Objet: US “rage” over
USMCA dairy decision
RAGE
BUILDS OVER USMCA RULING: American lawmakers and major
industry groups are tearing into a landmark decision from the three-member USMCA panel on
Friday that rejected a complaint that Canada has overly restricted U.S. dairy
imports.
“The panel’s decision leaves in place a status quo of
Canadian dairy restrictions that is simply unacceptable. American farmers
deserve a level playing field, and Canada must uphold both the spirit and the letter of its obligations
under USMCA,” said Jason Smith (R-Mo.), chair of the House Ways and Means
Committee, in a statement.
Rep. Elise Stefanik (R-N.Y.) shared a similar sentiment on
Friday, suggesting the move would position farmers in Upstate New York
and North Country at a strategic disadvantage.
Catch
me up: The U.S. requested a panel in January to
investigate if Canada’s market-share approach to deciding dairy import rules
violated USMCA obligations. The Biden administration argued that Canada’s
revised rules on import quotas barred importers, retailers and food service
operators from gaining market access. The country uses tariff rate quotas to
limit foreign dairy imports to protect the domestic industry in 14 categories
including milk, cream, butter, skim milk powder and cheese.
“Two of the three panelists found that Canada’s
measures do not breach of any of the USMCA commitments that the United States
cited,” said the Office of the U.S. Trade Representative in a
statement on Friday, referring to the decision.
Big
biz in the fray: Under a system of tariff rate quotas,
Canada has awarded the majority of volumes to domestic processors. That hits
market access for U.S. exporters, hindering the efficacy of the revised version
of the North American free trade pact, according to U.S. industry.
“By allowing
Canada to ignore its USMCA obligations, this ruling has unfortunately set a
dangerous and damaging precedent,” said Krysta Harden, president and CEO of the U.S. Dairy
Export Council. The National Milk Producers Federation similarly argued that
the panel ruled in favor of trade obstruction. “We urge Ambassador Tai and
Secretary Vilsack to look at all available options to ensure that Canada stops
playing games and respects what was negotiated,” said president and CEO Jim
Mulhern.
Admin
agrees: USTR Katherine Tai on Friday said she was “very
disappointed” with the determination. She added that “despite the conclusions
of this report, the United States continues to have serious concerns about how
Canada is implementing the dairy market access commitments it made in the
Agreement.”
How
we got here: The U.S. has launched two dispute settlement
panels to fight Canada’s dairy TRQs since the USMCA came into force in 2020.
The U.S. claimed victory in the first panel, launched and completed in 2021,
after panelists ruled Canada breached its obligations under the deal by
reserving TRQs for domestic processors.
Ottawa
gloats: International Trade Minister Mary Ng and
Agriculture Minister Lawrence MacAulay issued a joint statement saying the Canadian
government is “very pleased” with the panel’s conclusion and said it’s a
positive development for “Canada’s dairy industry and our system of supply
management.”
Washington’s
not alone: Canada’s TRQ policy also faces criticism from
trading partners like New Zealand, which initiated a formal trade dispute under
the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Its
panel in September released its report concluding that Canada’s policies were
granting preferential access to domestic dairy processors.
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Mariam Abou-Dib
Executive Director/ Directrice exécutive
Teamsters Canada
613-859-2368