This article was originally published in Blakes Bulletin on International Trade, March 2006
A U.S.-owned exporter of dairy products has just filed a request for arbitration under the North American Free Trade Agreement’s investment chapter, alleging that Canada’s restriction on exports of milk from Ontario are tantamount to expropriation.
Delaware-based Great Lakes Farms (GLF) exports, through its Canadian operations, dairy products from the province of Ontario to the U.S. In its statement of claim, the company alleges that restrictions on its ability to export milk and cheese to the U.S., which were put in place after the World Trade Organization ruled in 1999 that Canada was illegally subsidizing domestic milk producers, threaten its investment in Canada.
GLF has been operating outside the Ontario’s monopoly supply management system, by purchasing milk from producers who do not have production quotas. It says that, over the last few years, the province has placed undue restrictions on its ability to purchase milk from these farmers, thus limiting its ability to export.
The company seeks CAD 78 million in compensation for breach of four provisions in the NAFTA agreement; National Treatment; Treatment in Accordance with International Law; Conduct of Monopolies and State Enterprises; and Full, Fair and Effective Compensation for Expropriation.
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