Several dairy organizations are disheartened by the U.S.-Mexico-Canada Agreement (USMCA) dispute panel that is allowing Canada to restrict the dairy access that the United States negotiated for in the USMCA pact weakens the agreement’s value to the U.S. dairy industry.
Jim Mulhern, president and CEO of NMPF said in a release statement, “It is profoundly disappointing that the dispute settlement panel has ruled in favor of obstruction of trade rather than trade facilitation.
An earlier panel ruled in January 2022 that Canada had improperly restricted access to its market for U.S. dairy products. In response, Canada made insufficient changes to its dairy tariff rate quota (TRQ) system, resulting in an outcome that still fell far short of the market access the U.S. expected to receive under USMCA. To address that shortcoming, the U.S. brought a second case to challenge the changes that Canada instituted. Last week the three-member panel established under the USMCA ruling concluded that Canada had not acted unreasonably.
“Despite this independent panel’s adverse ruling, we’d like to thank the Biden Administration and the many members of Congress who supported us for their tireless pursuit of justice for America’s dairy sector. We urge Ambassador Tai and Secretary Vilsack to look at all available options to ensure that Canada stops playing games and respects what was negotiated,” Mulhern states.
“Despite the conclusions of this report, the United States continues to have serious concerns about how Canada is implementing the dairy market access commitments it made in the agreement,” U.S. Trade Representative Katherine Tai said in a statement.
Edge Dairy Farmer Cooperative, one of the largest dairy co-ops in the country, also expressed disappointment in the ruling by a dispute settlement panel established under the U.S.-Mexico-Canada Agreement. U.S.
“U.S. dairy was optimistic USMCA would bring new opportunities, but both sides must play by the rules. We are disappointed by the ruling but do not consider this issue settled. U.S. trade officials must continue finding ways to uphold the commitments Canada — and all U.S. trade partners — make under trade agreements,” Edge Dairy President Brody Stapel said. “USMCA promised opportunity for American dairy farmers — an estimated 50% annual increase in export value. Unfortunately, processors of high-quality dairy products still cannot find ways to get their product onto Canadian grocery store shelves. This issue remains a key focus for Edge, and we will continue supporting U.S. trade officials in finding a path forward.”
“We will continue to work to address this issue with Canada, and we will not hesitate to use all available tools to enforce our trade agreements and ensure that U.S. workers, farmers, manufacturers and exporters receive the full benefits of the USMCA,” Tai said.
Friday’s announcement was a major setback, according to U.S. dairy industry groups.
“This ruling has unfortunately set a dangerous and damaging precedent,” said Krysta Harden, president and CEO of the U.S. Dairy Export Council.
The North American Free Trade Agreement rewrote the rules of trade between the three countries more than a quarter of a century ago. Mexico’s borders have been largely open to free trade, which has meant a flood of imports, primarily from the United States. In contrast, Canada has protected its markets from U.S. milk production which far exceeds what Canadian farmers produce.
