Wall Street Journal writer Josh Zumbrun reported on Tuesday that, “The Biden administration initiated a dispute process against the Canadian dairy industry, triggering the formal dispute mechanism of the new U.S.-Mexico-Canada Agreement for the first time.
“The U.S. dairy industry has long complained about policies in Canada that prevent sales in their market, and the issue has won the support of many members of Congress who represent the major dairy-producing states. Canada’s dairy protection was one of the key sticking points of the negotiations over the USMCA which was agreed to in 2018, and the U.S. dispute amounts to a formal accusation that Canada isn’t living up to the terms of the agreement.
This is an important step for American agriculture, and one that brings the U.S. dairy sector closer to realizing the full benefits of the USMCA. https://t.co/8soIoxPaRu
— Secretary Tom Vilsack (@SecVilsack) May 25, 2021
“‘Launching the first panel request under the agreement will ensure our dairy industry and its workers can seize new opportunities under the USMCA to market and sell U.S. products to Canadian consumers,’ said Katherine Tai, the U.S. trade representative and President Biden’s top trade adviser, on Tuesday.”
The Journal article noted that,
The U.S. alleges that Canada has used a complex system of tariff-rate quotas that sets aside a share of the dairy market exclusively for Canadian dairy processors, and that the system is in violation of what Canada agreed to in 2018.
“The complaint predates the Biden administration—in December of 2020, the Trump administration filed the initial complaint, and the U.S. and Canada discussed the complaint in December, but failed to resolve the issue.
On behalf of U.S. #dairy farmers and their cooperatives, we thank @USTradeRep @AmbassadorTai for initiating the dispute settlement process to examine Canada’s failure to provide access to its dairy TRQs in accordance with #USMCA. https://t.co/CqUxDNkS9a
— National Milk Producers Federation (@nmpf) May 25, 2021
“The U.S. is now escalating the dispute by requesting the creation of a formal dispute settlement panel. The panel would hold hearings to understand the issue and release a report later this year. If the U.S. prevails, Canada would then have to bring its practices into compliance. If they didn’t, the U.S. would eventually be able to impose tariffs.”
I commend the Administration for moving forward with enforcement measures that I called for with bipartisan support. Trade agreements work best when they are fully enforced. https://t.co/c4BKj8Nvda
— Rep. Ron Kind (@RepRonKind) May 25, 2021
Also this week, Bloomberg writer Ana Monteiro reported that, “The U.S. moved to set up a dispute-settlement panel to review Canada’s dairy quotas, which Washington alleges undermine the ability of American dairy exporters to sell a wide range of products to Canadian consumers.
“The U.S. is challenging Canada’s tariff-rate quotas, or TRQs, which apply a preferential duty rate to a certain quantity of imports and a different rate to imports above that quantity. Specifically, the U.S. is questioning the set-aside of a percentage of each dairy quota exclusively for Canadian processors, and the U.S. has requested a panel under the U.S.-Mexico-Canada Agreement to review the measures, the Office of the U.S. Trade Representative said in a statement Tuesday.”
BREAKING NEWS: @USTradeRep responds to Congress and U.S. dairy sector concerns and advances first USMCA Dispute panel to hold Canada accountable. Great to see USMCA in action, leveling the playing field for #NE03 dairy farmers and consumers! https://t.co/Ighzm7tD1C
— Rep. Adrian Smith (@RepAdrianSmith) May 25, 2021
The Bloomberg article noted that, “Canadian Trade Minister Mary Ng said the nation is ‘disappointed‘ with the U.S.’s request for a dispute panel.”
The Bloomberg article added that, “Canada’s dairy industry said its quotas are in line with the trade agreement, and the government has a solid case to present to the panel, said Pierre Lampron, president of Dairy Farmers of Canada.”