO to suspend trade concessions on Canadian products if
the panel determines that Canada has not complied. In that request, the United
States proposes to increase tariffs on Canadian products with an annual trade
value of up to $35 million, which is the approximate amount of annual harm to
the U.S. economy caused by Canada's dairy export subsidy regime. Under an
agreement with Canada, the United States would not suspend trade concessions
until an arbitrator has confirmed the level of trade harm suffered by the United
States. The
request for authorization to suspend trade concessions includes a list of
potential product categories from which the United States will draw in selecting
specific products that will be subject to increased duties. At this time, USTR
is not publishing a list of the specific products that may be subject to
increased duties. However, at a later date the Office of the U.S. Trade
Representative will publish a Federal Register notice seeking public
comment on a specific list of products.
Background
Canada
agreed to specific export subsidy limits on dairy products as part of its
Uruguay Round WTO obligations. However, on August 1, 1995, Canada replaced its
subsidy payments on dairy product exports, which were financed by a levy on
producers, with a new permit system which allowed Canadian processors to
purchase lower priced milk for sales to export destinations. Canada claimed the
new system was no longer an export subsidy.
The United
States challenged Canada's export subsidy system in the WTO, and on October 13,
1999, the WTO Appellate Body found that Canada's special class milk regime,
which provides reduced priced milk for export, is an export subsidy. The
Appellate Body also found that Canada was shipping subsidized dairy exports in
greater quantities than is permitted under its export subsidy commitment levels,
violating Canada's obligation under the Agreement on Agriculture. The
Canadian federal government eliminated one of the export subsidies that was
found to be inconsistent with Canada's WTO obligations. However, other programs
were introduced by Canada to replace the challenged export subsidy. Both the
United States government, and the New Zealand government (which is a
co-complainant with the United States), believe Canada's changes fail to bring
Canada's export subsidy system into conformity with its WTO
obligations.
NOTE:
Interested parties, including small and medium size businesses, may register via
the Internet at www.ita.doc.gov/301alert to receive notice when USTR publishes the Federal Register notice
seeking comment on a specific list of products.
PRODUCT
CATEGORIES FOR POTENTIAL SUSPENSION OF TRADE CONCESSIONS WITH
CANADA (LISTED BY
HTSUS CHAPTER HEADINGS
Chapter 3 |
Fish and crustaceans, molluscs and
other aquatic invertebrates |
Chapter 4 |
Dairy produce, birds eggs; natural
honey; edible products of animal origin, not elsewhere specified or
included |
Chapter 5 |
Products of animal origin, not
elsewhere specified or included |
Chapter 6 |
Live trees and other plants;
bulbs, roots and the like; cut flowers and ornamental foliage |
Chapter 7 |
Edible vegetables and certain
roots and tubers |
Chapter 8 |
Edible fruit and nuts; peel of
citrus fruit or melons |
Chapter 9 |
Coffee, tea, mate and
spices |
Chapter 10 |
Cereals |
Chapter 11 |
Products of the milling industry;
malt; starches; inulin; wheat gluten |
Chapter 12 |
Oil seeds and oleaginous fruits;
miscellaneous grains, seeds and fruits; industrial or medicinal plants; straw
and fodder |
Chapter 13 |
Lac; gums, resins and other
vegetable saps and extracts |
Chapter 15 |
Animal or vegetable fats and oils
and their cleavage products prepared edible fats; animal or vegetable
waxes |
Chapter 16 |
Preparations of meat, of fish or
of crustaceans, molluscs or other aquatic invertebrates |
Chapter 17 |
Sugars and sugar
confectionary |
Chapter 18 |
Cocoa and cocoa
preparations |
Chapter 19 |
Preparations of cereals, flour,
starch or milk; bakers' wares |
Chapter 20 |
Preparations of vegetables, fruit,
nuts or other parts of plants |
Chapter 21 |
Miscellaneous edible preparations |
Chapter 22 |
Beverages, spirits and
vinegar |
Chapter 23 |
Residues and waste from the food
industries; prepared animal feed |
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