US establishes second USMCA panel on Canadian dairy  |

US establishes second USMCA panel on Canadian dairy 

Katherine Tai
Katherine Tai
Trade Representative Katherine Tai announced today that the United States is establishing a dispute settlement panel under the United States-Mexico-Canada trade agreement (USMCA) regarding Canada’s dairy tariff-rate quota (TRQ) allocation measures.
Katherine Tai
Katherine Tai

The Office of the U.S. Trade Representative said in a news release, “In this new panel proceeding, the United States is challenging Canada’s revised dairy TRQ allocation measures that use a market-share approach for determining TRQ allocations, and impose new conditions effectively prohibiting retailers, food service operators, and other types of importers from utilizing TRQ allocations. Through these measures, Canada undermines the market access it agreed to provide in the USMCA.“
Under the USMCA’s revised dispute settlement procedures, the panel is established upon delivery of the request. Under the timeline provided in the USMCA, the panel is expected to issue a report later this year,” USTR added.
“Although the United States won a previous USMCA dispute on Canada’s dairy TRQ allocation policies, the Canadian government’s revised measures have not fixed the problem,” Tai said.
“With this panel request, we are utilizing our available tools to enforce our trade agreements and ensure that U.S. workers, farmers, processors, and exporters receive the full benefits of the USMCA. Canada made commitments to the United States in the USMCA, and the Biden-Harris administration is ensuring that they honor those commitments.”
“Canada is a valued and important trading partner, but they continue to fall short of their USMCA obligations by denying U.S. dairy producers and exporters fair access to the Canadian market,” said Agriculture Secretary Tom Vilsack.“International trade is critical to economic growth and stability for American producers. This panel request is necessary to ensure Canada honors their commitments as they relate to dairy, and so American producers have greater export opportunities as intended.”
The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) praised the announcement.“Canada’s TRQ allocation system is not only a violation of USMCA – it directly harms American dairy farmers, processors, and other workers by unfairly restricting access to their market,” said Jim Mulhern, NMPF president and CEO.“USTR’s action is an important step in righting this wrong and sending a message that the U.S. will fight violations of trade deals in Canada and wherever else they may be committed.”
Krysta Harden
Krysta Harden
“The U.S. dairy community greatly appreciates the Biden administration’s decision to prioritize steps to address Canada’s USMCA violations,” said Krysta Harden, USDEC president and CEO.“
Unfortunately, Canada has shown a pattern of not living up to the dairy commitments it has made in trade agreements. As long as they continue to drag their feet, we’ll continue to work with USTR and USDA to fight back, and propose retaliatory action if necessary.”If the panel ultimately confirms that Canada has been violating its obligations under USMCA, the U.S. would be granted the right to impose retaliatory duties should Canada fail to fix its unfair TRQ administrative practices, NMPF and USDEC noted.
The International Dairy Foods Association (IDFA) said, “Canada had agreed to increase U.S. dairy access to its market for milk, cheese, butter, cream, skim milk powder, yogurt, whey, and ice cream by establishing TRQs for those items.”“But Canada continues to construct its dairy TRQ rules in a manner that discourages those products from entering the country by reserving a large percentage of each dairy TRQ for its own dairy processors, who have no incentive to import U.S. products that they themselves produce. That action, IDFA argues, limits the ability of U.S. suppliers to export and is not fair and equitable administration of its TRQs, as Canada has committed to do under USMCA.”“IDFA is very grateful to Ambassador Tai and the entire U.S. government team for moving forward with this enforcement action against Canada, the resolution of which is a critically important matter for U.S. dairy producers and processors,” said IDFA President and CEO Michael Dykes.“We appreciate Ambassador Tai’s open and vigilant commitment to enforcing U.S. trade agreements to their fullest and maintaining a rules-based trading system.”The Office of the U.S. Trade Representative also compiled positive reactions to the filing of the case. See link.
A spokesperson at the Canadian Embassy in Washington said, “Canada is disappointed that the United States has again taken this step under USMCA.”“Under the agreement, Canada agreed to provide new market access to the United States for dairy products while successfully defending supply management. A 2021 panel has already found that Canada has significant discretion in administering its tariff rate quotas (TRQs).“Under the panel’s decision, Canada has the discretion to administer its TRQs in a manner that supports our dairy supply management system. The government of Canada will always stand up for its dairy industry, farmers and workers and communities they support, and continue to preserve, protect and defend the supply management system.”

–The Hagstrom Report