(a) "The Government of Canada is providing subsidies, and in particular export subsidies, on dairy products through its national and provincial pricing arrangements for milk and other dairy products without regard to the export subsidy reduction and other WTO commitments undertaken by Canada. Specifically, the Government of Canada established and maintains a system of special milk classes through which it maintains high domestic prices, promotes import substitution, and provides export subsidies for dairy products going into world markets. These practices distort markets for dairy products and adversely affect US sales of dairy products."
(b) "In addition, although Canada committed under the Marrakesh Agreement Establishing the World Trade Organization to permit access to an in-quota quantity of 64,500 tonnes (product weight basis) under a tariff-rate quota for imports of fluid milk and cream, Canada has refused to permit commercial import shipments within the quota. Instead, Canada is administering this tariff-rate quota in a manner that denies market access."
(c) "These measures appear to be inconsistent with the obligations of Canada under the General Agreement on Tariffs and Trade 1994 (GATT 1994), the Agreement on Agriculture, the Agreement on Subsidies and Countervailing Measures, and the Agreement on Import Licensing Procedures. The measures in question are the Canadian Dairy Commission Act, agreements of the Canadian Dairy Commission, the Interprovincial Comprehensive Agreement on Special Class Pooling (as well as the P-4, P-6, and P-9 interprovincial pooling agreements), the National Milk Marketing Plan (and amendments thereto), operations of the Canadian Milk Supply Management Committee, the Dairy Products Marketing Regulations, and Canada’s administration of its tariff-rate quota on fluid milk and cream (as reflected in its implementation of its WTO Schedule of Concessions)."
(d) "These measures are inconsistent with the obligations of Canada under Articles II, X, XI, and XIII of the GATT 1994; Articles 3, 4, 8, 9, and 10 of the Agreement on Agriculture; Article 3 of the Agreement on Subsidies and Countervailing Measures; and Articles 1, 2 and 3 of the Agreement on Import Licensing Procedures."
(a) "The Government of Canada is providing export subsidies on dairy products in contravention of its export subsidy reduction and other WTO commitments as encapsulated by the Agreement on Agriculture and the General Agreement on Tariffs and Trade 1994 (GATT 1994). The dairy export subsidy scheme in question is commonly referred to as the "special milk classes" scheme. The background to, and details of, the "special milk classes" scheme is contained, though not necessarily exclusively, in the following documents:
(i) the Canadian Dairy Commission Act;
(ii) the Comprehensive Agreement on Special Class Pooling (the P9 Agreement);
(iii) the National Milk Marketing Plan (NMMP);
(iv) the Agreement on All Milk Pooling (the P6 Agreement); and
(v) the Western Milk Pooling Agreement (the P4 Agreement)."
(b) "The "special milk classes" scheme referred to above is inconsistent with Canada's obligations under the following provisions:
(i) Articles 3, 8, 9 and 10 of the Agreement on Agriculture; and
(ii) Article X:1 of the GATT 1994."
"To examine, in the light of the relevant provisions of the covered agreements cited by the United States in document WT/DS103/4 and by New Zealand in document WT/DS113/4, the matters referred to the DSB respectively by the United States and New Zealand in these documents, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements".
