Canada, New Zealand both claim victory in CPTPP dairy dispute decision

A dairy cow in New Zealand (source: Fonterra)

The governments of New Zealand and Canada are both claiming victory in a dispute settlement ruling on the way Canada administers dairy market access under the CPTPP trade deal.

The dispute panel sided with New Zealand on two of the country’s main complaints, agreeing that Canada’s pooling system for allocating dairy tariff rate quotas (TRQs) is not consistent with its obligations in the Trans-Pacific trade agreement, and that Canada was giving priority to domestic processors.

The panel sided with Canada on two other technical complaints filed by New Zealand regarding Canada’s ability to set criteria for quota allocation.

Similar to the 2021 Canada-U.S. dairy dispute ruling under the North American trade deal, both governments involved are framing the result as a win for their side, with trade experts viewing the net result as a win for the country looking to gain more Canadian dairy market access.

“Canada is very pleased with the outcome of the panel’s report which is a clear victory for Canada,” say Canada’s Trade Minister Mary Ng and Agriculture Minister Lawrence MacAulay, in a joint statement, issued late Tuesday.

“The panel has made a significant finding by recognizing Canada’s discretion to set TRQ allocation policies, including determining who is eligible to obtain an allocation. We will not negotiate these allocations with countries who seek to weaken Canada’s supply management system,” say the Canadian ministers.

International trade professor and former advisor to Canadian Prime Minister Stephen Harper Meredith Lilly tweeted that Ng and MacAulay’s statement “buries the lede.”

“The Panel ruled that Canada lost the key issues of the case – Canada’s TRQ allocation practices violate CPTPP obligations and limit NZ’s ability to fully use its quota,” wrote Lilly.

New Zealand’s government is calling the ruling a “decisive win.”

“Canada was not living up to its commitments under CPTPP, by effectively blocking access for our dairy industry to upscale its exports. That will now have to change,” New Zealand’s Minister for Trade and Export Growth Damien O’Connor says.

“This is a significant win for New Zealand and our exporters. Our dairy industry lost out on an estimated $120 million in revenue from the Canadian market in the past three years,” continues O’Connor, noting New Zealand secured access accounting for 3.3 per cent of Canada’s dairy market during negotiations of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

New Zealand initiated the dispute with Canada — the first under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — in May 2022. After consultations between the two countries failed to resolve the issue, New Zealand requested the creation of the dispute settlement panel in November 2022.

According to the Canadian government, both countries now have 45 days to agree on a timeline by when Canada will have to meet its obligations.

“We will work closely with the dairy industry as we move towards the next phase of the process,” say Ng and MacAulay.

The U.S., meanwhile, requested a second dispute settlement panel under the Canada-U.S.-Mexico trade deal regarding Canada’s dairy TRQ allocation earlier this year. The panel is expected to issue its ruling in the coming months.

More coverage to come.


New Zealand files first CPTPP trade dispute against Canada’s implementation of dairy rules

Both Canada and U.S. claim victory in first challenge of USMCA rules for dairy

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

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