May 27, 2022
US requests second dispute settlement panel to look into USMCA Canadian dairy quotas
The Biden administration is proposing that a second dispute settlement panel be established under the US-Mexico-Canada Agreement (USMCA) to look into a trade dispute with Canada over dairy import limits, Reuters reported.
According to a statement from US Trade Representative Katherine Tai's office, Canada's dairy tariff-rate quota allocations deny eligible US applicants, including retailers, access to Canadian markets, undermining the market access that it agreed to provide in the USMCA. The USMCA took effect in 2020.
Farmers in the US have complained that Canada's supply management system favours Canadian processors and limits their ability to export to their northern neighbour. After failing to resolve the issue bilaterally with Ottawa last year, Washington requested the establishment of the first dispute panel on dairy quotas.
The first panel's conclusions were published in a 50-page report that said Canada had broken a trade agreement with the United States and Mexico by reserving the majority of its preferential dairy tariff-rate quotas (TRQs) for Canadian processors.
Canada's Trade Minister Mary Ng said that Canada has updated its dairy quota distribution regulations since then, and that the country had completed its commitments under the USMCA to guarantee its quota system was legal.
Ng said Canada will actively engage in USMCA's consultation process and stand firm in their position to administer TRQs in a way that supports the country's dairy supply management system.
Tai said the US has informed Canada that its new rules are incompatible with the USMCA and prevent US workers, producers, farmers, and exporters from fully benefiting from the market access that Canada pledged to under the USMCA.
The International Dairy Foods Association (IDFA), based in the US commended what it called the Biden administration's "strong" approach.