Digging in to the Canada-U.S. dairy TRQ dispute, as the U.S. contemplates its next move


Canada is standing by its proposed solution regarding dairy tariff-rate quotas under the United States-Mexico-Canada Agreement (USMCA), as U.S. dairy groups continue to pressure the White House to escalate the matter. Earlier this week, U.S. trade representative Katherine Tai said Canada’s changes didn’t go far enough, and the proposed solution was a disappointment.

Jim Wiesemeyer with Pro Farmer, based out of Washington, D.C., weighed in on the situation and provides insight on what the next moves could be, what he’s hoping will be avoided, and what some of the potential motives could be surrounding the yet-to-be-heard decision from the U.S..

“First of all, I don’t think this says much for the what we thought was going to be an accelerated dispute resolution process on the new North American trade agreement,” says Wiesemeyer. “The USTR in Washington is consulting with what they call the stakeholders, Congress, on the next steps. They don’t say what the next step is. And [USDA secretary Tom] Vilsack doesn’t say retaliation, but at least a couple of dairy groups want the U.S. to retaliate.”

Wiesemeyer adds that he strongly hopes the response wont be in the way of retaliation, however it is, he doesn’t believe that it will come through the food sector. He speculates that the U.S. would avoid the food price environment and hit Canada with a blow in another industry.

Political strategy could also come into play and may determine the standpoints of some as we move closer to the midterm election this fall.

“Well, I won’t say they aren’t a factor. One key state is Wisconsin, that’s a battleground state for the Senate. So I just think the White House, they’re chalking up some losses left and right. So there’s your pressure, they need a win here and so the dairy issue could be wrapped up in the that.” says Wiesemeyer.

Additionally, we have to look at what is happening on a global level with trade. Indonesia has cut off palm oil exports, followed by India, which has essentially cut off wheat exports. Although Wiesemeyer says there are surely people in Congress who are in favour of doing the same and provides insights on the reality of that process as it relates to dairy and also fuel.

“There’s people in Congress that think it’s a good idea. When you have gasoline prices in every state over $4 and probably on their way to $5, the pressure grows on price controls. I hope that doesn’t happen,” says Wiesemeyer. “The House passed a bill on price controls for gas gouging, but I don’t think the votes are there in the Senate. Bottom line, I don’t think the United States will do that. I’ll guarantee you, when you have price controls, it makes matters worse, you put a price control on any commodity and you’ll have a shortage of it.”

He also discloses his take on the wheat cut-off by India. Wiesemeyer says that he believes the decision was made in order to get a true assessment of their new crop potential, after which, he predicts we will see a resurgence of wheat exports from India.

At the end of the day, Canada is holding strong on their position stating they have gone through the proper consultation process and as stated earlier, this is their final offer, to which the U.S. continues to hold their position, proclaiming they are right and just and that Canada has proposed an inadequate offer ever since this issue started.

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