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Global dairy producers protest new deal for Canadian milk products

Global dairy producers protest new deal for Canadian milk products

Dairy producers in Australia, the European Union, Mexico, New Zealand and the United States are pushing for their respective governments to take Canada to task over a new deal between farmers and the dairy industry that they say violates their international trade obligations.

In a letter released publicly on Monday, the dairy associations said the new deal places Canada in contravention of its World Trade Organization (WTO) and North American Free Trade Agreement (NAFTA) obligations and called for their respective governments to initiate a dispute settlement proceeding through the WTO.

The groups said the new deal -- which was agreed upon by the Dairy Farmers of Canada and the Dairy Processors Association of Canada in July -- favours Canadian dairy ingredients over imports and subsidizes the export of local products to “unfairly compete” with those abroad.

“Canada’s increasingly protectionist policies violate their international trade obligations, hold out the prospect of trade diversion with attendant global price-depressing impacts, and are in conflict with the principles of free markets and fair and transparent trade,” said the letter.

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Jaime Castaneva, senior vice-president for one of the signatory groups, the U.S Dairy Export Council, which represents about 100 co-operatives and manufacturers, told the Financial Post that Canada should cancel the agreement and prevent an extended and costly proceeding with the WTO.

“It’s the same old story with respect to Canada,” Castaneva told the newspaper.

“Twenty years ago the U.S. and New Zealand took Canada to the WTO. This new ‘special class’ of milk has the same principles as the program 20 years ago – it’s all about preventing imports and dumping milk in international markets.”

Canada’s supply management, which was introduced in the early 1970s, controls levels of milk production by linking it to consumer demand and restricting imports, as well as competition, through steep tariffs.

The system was designed to protect Canadian dairy producers and stabilize prices.

However, in recent years, cheese producers have found ways to circumvent these tariffs by importing ingredients called “ultra-filtered milk,” which are not found on Canada’s tariff list.

But the new deal would see the creation of  “class six” milk that farmers will sell to processors at reduced prices to offset these cheaper imports.

Canada is restricted in terms of selling milk abroad at prices cheaper than it is available for at home, but dairy farmers argue that “class six” would allow them to peddle their surplus milk at reduced prices around the world.

Isabelle Bouchard, a spokeswoman for the Dairy Farmers of Canada, told the Financial Post that she could not discuss the details of the new agreement until it has been signed by all parties involved, but was shocked by the reaction of foreign dairy producers.

“It’s a surprise that these groups are acting because the deal has not been ratified,” she told the newspaper.

“What they are talking about is just created in their own minds.”

She added that dairy farmers have long complained about the import of ultra-filtered milk, and that “Canadians want Canadian milk.”