Canadian Dairy TRQ Provisions Remain in Violation of USMCA Terms

The United States is once again seeking dispute settlement consultations in relation to the U.S.-Mexico-Canada Agreement (USMCA). At issue are dairy restrictions that Canada has in place, that the U.S. has raised concern about in the past. A previous dispute panel back in January found that Canada’s dairy tariff-rate quota (TRQ) provisions were in violation of terms agreed to in the USMCA. The U.S. is once again challenging Canada’s TRQ approach, after Canada’s revised measures failed to remedy the original issue.

“I am deeply troubled by Canada’s decision to expand its dairy tariff-rate quota restrictions,” U.S. Trade Representative Katherine Tai said in a news release. “We communicated clearly to Canada that its new policies are not consistent with the USMCA and prevent U.S. workers, producers, farmers, and exporters from getting the full benefit of the market access that Canada committed to under the USMCA.”

Canada has also failed to allocate all of its TRQs for the year despite being required to fully allocate TRQs at the beginning of the year under USMCA requirements. USTR will continue working closely with the U.S. Department of Agriculture in communicating with industry members while working towards obtaining Canada’s full compliance with USMCA dairy requirements. Industry groups including the National Milk Producers Federation and U.S. Dairy Export Council (USDEC) expressed appreciation for the continued efforts to hold Canada accountable to the terms of the USMCA.

“USTR and USDA have shown dogged determination to uphold USMCA despite Ottawa’s clear refusal to engage in real reform to come into compliance with the agreement,” said USDEC President and CEO Krysta Harden. “If we allow Canada to simply ignore its clear obligations, it will set a dangerous and damaging precedent for future trade disputes that will reach far beyond the millions of jobs supported by the American dairy industry.”

If the issue is not resolved through consultations between the U.S. and Canada, the U.S. may request the establishment of a panel under the USMCA.

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