Jaime Castaneda, NMPF’s Executive Vice President for Policy Development & Strategy, discusses Canada’s lack of willingness to honor its dairy commitments under USMCA on RFD-TV. A dispute resolution panel under the trade agreement has found Canada’s system of allocating access to its dairy market to the U.S. in violation of the deal. NMPF is urging an aggressive U.S. response.
NMPF Senior Vice President for Trade Shawna Morris discusses the current nationwide infant formula shortage and ways to solve the immediate crisis, speaking with the National Association of Farm Broadcasters. While temporary import increases can help alleviate short-term shortages, current problems involve supply-chain shortfalls doesn’t reflect a lack of inputs, she said: “The milk, the ingredients, that the plant would need in order to produce formula, no challenge there. Instead, what we have is a problem more on the processing capacity piece.”
The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) today called on the U.S. government to levy retaliatory tariffs on Canada after Ottawa made clear that it refuses to meet its signed treaty obligations under the U.S.-Mexico-Canada Agreement (USMCA) concerning dairy market access.
In January, a USMCA dispute resolution panel initiated by the U.S. found that Canada’s dairy tariff-rate quotas (TRQs) system violates the terms of USMCA. Canada issued a new TRQ proposal in March which included only inconsequential changes. Today’s announcement shows no indication that Canada intends to comply with its USMCA commitments on dairy TRQs.
“Canada made a clear choice to thumb its nose at both the United States government and its international treaty obligations. It has completely disregarded the USMCA agreement signed just a few short years ago,” said Jim Mulhern, president and CEO of NMPF. “Ottawa’s decision today is clearly designed to test our resolve by doubling down on its longstanding dairy trade violations, ignoring both the spirit and the letter of its trade agreements. That decision demands retaliatory action by the U.S. government. Otherwise, our trade agreements will be seen as toothless before the ink is dry.”
“USTR, USDA and scores of members of Congress from both side of the aisle have worked diligently to ensure American dairy farmers and manufacturers benefit from USMCA. They deserve our deepest thanks for bringing us this far,” said Krysta Harden, president and CEO of USDEC. “Unfortunately, Canada simply refuses to institute real reform, and such actions must have consequences. Retaliatory tariffs are both fair and necessary in this circumstance, as clearly provided for by USMCA.”
As an April 5 bipartisan letter on the matter sent to Ambassador Tai and Secretary Vilsack from several leading members of the U.S. House of Representatives stated, “A deal’s a deal; it’s not too much to ask that our trading partners live up to their end of the bargain.”
On April 19, USDEC and NMPF filed public comments on the matter with Global Affairs Canada. The filing noted, “Canada’s proposed allocation and administration policy changes in response to the CUSMA report continue to fall woefully short of full compliance with Canada’s CUSMA obligations. This has consequences not only for the agreed-upon CUSMA benefits denied U.S. and Canadian stakeholders, but also for the credibility of CUSMA enforcement procedures undergoing their first test in this dispute and for the success of CUSMA itself. We urge Canada to consider its larger interest in the success of the CUSMA and modify its dairy TRQ allocation and administration policies to give effect, in good faith, to Canada’s CUSMA commitments.”
NMPF soundly rejected a Canadian proposal to “modify” its dairy tariff rate quota (TRQ) administration process in joint comments with USDEC to the Canadian government on April 19. The action follows a January dispute settlement ruling that Canada is not abiding to its market access commitments in the U.S.-Mexico-Canada Agreement (USMCA).
NMPF’s comments outline how Canada’s TRQs fail to fulfill its dairy obligations including how Canada limits proposed TRQ allocations to Canadian processors and distributors based on dairy sales; how Canada excludes other dairy purchasers such as retailers from the system; and Canada’s lack of good regulatory practices designed to encourage effective use of the TRQs allocated to a given company.
NMPF called on Canada to “consider its larger interests” in the success of USMCA and modify its dairy TRQ allocation and administration policies to show its good faith toward USMCA.
Complementing this effort, NMPF worked with leading members of the U.S. House of Representatives on an April 5 bipartisan letter to Ambassador Katherine Tai and Secretary Tom Vilsack calling on the Biden administration to reject the proposal and ensure U.S. dairy producers are extended the market access that had been negotiated.
