JOINT NEWS RELEASE FROM IDFA, NMPF, USDEC
For Immediate Release

U.S. Wins Dairy Export Subsidy Challenge

(Washington, D.C. - December 20, 2002) After five years, six panel decisions, and four appeals, the World Trade Organization (WTO) Friday reached a final verdict that vindicates the U.S. challenge to Canada's dairy export practices. The victory allows the U.S. dairy industry to finally close this long-running dispute, and sets an important precedent by better defining export subsidies under the WTO rules, according to three U.S. dairy industry organizations that supported the U.S. government in bringing the original challenge and providing technical support throughout the process.

Friday's WTO Appellate Body decision supports two earlier rulings that Canada's provincially run two-tier pricing system provides an export subsidy that Canada uses to exceed its WTO limits. The WTO agreed with the U.S. contention that the provincial governments are providing an export subsidy by ensuring that processors can procure lower-price milk for export. Canada exhausted its final appeal in September.

"This is great news for the U.S. dairy industry on many levels," says Tom Suber, president of the U.S. Dairy Export Council (USDEC). "First and foremost, it settles the question of precisely what constitutes an export subsidy. Without this clarification, we had real concerns that other countries would not fulfill their negotiated obligations. Equally important, we have been concerned that other WTO members might adopt similar schemes to circumvent their WTO obligations."

The ruling also will be beneficial to U.S. negotiators as they approach the Doha Round of multilateral agricultural reform talks. "The elimination of export subsidies is our number-one concern in the Doha Round," says Jerry Kozak, president and chief executive officer of the National Milk Producers Federation (NMPF). "We had to put this matter to rest so our trade ambassadors would know whether they needed to renegotiate export subsidy limits in the current round of WTO talks."

Canada will finally be forced to abide by the subsidy limits it agreed to in the Uruguay Round, added E. Linwood Tipton, president and CEO of the International Dairy Foods Association (IDFA). "This is a very positive step as we move forward in the Doha Round. We call upon the Canadian government and dairy industry leaders to honor the WTO ruling and promptly make the necessary adjustments to comply with their subsidy commitments," he says.

Canada's annual export subsidy limits are 9,076 metric tons of cheese, 3,500 tons of butter, 44,953 tons of skim milk powder and 30,282 tons of other products. From 1997 to 2001, Canada's average annual exports reached 22,993 tons of cheese, 11,619 tons of butter and 35,606 tons of skim milk powder, plus 35,229 tons of evaporated/condensed milk, 7,517 tons of fluid milk and 6,687 tons of ice cream, according to USDEC.

FOR MORE INFORMATION, CONTACT:

SUSAN RULAND, VICE PRESIDENT OF COMMUNICATIONS
INTERNATIONAL DAIRY FOODS ASSOCIATION
1250 H ST., NW, SUITE 900
WASHINGTON, D.C. 20005
202-737-4332
FAX 202-331-7820

GINNY THIERSCH, VICE PRESIDENT OF COMMUNICATIONS & MEMBERSHIP
U.S. DAIRY EXPORT COUNCIL
2101 WILSON BLVD., SUITE 400
ARLINGTON, VA 22201
703-528-3049
FAX 703-528-3705

CHRIS GALEN, VICE PRESIDENT OF COMMUNICATIONS
NATIONAL MILK PRODUCERS FEDERATION
2101 WILSON BLVD., SUITE 400
ARLINGTON, VA 22201
703-243-6111, X. 356
FAX 703-841-9328

International Dairy Foods Association
IDFA is the Washington, DC-based organization representing the nation's dairy processing and manufacturing industries, and their suppliers. IDFA is composed of three constituent organizations: Milk Industry Foundation (MIF), National Cheese Institute (NCI) and International Ice Cream Association (IICA). Its 500-plus members range from large multinational corporations to single-plant operations, and represent more than 85% of the total volume of milk, cultured products, cheese, and ice cream and frozen desserts produced and marketed in the United States, an estimated $70-billion industry. CONTACT: SUSAN RULAND, VICE PRESIDENT OF COMMUNICATIONS, 202-220-3549

National Milk Producers Federation
The National Milk Producers Federation (NMPF), headquartered in Arlington, VA, develops and carries out policies that advance the well-being of U.S. dairy producers and the cooperatives they collectively own. The members of NMPF's 31 cooperatives produce the majority of the U.S. milk supply, making NMPF the voice of 55,000 dairy producers on Capitol Hill and with government agencies. CONTACT: CHRIS GALEN, VICE PRESIDENT OF COMMUNICATIONS, 703-243-6111.

U.S. Dairy Export Council
The U.S. Dairy Export Council (USDEC) is a non-profit, independent membership organization that represents the export trade interests of U.S. milk producers, proprietary processors, dairy cooperatives, and export traders. Its mission is to increase the volume and value of U.S. dairy product exports. USDEC maintains offices in Mexico City, Tokyo, Seoul, Hong Kong, Shanghai, Taipei, London, Bangkok and Sao Paulo to assist in the export of U.S. dairy products worldwide. Working through these offices and in numerous other countries, USDEC creates demand in consumer, foodservice and ingredient channels to help drive sales of U.S. dairy products. In short, the organization provides all the services necessary to assist U.S. dairy exporters to penetrate foreign markets. CONTACT: GINNY THIERSCH, VICE PRESIDENT OF COMMUNICATIONS & MEMBERSHIP, 703-528-3049.

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