U.S. requests another dispute settlement panel on Canada’s dairy policy

The United States is formally requesting a second dispute settlement panel over Canada’s dairy tariff-rate quota (TRQ) policies under the Canada-U.S.-Mexico trade agreement (also known as CUSMA or USMCA).

“Although the United States won a previous USMCA dispute on Canada’s dairy TRQ allocation policies, the Canadian government’s revised measures have not fixed the problem,” said U.S. Trade Representative Katherine Tai on Tuesday. “With this panel request, we are utilizing our available tools to enforce our trade agreements and ensure that U.S. workers, farmers, processors, and exporters receive the full benefits of the USMCA. Canada made commitments to the United States in the USMCA, and the Biden-Harris Administration is ensuring that they honour those commitments.”

Both Canada and the U.S. claimed victory following a December 2021 dispute settlement panel ruling on Canada’s dairy TRQ allocation measures. Canada updated its TRQ allocation rules in May 2022, but the changes were immediately denounced by the U.S., with American dairy groups calling for trade retaliation.

“Canada is disappointed that the United States has requested a dispute settlement panel,” says Mary Ng, Canada’s Minister of International Trade, Export Promotion, Small Business and Economic Development, in a statement shared with RealAgriculture.

“We know how important stability and certainty are to our farmers, workers, and businesses, and we will always work to ensure that trade rules are implemented as intended, protecting their livelihoods and setting them up for success at home and abroad,” continues Ng. “Canada will continue to defend our supply management system and the market access which was agreed upon with the U.S. We will stand firm against attempts to re-negotiate during this dispute settlement panel process.

The USTR says the new request expands its challenge to Canada’s revised TRQ policies, which it says “use a market-share approach for determining TRQ allocations, and impose new conditions effectively prohibiting retailers, food service operators, and other types of importers from utilizing TRQ allocations.”

“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,” said U.S. Agriculture Secretary Tom Vilsack, in a statement. “International trade is critical to economic growth and stability for American producers. This panel request is necessary to ensure Canada honours their commitments as they relate to dairy, and so American producers have greater export opportunities as intended.”

Based on the timelines in the trade agreement, a dispute settlement panel will be formed in the next month or so. The panel would be expected to publish its report seven to nine months later.

Related:

Dairy TRQ Round Two: U.S. files new complaint over Canadian dairy import rules

USTR files new and expanded dispute over Canada’s dairy allocation rules