|Table Error! Unknown switch argument. - Products1 and marketing years2 subject to the complainants' claims|
|Butter||Cheese||Other Milk Products|
|New Zealand||1995/96 1996/97||1995/96 1996/97||1996/97|
|1 Butter consists of products classified in 0405.10 and 0405.90. Cheese consists of products provided for in 0406.10, 0406.20, 0406.30, 0406.40, and 0406.90. Other Milk Products includes milk and cream in 0401.10, 0401.20, 0401.30; powdered whole milk and cream in 0402.21 and 0402.29; condensed evaporated milk in 0402.91 and 0402.99; buttermilk and yoghurt in 0403.10 and 0403.90; milk protein concentrate, 0404.90; and ice cream, 2105.00. Although the United States understood that Canadian exports of Skim Milk Powder were not in excess of Canada's WTO commitments, the United States considered that all exports under the SMP category that were exported through the Special Milk Classes Scheme should have been notified as subsidies to the WTO. 2 New Zealand did not refer to the marketing year 1997/98 because official figures for that period were not available. Nevertheless, if those figures were to indicate that Canada's actual exports also for that period exceeded its reduction commitments in respect of the products mentioned in the table, New Zealand would consider that Canada had also breached its WTO obligations in respect of those products for the 1997/98 marketing year. The United States noted that although Canada had not yet reported to the WTO its export quantities for the 1997/98 period, based on preliminary information for that period, the volume of exports appeared to remain at levels exceeding the pertinent reduction commitments. After our first substantive meeting, the figures for marketing year 1997/1998 became available and are incorporated above in Table 2 in para.2.41.|
"Federal Regulations were passed to provide federal legislative support to the continued regulation of the dairy industry in Canada. At its core, regulation of this industry is accomplished by the joint participation of both federal and provincial authorities. This is reflected in the National Plan and in the marketing scheme created by the Federal Regulations".51
"The Canadian Milk Supply Management Committee (CMSMC) will be the supervisory body which will oversee the implementation of this agreement."57
"On occasion, the [CDC] Commissioners may take decisions on issues when [the CMSMC] Committee members are not unanimous."
"In the event that there are no Signatories of a province which are producer boards, representatives of producer organizations shall be seated as full participants in the deliberations of the Committee, except that they shall not have the right to vote." (Emphasis added.)
" … the EEC internal régime for apples was a hybrid one, which combined elements of public and private responsibility. Legally there were two possible systems, direct buying-in of apples by Member State authorities and withdrawal by producer groups. Under the system of withdrawals by producer groups, which was the EEC’s preferred option, the operational involvement by public authorities was indirect. However, the régime as a whole was established by Community regulations which set out its structure. Its operation depended on Community decisions fixing prices, and on public financing; apples withdrawn were disposed of in ways prescribed by regulation. The Panel therefore found that both the buying-in and withdrawal systems established for apples under EEC Regulation 1035/72 (as amended) could be considered to be governmental measures for the purposes of Article XI:2(c)(i)."75
"... the fact that an action is taken by private parties does not rule out the possibility that it may be deemed to be governmental if there is sufficient government involvement with it. It is difficult to establish bright-line rules in this regard, however. Thus, that possibility will need to be examined on a case-by-case basis."93
"... Viewed in the context of the JFTC having approved the Fair Competition Code and the Retailers Council, and of Article 10(5) appearing to give a governmental exemption from certain provisions of the Antimonopoly Law to actions by the Retailers Council and code members under the code, it is difficult to conclude that investigation, enforcement and governmental liaison actions of the Retailers Council under the code are purely private actions of a private trade association.... we note that a finding to the contrary would create a risk that WTO obligations could be evaded through a Member's delegation of quasi-governmental authority to private bodies. In respect of obligations concerning state trading, the provisions of GATT explicitly recognize this possibility. In this regard, an interpretative note to Articles XI, XII, XIII, XIV and XVIII states: "Throughout Articles XI, XII, XIII, XIV and XVIII, the terms "import restrictions" or "export restrictions" include restrictions made effective through state-trading operations". The existence of this note demonstrates that the drafters of the General Agreement recognized a need to address explicitly one aspect of the government-delegation-of-authority problem. In our view, it supports our finding that measure for purposes of Article XXIII:1(b) should be interpreted so as to prevent actions by entities with governmental-like powers from nullifying or impairing expected benefits."95
"These past GATT cases demonstrate the fact that an action taken by private parties does not rule out the possibility that it may be deemed to be governmental if there is sufficient government involvement with it. It is difficult to establish bright line rules in this regard, however. Thus, that possibility will need to be examined on a case by case basis."99 (emphasis added)
"The regime as a whole was established by Community regulations which set out its structure. Its operation depended on Community decisions fixing prices, and on public financing; apples withdrawn were disposed of in ways prescribed by regulation."102
"In discharging its duties under the Federal Regulations, the Committee acts as a federal body, a federal functionary concerned solely with matters related to the federal quota.
