U.S. dairy groups sour on Canada's proposal for resolving tariff rate quota dispute

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U.S. dairy groups are not pleased with the Canadian government’s proposal for resolving the dispute over dairy tariff rate quotas (TRQs) as part of the the new Canada-U.S.-Mexico trade agreement (commonly referred to as the USMCA).

The first dispute settlement panel established under the trade deal said Canada had violated the agreement in its dairy TRQ allocation process in a ruling issued in January.

Canada submitted its proposed changes to the U.S. government in early February, but they were not made public until Global Affairs Canada published the proposal on its website this week.

The changes appear to provide distributors with increased market access that was previously reserved for processors.

“Canada’s recent dairy TRQ proposal will not lead to that result. While it’s not surprising that Canada is trying to see just how little will be demanded of them, it’s essential that the U.S. government insist on real reforms,” says Krysta Harden, president and CEO of the U.S. Dairy Export Council, in a statement issued March 3.

“Enough is enough. U.S. dairy producers are sick and tired of Canada’s game playing on dairy market access. From their irrelevant celebration that the panel upheld Canada’s right to retain a supply management system, a fact that no one has challenged and was not at issue in the USMCA case, to the continual efforts to undermine established trade commitments in order to favor Canadian dairy farmers, this pattern of behaviour has gone on too long. All that American dairy farmers want is fair and good-faith implementation of USMCA’s dairy provisions. That doesn’t seem like a high bar, yet it appears to be insurmountable for Canada based on yesterday’s proposed dairy TRQ scheme changes,” adds Jim Mulhern, president and CEO of the U.S. National Milk Producers Federation.

The U.S. groups have not provided any further details on why Canada’s proposal fails to meet their expectations.

Since it’s the first dispute brought forward under the new trade deal, the U.S. dairy groups are urging Washington to view it as a “test-case” for whether the deal’s dispute settlement process can provide effective enforcement.

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