The letter was sent by Reps. Ron Kind (D-WI), Tom Reed (R-NY), Antonio Delgado (D-NY), Glenn Thompson (R-PA), Suzan DelBene (D-WA), Dusty Johnson (R-SD), Jim Costa (D-CA), and David Valadao (R-CA), the same congressional leaders who successfully urged USTR to launch a dispute settlement case against Canada in May 2021.
“A deal’s a deal; it’s not too much to ask that our trading partners live up to their end of the bargain,” the letter stated. “That is why it is critical that this compliance stage of the USMCA dairy case demonstrate that the USMCA enforcement process works—not just to deliver the right finding, as it did in January, but to ensure faithful implementation of the overall agreement and drive real, tangible reforms that are seen on store shelves, to the benefit of American dairy producers and manufacturers, as intended.”
The House letter follows a March 4 letter from Rep. Elise Stefanik (R-NY) to Ambassador Tai sharply criticizing the Canadian proposal. A similar bipartisan, bicameral letter was sent on April 6 from members of the Minnesota Congressional delegation, led by Rep. Michelle Fischbach (R-MN) and Sen. Amy Klobuchar (D-MN). Sen. Tina Smith (D-MN) and Reps. Tom Emmer (R-MN), Angie Craig (D-MN) and Pete Stauber (R-MN) also joined the letter.
NMPF continues to work with these and other congressional offices to help ensure that Canada is held to account so that U.S. dairy farmers can reap USMCA’s full promised benefits.
The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) expressed their deep appreciation for robust Congressional support on ensuring Canada fully honors its U.S.-Mexico-Canada (USMCA) dairy market access commitments. Today several leading members of the U.S. House of Representatives sent a bipartisan letter to U.S. Trade Representative Katherine Tai and U.S. Secretary of Agriculture Tom Vilsack calling on the administration to reject Canada’s recent dairy proposals and insist on real reform.
Last month, Canada proposed inconsequential changes to its dairy tariff-rate quota (TRQ) allocations after a USMCA dispute panel found in January that Canada’s existing rules do not meet USMCA requirements. Led by Reps. Ron Kind (D-WI), Tom Reed (R-NY), Antonio Delgado (D-NY), Glenn Thompson (R-PA), Suzan DelBene (D-WA), Dusty Johnson (R-SD), Jim Costa (D-CA), and David Valadao (R-CA), the letter argues that Canada must bring its dairy TRQs into alignment with its USMCA commitments, which would further open Canada’s market to U.S. dairy products. Representative Elise Stefanik (R-NY) has sent a similar letter pointing out that Canada’s USMCA dairy TRQ proposal is insufficient to deliver on USMCA’s promise for dairy exporters on March 4.
“The USMCA is not a list of optional suggestions and aspirational ambitions. Yet Canada has treated its obligations to American dairy producers as a game, seeing what they can get away with,” said Jim Mulhern, president and CEO of NMPF. “Congress rightfully recognizes this must stop. If we do not require our allies meet their signed commitments, then our trade agreements are not worth the paper they are printed on.”
“USDEC appreciates this strong bipartisan support focused on ensuring that American dairy exporters receive the benefits that was negotiated in the USMCA,” said Krysta Harden, president and CEO of USDEC. “We are committed to continuing to work with the U.S. government to make sure that the dairy market access negotiated with Canada is provided in full to the benefit of both American dairy farmers and manufacturers, and Canadian consumers alike.”
The bipartisan House letter sent today states, “A deal’s a deal; it’s not too much to ask that our trading partners live up to their end of the bargain. That is why it is critical that this compliance stage of the USMCA dairy case demonstrate that the USMCA enforcement process works – not just to deliver the right finding, as it did in January – but to ensure faithful implementation of the overall agreement and drive real, tangible reforms that are seen on store shelves, to the benefit of American dairy producers and manufacturers, just as USMCA intended.”
NMPF firmly rejected a proposal made public on March 3 by Global Affairs Canada that outlined “modifications” to its U.S.-Mexico-Canada Agreement (USMCA) dairy tariff rate quota (TRQ) allocations and has urged the U.S. government to do the same.
The Federation initially called out Canada’s attempts to circumvent its dairy market access obligations shortly before the trade pact’s implementation in July 2020. Following evaluation of input submitted by NMPF and the U.S. Dairy Export Council, the U.S. Trade Representative (USTR) launched the first-of-its-kind USMCA dispute settlement panel in May 2021 over Canada’s TRQ allocations. The panel’s ruling, released in January 2022, requires Canada to modify its TRQ allocation process to come into compliance with the trade agreement.
