American Farm Bureau Federation President Zippy Duvall thanked U.S. Trade Representative Katherine Tai for her investigation into whether Canada is violating dairy import commitments to the U.S. and Mexico.
In a release from the U.S. Trade Representative's Office on Jan. 31, Tai announced that the U.S. will establish a dispute settlement panel to determine whether Canada was violating its commitments under the United States-Mexico-Canada Agreement (USMCA) by not providing proper market access to U.S. dairy producers. Duvall expressed his support in a release on the Farm Bureau's website.
“We’re pleased USTR (U.S. Trade Representative) continues to put pressure on Canada to live up to its commitments under the U.S.-Mexico-Canada Agreement," Duvall said in the news release. "America’s hardworking dairy farmers deserve the opportunity to sell their products to Canada, but they have run into persistent roadblocks. We appreciate Trade Representative Tai for her work to enforce the tariff-quota provisions of the trade agreement. We value Canada as a trading partner, but its leaders must honor the agreement to ensure Canada’s families have choices at the supermarket, and America’s farm families have fair access to markets.”
The release by Tai alleged that Canada revised its dairy tariff-rate quota (TRQ) allocation measures, which the U.S. plans to challenge through the panel. Canada's TRQ measures use a market-share approach to determine allocations, which led to Canada disallowing importers the market access they were told they would have.
“Although the United States won a previous USMCA dispute on Canada’s dairy TRQ allocation policies, the Canadian government’s revised measures have not fixed the problem,” Tai told Reuters. “With this panel request, we are utilizing our available tools to enforce our trade agreements and ensure that U.S. workers, farmers, processors and exporters receive the full benefits of the USMCA. Canada made commitments to the United States in the USMCA, and the Biden-Harris administration is ensuring that they honor those commitments.”
In late 2021, a USMCA settlement panel found that Canada's dairy TRQ allocation measures "were not aligned with Canada's obligations under the USMCA," according to the news release. Canada later revised its TRQ allocation measures, but those revisions didn't solve the problem, the U.S. alleged.
“Canada is a valued and important trading partner, but they continue to fall short of their USMCA obligations by denying U.S. dairy producers and exporters fair access to the Canadian market,” Agriculture Secretary Tom Vilsack said, according to the Office of the U.S. Trade Representative. “International trade is critical to economic growth and stability for American producers. This panel request is necessary to ensure Canada honors their commitments as they relate to dairy, and so American producers have greater export opportunities as intended.”
According to Reuters, U.S. dairy producers had some access to Canada's dairy market under the renegotiated North American Free Trade Agreement (NAFTA) in 2018, but there was tension surrounding the agreement, now known as the USMCA. TRQs allow products such as raw milk and cheese to be imported to Canada with reduced or no tariffs, but U.S. producers say the TRQs have only been granted to Canadian processing firms.
Canadian Trade Minister Mary Ng issued a statement saying she was "disappointed" that the U.S. was seeking another dispute panel.
"We will stand firm against attempts to renegotiate during this dispute settlement panel process," she said, according to Reuters.
