WTO declines to rule on NZ complaint against Canada

The World Trade Organisation's appellate body has declined to rule on New Zealand's complaint that Canada is providing illegal export subsidies to its dairy industry.

Trade Negotiations Minister Jim Sutton said the body felt there was insufficient information to make a determination.

"The decision leaves the door open to New Zealand and its co-complainant, the United States, to pursue further proceedings against Canada," he said in a statement.

"While we need to study the ruling closely, our preliminary view is that we will continue the legal challenge."

The dispute relates to a dairy export scheme the Canadians devised to replace a scheme already ruled illegal by the WTO in 1999, Mr Sutton said.

"This is an important case for New Zealand. Canada's illegal export subsidies cost New Zealand about $80 million a year because of their depressing effect on world dairy prices. That's more than $5500 per year for each New Zealand dairy farmer."

Mr Sutton said the latest decision was not a victory for Canada -- "far from it".

"While the appellate body disagreed with some aspects of the panel's legal analysis, the appellate body made it clear that it was not finding that the Canadian measures were consistent with Canada's WTO obligations.

"I regret that this dispute has been further prolonged but I think it's important for New Zealand to see the process through to resolution.

"It's essential that the integrity of WTO rules relating to export subsidies is not undermined."

Canada's Agriculture Minister Lyle Vanclief previously warned that there would be no radical overhaul of the country's two-tier milk pricing system even if it lost the appeal.

- NZPA