USTR requests new dairy consultations with Canada

United States Trade Representative Katherine Tai announced that the United States is requesting new dispute settlement consultations with Canada under the United States-Mexico-Canada Agreement regarding Canada’s dairy tariff-rate quota (TRQ) allocation measures.
The announcement came less than one month before President Biden, Prime Minister Pierre Trudeau and Mexican President Andrés Manuel López Obrador are scheduled to meet Jan. 10 in Mexico for a summit.
“Since initiating consultations with Canada in May 2022, the United States has identified additional aspects of Canada’s measures that appear to be inconsistent with Canada’s obligations under the USMCA, and U.S. concerns have only increased,” USTR said in a news release. “With this new request, the United States expands its challenge of Canada’s dairy TRQ allocation measures to include Canada’s use of a market-share approach for determining TRQ allocations. Canada applies different criteria for calculating the market share of different segments of applicants, and Canada is failing to allow importers the opportunity to fully utilize TRQ quantities. The United States continues to challenge Canada’s dairy TRQ allocation measures that impose new conditions on the allocation and use of the TRQs, and that prohibit eligible applicants, including retailers, food service operators, and other types of importers, from accessing TRQ allocations. Through these measures, Canada undermines the market access that it agreed to provide in the USMCA.”
“We remain very concerned by Canada’s refusal to honor USMCA commitments,” Tai said in the news release. “Rather than work toward meeting its obligations, Canada persists in implementing new dairy policies that are inconsistent with the USMCA, and which continue to deny U.S. workers, farmers, producers, and exporters the full benefits of market access they were initially promised. We remain steadfast in our commitment to use all tools available to enforce our trade agreements and ensure that our dairy industry can offer a wide range of high-quality American products to Canadian customers.”
“Canada remains in violation of its commitments under the USMCA by not removing its trade restrictions on American dairy producers,” Agriculture Secretary Tom Vilsack said in the USTR release. “Obtaining access to the Canadian market for U.S. producers and exporters is an important priority for this administration, and the U.S. Department of Agriculture and the Office of the U.S. Trade Representative will continue to work in lockstep and use every tool at our disposal to achieve market access.”
International Dairy Foods Association President and CEO Michael Dykes, who represents dairy processors, said, “IDFA members and staff are grateful to our U.S. government colleagues for their perseverance in addressing Canada’s failure to abide by USMCA. We strongly support USTR’s announcement today and look forward to continuing to support the U.S. government’s efforts to ensure U.S. dairy exports reach the potential promised by USMCA.”
“Under the terms of USMCA, consultations are generally considered to be a pre-dispute step in hopes that parties can reach agreement on the concerns raised,” said Dykes. “Based on Canada’s history of continually rejecting U.S. concerns, however, IDFA anticipates these consultations will result in a dispute settlement panel being formed.”
National Milk Producers Federation President and CEO Jim Mulhern said, “We thank USTR and USDA for their diligence in working to ensure that American dairy producers have the market access promised under USMCA. NMPF is committed to doing everything it can to support the case. At the end of the day, if Canada continues to flagrantly flout its obligations, the U.S. government has to be ready with retaliatory measures that make the Canadian government reconsider its actions.”
“It is deeply unfortunate that Canada simply refuses to honor the full terms of our agreement,” added Krysta Harden, president and CEO of the U.S. Dairy Export Council. “USMCA is a fair deal that was thoroughly negotiated and agreed to by the Canadian government. The U.S. dairy community is thankful the administration and Congress have taken Canada’s violations seriously and are fighting for full export benefits that the American dairy industry earned.”
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