U.S. Trade Representative (USTR) Ambassador Katherine Tai today announced that the United States has requested and established a dispute settlement panel under the United States-Mexico-Canada Agreement (USMCA) to review measures adopted by the Government of Canada that undermine the ability of American dairy exporters to sell a wide range of products to Canadian consumers.
The United States is challenging Canada’s allocation of dairy tariff-rate quotas (TRQs), specifically the set-aside of a percentage of each dairy TRQ exclusively for Canadian processors. These measures deny the ability of U.S. dairy farmers, workers, and exporters to utilize the TRQs and realize the full benefit of the USMCA.
A tariff-rate quota applies a preferential rate of duty to an “in-quota” quantity of imports and a different rate to imports above that in-quota quantity. Under the USMCA, Canada has the right to maintain 14 TRQs on dairy products: milk, cream, skim milk powder, butter and cream powder, industrial cheeses, cheeses of all types, milk powders, concentrated or condensed milk, yogurt and buttermilk, powdered buttermilk, whey powder, products consisting of natural milk constituents, ice cream and ice cream mixes and other dairy, according to a USTR press release.
“A top priority for the Biden-Harris Administration is fully enforcing the USMCA and ensuring that it benefits American workers,” said Ambassador Tai. “Launching the first panel request under the agreement will ensure our dairy industry and its workers can seize new opportunities under the USMCA to market and sell U.S. products to Canadian consumers.”
Initiating an official dispute settlement will, under USMCA rules, establish a panel to determine whether Canada has been violating its trade obligations. If the panel determines a lack of compliance, the U.S. would then be granted the right to impose retaliatory duties if Canada fails to fix its problematic TRQ administrative practices, according to a National Milk Producers Federation (NMPF) press release.
“On behalf of America’s dairy farmers, we thank Ambassador Katherine Tai for initiating the USMCA dispute settlement process by requesting the formation of a panel to examine Canada’s failure to provide access to its dairy TRQs in accordance with USMCA,” said Jim Mulhern, NMPF President and CEO. “Canada has failed to take the necessary action to comply with its obligations under USMCA by inappropriately restricting access to its market. This needs to stop, and we are thankful that USTR intends to make that happen.”
The news of the dispute settlement case has also been welcomed by other industry leaders.
“Our appreciation goes to the Biden Administration for moving forward with a dispute settlement action against Canada’s administration of dairy TRQs,” said Krysta Harden, U.S. Dairy Exports Council President and CEO. “We have had long-standing and well-founded concerns that Canada undermines its trade agreements when it comes to dairy. Our trading partners need to know that failure to meet their agricultural trade commitments with the United States will result in robust action to defend U.S. rights – today’s action demonstrates just that. The expansion of dairy market access opportunities is critical for our industry. Today’s action is a critical step toward maximizing current export opportunities while sending a strong message in defense against the erection of future barriers in Canada and other
markets as well.”
