NMPF Push on Canadian USMCA Compliance Results in Second USTR Case on Dairy Access
June 2, 2022
NMPF’s championing of the need to use the full arsenal of U.S.-Mexico-Canada (USMCA) agreement enforcement tools to tackle Canada’s lack of compliance with its dairy market access obligations saw USTR launch an additional dispute settlement case on May 25. Just over a week prior, on May 16, Canada published as final a revised set of USMCA dairy tariff rate quota (TRQ) rules, which failed to fix its USMCA-violating practices. To address the additional problems Canada’s revised approach has raised and to defend the integrity of the agreement, the U.S. Trade Representative’s Office announced it was bringing an additional case.
“Prime Minister Trudeau regularly pledges Canada supports a rules-based global order built on cooperation and partnership, yet Canada continues to flout these trade commitments and plays games rather than meet its signed treaty commitments,” said Jim Mulhern, president and CEO of NMPF. “Dairy farmers appreciate USTR’s continued dedication to aggressively pursuing the full market access expansion into the Canadian market that USMCA was intended to deliver. At the same time, given Canada’s history of persistent violations and the high likelihood Ottawa will once again disregard its USMCA obligations, USTR and USDA must be prepared to deploy the strongest-possible retaliatory measures envisioned under the USMCA should this ‘whack-a-mole’ approach continue. Canada’s actions must have consequences.”
The latest step came after repeated meetings by NMPF and USDEC staff with USDA and U.S. Trade Representative officials to urge further action in anticipation of Canada’s announcement that it would make only minor cosmetic changes to its dairy USMCA tariff-rate quota (TRQ) system. Those changes fall well short of the reforms both organizations have insisted are needed for Canada to meet its commitments under the trade agreement.
A USMCA dispute settlement panel, initiated by the U.S. government at NMPF’s urging, found in January that Canada has not complied with its dairy market access commitments. Canada responded to the ruling in March with a proposal to “modify” its dairy TRQs, which NMPF and USDEC soundly rejected as it failed to incorporate real reforms. Despite the subsequent rejection from the Administration and Congress, Canada forged ahead on May 16 in publishing the TRQs without any consequential changes. In response, USTR indicated its intent to challenge those new rules.
Canada’s dairy TRQ system is also facing a dispute settlement process initiated by New Zealand under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a process that echoes some of the concerns raised by the U.S. government.