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Canadian policies on dairy products and on wine questioned at WTO

September 28, 2016

Members of the World Trade Organization (WTO) raised several questions on Canada's policies at the last meeting of the WTO Agriculture committee in mid-September.

WTO members questioned Canada on a recent agreement between Canadian dairy farmers and processors to allow Canadian processors to buy domestic milk ingredients at lower prices. The nationwide pricing strategy aims to promote the use of Canadian domestic ingredients.

Australia, New Zealand and the United States are concerned that they could lose their market share in the ultra-filtered milk industry. Canada said the decision to create a dairy ingredient strategy was not a government policy and was an industry-driven initiative. The details of this new initiative remain to be finalized, Canada said.

Then Norway, Switzerland, New Zealand and the United States renewed concerns about Canada's allocation of its tariff rate quota for cheese, a policy tool that establishes a low or zero duty for imports inside a certain quota. Imports exceeding the quota volume usually face a high duty. Canada has allegedly allocated more than 800 tons of its cheese tariff quota to the European Union as part of a Canada-EU free trade agreement, resulting in lower market access for non-EU exporters.

Canada said it would continue to administer its WTO tariff rate quota for cheese under the current practice, which it believes conforms with its WTO obligations.

Finally, Canada responded to questions about a new wine sale policy in Ontario which would authorize up to 70 grocery stores to sell both imported and domestic wines, with a certain display space reserved for wine from small wineries. The policy aims to support small producers, promote fairness and prevent market disruption.

Australia, the EU and New Zealand said that although they understood the need to protect small wineries, they were concerned that the definition Canada uses for small wineries would disadvantage imported wine.

The issues raised in this meeting do not have direct consequences, but suggest that some countries might be tempted to formally complain against some of Canada's policies.

Source: WTO

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