This exercise of co-operative federalism, suggested by many judicial decisions as the only practical and effective way to regulate in Canada the marketing of agricultural products under divided jurisdiction, is at the heart of the Governor in Council’s recognition of the Committee. The Committee’s composition includes, inter alia, representatives appointed by provincial signatories who are bodies established under provincial law to exercise statutory powers in relation to the marketing of dairy products in intraprovincial trade." (Emphasis added.)106
amount for profit as well as the processor’s costs.111 This amount was then subtracted from the processor’s selling price for butter, cheese, or some other dairy export in world markets. The international sales price for the dairy export, less the processor’s "assured margin," was the amount paid to the dairy farmer for his or her milk.
"In 1997, Dairy Farmers of Ontario conducted a survey to determine the extent of producer interest in providing milk for the Optional Export Program. Now, as you probably differentiate this milk supply, which represents a conscious and voluntary exposure to world markets from over-quota milk - and I wouldn’t want that to be said in public, as well - producers produced or filled their quota, and that’s basically a producer behaviour, and the level of over-quota milk as Mr. Core [President of Dairy Farmers of Ontario] has stated a bit earlier, is sort of dependent on the biological conditions that they find on the farm. In fact, if you happen to be in a state where the feed is good and the cows are calving properly and there is not a whole bunch of diseases, these can add together to create a fairly significant level of over-quota milk. When in fact, under normal chance circumstances, if you didn’t have a lot of good things happening at the same time, the level of over-quota milk would be much less."122
"Last year the quota was cut by 3%. A farmer had the choice of reducing his production by 3%. He could sell one cow out of that barn and reduce his net revenue. He had to reduce his production because the quota was cut last year by 3%. That’s the choice he has. He may decide to keep his production at the level of the previous year and then produce 3% over quota. Then it may happen that this year the feed was a little better, the climate was a little better, and it just happens that he’s producing 6% over his quota. That milk is being removed by the CDC at the international price."123
"So, again, I would note that a 5-B, which is a typical Class 5 price, most of the variable costs are covered. But when we go down to the world price, the $23.38 in this instance, look across there, you find that the cutoff point is around 18 percent of producers whose variable costs would be covered. That means that a vast majority of producers would definitely not want to produce milk at the world price."128
(a) In-quota milk: Producers, acting collectively through their milk marketing boards and the CMSMC, controlled the quota level and the amount of milk that was likely to be exported from in-quota production. If prices obtained for milk used to make products for export were not high enough, producers could decide, through their boards, to reduce the quantity of MSQ.135
(b) Over-quota milk: Individual producers decided whether to supply milk above their individual production quota in the full knowledge136 that over-quota shipments would receive world market returns. In fact, considerable numbers of producers voluntarily, as a business matter, chose to engage in over-quota production.
"7.1.6 There is evidence that some dairy producers produce quantities in excess of MSQ. This is done by producers who voluntarily seek to increase production for participation in world markets. Certain low cost producers may also voluntarily decide to actively participate in world markets through the Optional Export programe. These producer decisions, however, must not be confused with a proposal to service the domestic butterfat market using within quota production at world prices. The recent decision to reduce MSQ is clear evidence that dairy producers are not willing to produce irrespective of domestic market requirements."139
(a) the first component was "subsidies contingent on export performance";
(b) the second component included as export subsidies for the purposes of the definition the export subsidies specifically listed in Article 9 of the Agreement.
