News & Resources

First USMCA Dispute Settlement Case Launched to Enforce Canada’s Dairy Obligations

June 2, 2021

Following a year of persistent advocacy, NMPF celebrated the Office of the U.S. Trade Representative’s (USTR) May 25 announcement that the agency will request a Dispute Settlement Panel be established to consider Canada’s failure to comply with dairy tariff-rate quota (TRQ) provisions in the U.S.-Mexico-Canada Agreement (USMCA).

This milestone move is a powerful message not only in the Canada dairy context but also in demonstrating to the world the willingness of the United States to use enforcement procedures when it’s clear a country is violating its agricultural trade commitments.

Since mid-2020 Canada has maintained dairy tariff-rate quota (TRQ) measures that run counter to its market access obligations under USMCA, including by awarding the bulk of the TRQs to Canadian processors, not providing fair or equitable procedures for administering the TRQs and not giving retailers any access to the TRQs. While the United States tried to resolve the matter through consultations with Canada, Canada refused to change its policies. With the broad backing of the U.S. dairy industry and clear bipartisan support from Congress for holding our trading partners accountable, USTR has now launched USMCA’s first dispute settlement case. As a result, a panel of judges will evaluate Canada’s actions and determine whether they must be revised to come into compliance with USMCA.

NMPF’s work on reaching this point has been extensive and includes working with the U.S. Dairy Export Council to support U.S. government negotiators during USMCA negotiations to secure the NAFTA upgrades on dairy trade that USMCA put in place.

Once it became clear that Canada had failed to abide by its commitments post-USMCA implementation, NMPF dug in further to arm U.S. government staff with information and to launch wide-spread outreach urging policymakers to support strong enforcement action. A marker of the high level of bipartisan support for just such a step was seen last August in a set of letters sent to USTR by Congress: one letter signed by 25 Senators, and a companion message from 104 members of the House of Representatives, both urging enforcement action be pursued. USTR commenced the first step in the enforcement process in December by initiating formal USMCA consultations with Canada regarding dairy market access. Canada refused to change.

Subsequent Congressional outreach and a direct meeting between the newly appointed U.S. Trade Representative, Ambassador Katherine Tai, and NMPF Chairman Randy Mooney and President and CEO Jim Mulhern on May 3 helped elevate USTR’s awareness and focus on the need for a dispute settlement case to bring Canada into compliance. As part of that process, NMPF worked with USDEC to coordinate a dairy industry letter signed by 68 dairy cooperatives, processors, state associations and dairy trade associations, pushing USTR take the necessary next steps. Meanwhile, Reps. Ron Kind, D-WI, and Tom Reed, R-NY, on May 21 joined with six other leaders, primarily from the House Ways and Means and Agriculture Committees on a bipartisan message to USTR urging further enforcement action.

Additional members of Congress have signaled their support. Rep. Elise Stefanik, R-NY, also sent a letter May 21 encouraging USTR to act and multiple members of Congress voicing their support for further dairy Canada market access enforcement steps during Amb. Tai’s trade oversight hearings this past month. This work, together with outreach from dairy voices across the country over the past year, ultimately resulted in the long-anticipated May 25 announcement that a formal panel will be established.

While the formation of a USMCA dispute settlement panel is a key part of ensuring U.S. dairy producers are provided the access USTR has worked hard to negotiate, it is only one piece of the puzzle dairy needs to be successful global. Even while celebrating this big step forward, NMPF continues to advocate consistently for the importance of expanding market access opportunities elsewhere in the world as well and for ensuring that our existing markets remain open and unimpeded for American dairy products.