Canada has lost its last ditch attempt at the World Trade Organisation (WTO) to protect its collective dairy marketing system, with the WTO’s appellate body dismissing Ottawa’s appeal on legal points against earlier negative rulings.

The USA and New Zealand brought the case alleging that the system allowed Canadian dairy exports to be unfairly subsidised on world markets. Although the ruling allows these countries to take retaliatory action against Canadian exports, Canada’s international trade minister Pierre Pettigrew has said Ottawa would comply with the ruling after consulting the country’s provincial governments.

The WTO panel had ruled that through its CEM (Commercial Export Milk) scheme and its Special Milk Class 5(d) system, Canada is “providing export subsidies” over and above the liberalisation commitments it has made at the WTO.