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The Canadian Government is seeking to curb imports of milk protein concentrates, a trade worth millions of dollars a year to New Zealand dairy farmers.
It announced yesterday it would invoke a World Trade Organisation mechanism which allows countries to withdraw concessions agreed under the Uruguay Round and renegotiate tariff barriers. There is provision for countries affected to be compensated.
A Fonterra spokeswoman said the value of exports affected was likely to be in the order of "tens of millions of dollars" although it was not clear exactly which products would be hit.
Trade Minister Phil Goff deplored the move. "The decision to place limits on the importation of dairy ingredients that have previously entered the market freely goes against our long and mutually-beneficial trading relationship," Goff said.
It also sent a negative signal about Canada's commitment to freeing up trade at a critical time in the Doha Round negotiations.
Reuters reported Canadian Agriculture Minister Chuck Strahl as saying imports of milk protein concentrates, used in making cheese and other dairy products, had shot up 82 per cent in the past year and were unfairly cutting into farmers' livelihoods.
Apart from New Zealand, the main suppliers are the European Union, Switzerland and the United States - but the imports from the US cannot be restricted because of the North American Free Trade Agreement.
Goff said New Zealand would argue for the least restrictive regime possible and for full compensation for any impact on the country's dairy sector.