"Except as otherwise provided under this Agreement or the Multilateral Trade Agreements, the WTO shall be guided by the decisions, procedures and customary practices followed by the CONTRACTING PARTIES to GATT 1947 and the bodies established in the framework of GATT 1947."153
"The Panel examined the question whether subsidies financed by a non-governmental levy were notifiable under Article XVI. The GATT does not concern itself with such action by private persons acting independently of their government except insofar as it allows importing countries to take action under other provisions of the Agreement. In general there was no obligation to notify schemes in which a group of producers voluntarily taxed themselves in order to subsidize exports of a product. The Panel felt that in view of the many forms which action of this kind could take, it would not be possible to draw a clear line between types of action which were and those which were not notifiable. On the other hand, there was no doubt that there was an obligation to notify all schemes of levy/subsidy affecting imports or exports in which the government took a part either by making payments into the common fund or by entrusting to a private body the functions of taxation and subsidization with the result that the practice would in no real sense differ from those normally followed by governments. In view of these considerations the Panel feels that the question of notifying levy/subsidy arrangements depends upon the source of the funds and the extent of government action,164 if any, in their collection. Therefore, rather than attempt to formulate a precisely worded recommendation designed to cover all contingencies, the Panel feels that the CONTRACTING PARTIES should ask governments to notify all levy/subsidy schemes affecting imports or exports which are dependent for their enforcement on some form of government action." (Emphasis added)165
"Further, as from 1 January 1958 or the earliest practicable date thereafter, contracting parties shall cease to grant either directly or indirectly any form of subsidy on the export of any product other than a primary product which subsidy results in the sale of such product for export at a price lower than the comparable price charged for the like product to buyers in the domestic market."
"The provisions of GATT 1994 and of the other Multilateral Trade Agreements in Annex 1A to the WTO Agreement shall apply subject to the provisions of this Agreement."
(a) the starting point was always the actual text and its ordinary meaning;
(b) the ordinary meaning of the terms of the agreement was to be read in their context;
(c) "context" had to comprise the text of the agreement, including other contemporaneous agreements reached by all the parties, as outlined in Article 31.2 of the Vienna Convention; and
(d) recourse could be taken to supplementary means of interpretation, such as negotiating history, in the event of ambiguity or to confirm a meaning.
"The legitimate expectations of the parties to a treaty are reflected in the language of the treaty itself. The duty of a treaty interpreter is to examine the words of the treaty to determine the intentions of the parties. This should be done in accordance with the principles of treaty interpretation set out in Article 31 of the Vienna Convention. But these principles of interpretation neither require nor condone the importation into a treaty of words that are not there or the importation into a treaty of concepts that were not intended."174 (emphasis added)
"[W]ith respect to subsidies on agricultural products, the Agreement on Agriculture and the SCM Agreement reflect the latest statement of the WTO members as to their rights and obligations concerning agricultural subsidies."179
"The revised text is being re-issued on the understanding of participants in the Uruguay Round that these negotiating modalities shall not be used as a basis for dispute settlement proceedings under the WTO Agreement".
" … an examination of the text, context, and object and purpose of Article III.8(b) suggested that it was intended to exempt from the obligations of Article III only the payment of subsidies which involves the expenditure of revenue by a government."211
"Where a state agency sells domestically at a price above the price charged for exports, while domestic producers are paid the average price, exports are implicitly subsidized. To see why, it is best to compare this policy to one of producer-financed export subsidies. In the latter case, a levy is charged on the domestic sales, and the proceeds are then used to finance export subsidies. Under a price pooling regime, the same prices can result, and it is only the technical nature of financial flows which is different, but not the economic result. Hence, price pooling differs from producer-financed export subsidies only in form, not in substance. Countries should, therefore, not be allowed to escape their export subsidy commitments by using a price pooling regime."215
"It does not seem reasonable to suppose that the WTO Members intended to require, in respect of each and every category, the same kind of degree of connection or relationship between the measure under appraisal and the state interest or policy sought to be promoted or realised."217