More dairy TRQs will need to be filled directly from the U.S., says U.S. Dairy Export Council

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A resolution from the dispute panel regarding dairy tariff rate quota (TRQ) allocations has been reached, and the news is a bit, well, divisive.

The panel’s decision includes the statement that because Canada’s reserving of access of 85 to 100 per cent of 14 separate TRQs for Canadian processors is “inconsistent with Article 3.A.2.11 (b),” ruling that this constitutes limiting to processors.

Shawna Morris, senior vice president of the U.S. Dairy Export Council joined Shaun Haney on Wednesday’s episode of RealAg Radio, to discuss the issue from the perspective of the U.S.

“The panel sided with the U.S. government in agreeing that the key issue that the U.S. government was challenging was that Canada was awarded the vast majority of the dairy tariff rate quota access,” says Morris. “It’s a pretty straight forward finding I think, that Canada was in violation of the agreement and needed to make changes.”

There were other components that the panel did not rule on: fair and equitable treatment of the administration of TRQs, commercially viable quantities, and TRQ utilization, to name a few. Morris says that it’s not that unusual for a trade dispute brought forward to a panel of experts to come to conclusions about some components, but not others.

“Deciding on these additional elements didn’t make the U.S. ‘more right’ or didn’t make Canada ‘not wrong’ on the core findings, so they just set those aside and there weren’t decisions on those other pieces,” says Morris.

Regarding the ruling for processor allocations of TRQs, the changes required by Feb 4, 2022 in order to avoid retaliatory tariffs isn’t crystal clear, says Morris, but TRQs need to be available to different stakeholders of the processing side — retailers, trading companies, distributors all might want to import directly from the U.S. instead of having to route through a Canadian processing company.

Hear the full conversation between Morris and Haney, below:

Related:

Both Canada and U.S. claim victory in first challenge of USMCA rules for dairy

United States advances first USMCA dispute panel regarding dairy TRQs

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