US sets up dispute panel on Canadian dairy quotas under trade deal

by Bloomberg Feb 01, 2023

The US set up a second dispute-settlement panel to resolve differences with Canada over its dairy quotas, saying Ottawa is still undermining access to its market under a trade deal between the nations.

While Canada changed its quota allocations after a panel found in December 2021 that its measures were inconsistent with its obligations under the pact, its new policies “have not fixed the problem,” US Trade Representative Katherine Tai said in a statement Tuesday.

The neighbors didn’t resolve Washington’s concerns about Ottawa’s practices at a Jan. 17 meeting, the third round of consultations under the US-Mexico-Canada trade agreement. The USTR said the calculations based on market share prohibit eligible applicants — including retailers and food-service operators — from accessing allocations.

Under the USMCA that took effect in July 2020, Canada conceded to granting more duty-free or lower tariff access across dairy products including milk, cream, cheese, yogurt and ice cream via a tariff-rate quota, or TRQ.

But Canada was allocating the bulk of those imports to processors, limiting the ability of other groups like retailers to buy US product.

Canada is disappointed with the US request for another panel, Trade Minister Mary Ng said.

“Canada will continue to defend our supply-management system and the market access which was agreed upon with the US,” she said in a statement. “We will stand firm against attempts to re-negotiate during this dispute-settlement-panel process.”

The three-member panel is expected to issue a report later this year, the USTR said.

“Canada is a valued and important trading partner, but they continue to fall short of their USMCA obligations by denying U.S. dairy producers and exporters fair access to the Canadian market,” Agriculture Secretary Tom Vilsack said. “This panel request is necessary to ensure Canada honors their commitments as they relate to dairy, and so American producers have greater export opportunities as intended.”