New Zealand files first CPTPP trade dispute against Canada's implementation of dairy rules

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New Zealand has filed a trade dispute against Canada regarding its implementation of dairy tariff rate quotas (TRQs) under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (better known as the CPTPP).

It marks the first dispute brought forward by any country under the Pacific trade deal that took effect in December 2018.

“New Zealand has notified Canada and other CPTPP parties that we believe Canada’s implementation of its dairy TRQs goes against the rules of the CPTPP,” says New Zealand’s Trade and Export Growth Minister Damien O’Connor, in a statement issued May 12.

New Zealand’s argument is similar to the United States’ ongoing case over the implementation of Canadian dairy import rules under the new Canada-U.S.-Mexico trade agreement — the CUSMA or USMCA.

The New Zealand government says Canada’s dairy TRQs remain unfilled, and that its exporters are unable to fully benefit from market access that was negotiated under the CPTPP. They say this lost market access is estimated to be worth approximately NZ$68 million (approximately $55 million) over the first two years of the agreement.

“New Zealand has an excellent relationship with Canada, who are one of our closest partners in the world.  We have appreciated Canada’s engagement on this issue at different levels over a number of years and these proceedings will not come as any surprise to them,” says O’Connor.  “Occasionally even good friends disagree, and it’s for that reason dispute settlement mechanisms in free trade agreements such as CPTPP exist to provide a neutral forum for settling such disputes when they arise.”

Canada has seven days to respond to New Zealand’s request for consultations. If consultations are unsuccessful at resolving the dispute, New Zealand could request the formation of a dispute settlement panel.

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