US “Rage” Over USMCA Dairy Decision

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

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