USMCA panel rules in favor of U.S. over Canadian dairy import practices


USMCA panel rules in favor of U.S. over Canadian dairy import practices

The U.S. dairy industry is celebrating a victory in the first USMCA trade agreement dispute settlement process.  U.S. Trade Representative Katherine Tai announced the United States prevailed against Canada, with the review panel agreeing that Canada is breaching its trade agreement requirements by reserving most of the in-quota amount of dairy tariff-rate quotas for Canadian processors.

A tariff-rate quota applies a preferential rate of duty to an “in-quota” quantity of imports and a different rate to imports above that in-quota quantity.  The USTR’s office says Canada published notices to importers that in June and October 2020 and May 2021 for dairy TRQs, Canada set aside and reserved a percentage of the quota for processors and for so-called “further processors”, contrary to Canada’s USMCA commitments.  As a result of this restriction, the USTR says Canada has been undermining the value of its dairy TRQs for U.S. farmers and exporters since the entry into force of the USMCA by limiting access to in-quota quantities negotiated under the Agreement.  

Shawna Morris is the U.S. Dairy Export Council’s Vice President of Trade Policy. 

“Canada was given the lion’s share of all of the dairy importing rights, these dairy tariff rate importing quota access to its processors rather than them more available to other groups throughout the supply chain.”

And Mykel Wedig is with Edge Dairy Farmers Cooperative tells Brownfield what Canada was doing kept U.S. products out of Canadian consumer’s hands. “That means our products aren’t going directly into grocery stores and things of that nature, they were going into further processing so we were not getting the benefits we expected to see under the new USMCA.”

Canada received the confidential ruling on December 20th of last year and Morris says they have 45 days to comply, or Friday, February 3rd of 2022, or the U.S. can consider actions including retaliatory tariffs on Canadian products.