Decisions of the Appellate Body of the World Trade Organization Canada - Measures Affecting the Importation of Milk and the Exportation of Dairy Products (Article 21.5 DSU, first and second recourse) Download the Complete Survey (PDF Format) * Full Text of the WTO Appellate Body Report (PDF Format) I / II ** WTO Appellate Body Report: Canada - Measures Affecting the Importation of Milk and the Exportation of Dairy Products (Article 21.5 DSU, first and second recourse), AB-2001-6 WT/DS103, 113/AB/RW, and WT/DS103, 113/AB/RW2, adopted by Dispute Settlement Body, 18 December 2001 and January 17, 2003, respectively. Canada, Appellant, New Zealand, United States, Appellees. European Communities, Third Participant in first recourse; Argentina, Australia and European Communities, Third Participants in Second Recourse. Division in first recourse: Taniguchi, Abi-Saab, Ganesan; division in second recourse: Baptista, Sacerdoti and Taniguchi. Major Topics addressed by Appellate Body: Meaning of "payments" and "financed by virtue of governmental action" in Article 9.1(c). 1. Abstract In these appeals, Canada challenged the panels' findings on the revised Canadian regime for milk and dairy products. In particular, the claims of error put forward by the appellant concerned the interpretation of "payments on the export of an agricultural product" and "financed by virtue of governmental action" in Article 9.1(c) of the Agreement on Agriculture, a provision addressing export subsidy commitments. In the first recourse under Article 21.5 of the DSU, the Appellate Body agreed with the appellant that neither the domestic market price nor world market prices were the "right benchmarks" for assessing whether the Canadian regime involved "payments" for producers of export milk. Instead, it focused on the "average total costs of production of the milk producers" as a more appropriate standard. However, when employing this standard, the Appellate Body found that the facts on hand were not sufficient to come to the conclusion of a violation of the Agreement on Agriculture by Canada. Therefore, it reversed the panel's findings that Canada had provided export subsidies in excess of its quantity commitment levels under the Agreement on Agriculture. and stated it was unable to complete the analysis of the claims made by New Zealand and the United States. In the second recourse under Article 21.5, the Appellate Body upheld the panel's finding that Canadian sales of export milk were made below "average total costs of production of the milk producers." * The free viewer (Acrobat Reader) for PDF file is available at the Adobe Systems ** provided by WorldTradeLaw.net
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