The Canadian dairy industry received the most unwanted of all presents just prior to Christmas 2002- a clear loss on the dairy export issue upon final WTO appeal. This leaves the Canadian dairy industry with protracted challenges if it is to grow in the future. It appears to be the final chapter in the long running WTO-Canadian dairy export saga, which we first analyzed in a George Morris Centre Special Report about 3 years ago. Now the challenges associated with the implications of the WTO decision must be faced. The purpose of this paper is to outline the basic points advanced by Canada, and by New Zealand and the US in the WTO appeal, and to illustrate the importance of the WTO decision in the context of growth in the Canadian dairy industry. Finally, the apparent challenges laid down by the WTO decision are analyzed in the context of needs for new marketing research to reform the milk marketing system.