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Canada Attempts to Undermine U.S. Market Access with Pricing Policy Change

June 3, 2016

Canada is moving forward with a dairy policy designed to alter the market access available to the U.S. dairy industry. A pricing proposal introduced in Ontario this spring, and reportedly scheduled to be announced nationally in the very near future, is intended to harm imports of ultra-filtered milk from the United States. Already, American exports of ultra-filtered milk to Canada have dropped significantly due to procurement adjustments by Canadian processors last month.

Ultra-filtered milk is concentrated liquid milk with a very high (85%) protein level. U.S. ultra-filtered milk exported to Canada is used in cheese-making and enters under a tariff line for high-protein dairy that, according to the terms of the NAFTA agreement, provides duty-free access for U.S. products to the Canadian market. For the past few years, Canada has been considering various approaches aimed at curtailing these U.S. sales.

A regulatory shift in its cheese standards also remains a possibility, but for now, Canada appears to have settled on moving forward with the new pricing policy that provides processors an incentive for using Canadian milk for specifically targeted purposes, and a disincentive for using imported ingredients.

“It is unacceptable for Canada to undermine market access, especially at a time when the U.S. is preparing to move forward with the Trans-Pacific Partnership agreement,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “All parties to the TPP must be held to their previous agreements. This maneuvering—aimed to make it more difficult for U.S. dairy companies to access the export markets soon to be opened through TPP—are just the type of activity that must be guarded against once the agreement is enacted. 

NMPF has made clear that the benefits of TPP hinge on the strict and vigilant enforcement of the obligations contained therein. As NMPF has testified, the U.S. should not move forward to approve TPP until it can ensure that all countries will abide by their agreements.