10 - Canada - Dairy Canada – Measures Affecting the Importation of Dairy Products and the Exportation of Milk

Summary

Introduction

This paper summarizes and critically reviews the dispute brought before the World Trade Organization (WTO) concerning Canada – Measures Affecting the Importation of Dairy Products and the Exportation of Milk, euphemistically referred to herein as Canada – Dairy. This dispute is centered on the WTO Agricultural Agreement, though it also involves the WTO Subsidies and Countervailing Measures (SCM) Agreement and GATT – 1994.

Many analysts have argued that a significant accomplishment of the Uruguay Round of negotiations was the development of a set of rules on agricultural supports, that covered the three main policy instruments of such support: border measures, domestic supports, and export subsidies. The national commitments made as part of the Agreement on Agriculture clearly represented just the beginning of agricultural reform, reflected by the fact that agriculture was earmarked as part of the built-in agenda going forward. It is widely recognized that the agricultural sector is one of the most highly subsidized sectors in the world. Liberalization of trade in agriculture was deemed the “linchpin” of the Uruguay Round for the United States and a number of other jurisdictions. It remains controversial today. Hence, this political and economic backdrop adds a special importance to this dispute.

Contextually the dispute is also significant because it brings to light the systemic question of whether the Agriculture Agreement and the SCM Agreement are structured and drafted to strike the proper balance among the support measures, especially when there are spillover consequences of domestic support measures on export markets.