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Synopsis and References of the Case

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Chapter Summary

This case concerns Canadian trade policy with respect to both imports and exports of dairy products. Canada had adopted a complex milk management regime. The price of milk, in particular, varied according to the use to which it was put (fluid milk, industrial milk) and the market on which it was sold (domestic, foreign). The United States and New Zealand disputed the validity of these arrangements in relation, in particular, to the Agreement on Agriculture and the GATT 1994, and both the Panel and the Appellate Body viewed them as export subsidies prohibited by the Agreement on Agriculture. They also criticized Canadian trade policy for having the effect of restricting access to Canada's tariff-rate quota in a manner inconsistent with its obligations under the GATT 1994. However, the Appellate Body censured some of the Panel's reasoning and conclusions, stressing the need to observe the principle of effectiveness.

Keywords: Agreement on Agriculture; Canadian trade policy; dairy products; export subsidies; milk management



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