The U.S.-Mexico-Canada Agreement (USMCA), signed into law in January 2020, improved dairy trade with Canada and solidified trade relations with Mexico. Enforcing the agreement’s dairy provisions remain key to realizing and maintaining these gains.
While USMCA does not address the full range of Canada’s problematic tariff and non-tariff policies, it makes important advances such as reforms to Canada’s controversial dairy pricing system. However, Canada’s sustained and longstanding efforts to undermine access to its market and lower the benefits of the trade agreement to the U.S. dairy industry continue to pose deep concerns.
USMCA also strengthens U.S. dairy’s relationship with Mexico, the top export destination for U.S. dairy products. The agreement preserves duty-free access for U.S. dairy in Mexico and establishes new protections for products that rely on common cheese names, such as parmesan and swiss cheese. Recent anti-trade sentiment and technical barriers imposed by Mexico threaten to undermine this longstanding trade relationship.
NMPF supports aggressive action to ensure that Canada and Mexico fully comply with their USMCA commitments. Congress must work with the U.S. Trade Representative and USDA to enforce USMCA’s dairy-related provisions to prevent Canada or Mexico from undermining the benefits the deal offered for U.S. dairy producers.
- Mexico and Canada are two of the largest markets for U.S. dairy product exports, accounting in recent years for more than a third of the total value of U.S. dairy product exports.
- USMCA’s text fundamentally changes Canada’s trade-distorting policies and reforms Canada’s controversial dairy pricing system including by eliminating its Class 7 program. It also provides exclusive Canadian market access for U.S. farmers and manufacturers.
- Canada is taking several actions in how it administers tariff rate quotas (TRQs) that circumvent its USMCA obligations. Canada’s current TRQ allocations are designed to discourage their full use and value, limiting U.S. dairy-product imports. Specifically, Canada is reserving the bulk of quota access to Canadian processors and is not providing fair or equitable procedures in administering the TRQs.
- USMCA strengthens U.S. dairy’s relationship with Mexico and establishes new protections for products that rely on common cheese names. However, Mexico has taken or is considering several actions that can restrict trade, making the defense of smooth and open access to one of U.S. dairy’s top export markets essential.