Unfortunately, Canada’s plan to revise its tariff-rate quotas (TRQs) falls well short of its USMCA requirements. For instance, the new proposal continues to exclude retailers and food service companies and to strongly favor Canadian dairy manufacturers. USTR had raised these specific concerns during the dispute panel process.
Given Canada’s proposal is more akin to a token gesture than an actual remedy to the industry’s concerns, NMPF is now working with allies in the House and Senate to urge USTR to reject Canada’s proposal. Multiple House letters are being sent to USTR to this effect.
As the first such dispute panel under the USMCA, USTR’s actions in this matter will set a powerful precedent on whether USMCA enforcement cases are up to the task of holding all Parties to the agreement to account. USTR will need to demonstrate that the USMCA enforcement process can deliver the reforms needed to bring about full implementation of the agreement.
The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) rejected a proposal issued late yesterday by Global Affairs Canada that outlines the Canadian “changes” to their current scheme for allocating U.S.-Mexico-Canada Agreement (USMCA) dairy tariff-rate-quotas (TRQ).
In January the United States Trade Representative’s office announced that it had won USMCA’s first-ever dispute settlement panel by prevailing in its case against Canada regarding how Canada’s USMCA dairy TRQ allocation process violated the agreement. Ambassador Tai noted at the time that, “This historic win will help eliminate unjustified trade restrictions on American dairy products and will ensure that the U.S. dairy industry and its workers get the full benefit of the USMCA to market and sell U.S. products to Canadian consumers.”
“Enough is enough. U.S. dairy producers are sick and tired of Canada’s game playing on dairy market access. From their irrelevant celebration that the panel upheld Canada’s right to retain a supply management system, a fact that no one has challenged and was not at issue in the USMCA case, to the continual efforts to undermine established trade commitments in order to favor Canadian dairy farmers, this pattern of behavior has gone on too long. All that American dairy farmers want is fair and good-faith implementation of USMCA’s dairy provisions. That doesn’t seem like a high bar, yet it appears to be insurmountable for Canada based on yesterday’s proposed dairy TRQ scheme changes,” said Jim Mulhern, president and CEO of NMPF. “We urge the administration to demand that Canada go back to the drawing board until it can genuinely deliver on providing the U.S. dairy industry the full benefit of USMCA.”
“U.S. dairy farmers and manufacturers have only limited access to the Canadian market under USMCA. That makes it essential that Canada abide by its original commitments under that agreement,” said Krysta Harden, president & CEO of USDEC. “Canada’s recent dairy TRQ proposal will not lead to that result. While it’s not surprising that Canada is trying to see just how little will be demanded of them, it’s essential that the U.S. government insist on real reforms.”
As the first case brought and decided under USMCA, the U.S.-Canada dairy TRQ panel is a test-case for whether or not the USMCA dispute settlement process can provide effective enforcement and deliver genuine compliance with the agreement. NMPF and USDEC will continue to work with the Biden administration and Congress to seek to ensure that the process provides the type of strong precedent needed for future USMCA disputes as well.
Shawna Morris, Senior Vice President for Trade with the National Milk Producers Federation and the U.S. Dairy Export Council, discusses U.S. dairy’s win over Canada in the first trade dispute ever brought before the USMCA’s dispute settlement panel on RFD-TV. The panel ruled against Canada in a case brought by the United States over its unfair allocation of quotas that limited U.S. dairy access to Canada agreed to as part of USMCA.
More than a year of work from NMPF and the U.S. Dairy Export Council (USDEC) reaped dividends for dairy Jan. 4, as a landmark decision found that Canada is improperly restricting access to its market for U.S. dairy products and violating its U.S.-Mexico-Canada Agreement (USMCA) tariff-rate quota (TRQs) commitments.
The case, the first of any kind brought before a USMCA Dispute Settlement Panel, was launched with broad bipartisan support last May after months of urging from NMPF and USDEC, which is urging Canada to comply swiftly with the panel’s ruling.
“The United States and Canada negotiated specific market access terms covering a wide variety of dairy products, but instead of playing by those mutually agreed upon rules, Canada ignored its commitments. As a result, U.S. dairy farmers and exporters have been unable to make full use of USMCA’s benefits,” said Jim Mulhern, president and CEO of NMPF, calling the decision” an important victory for U.S. dairy farmers and the millions of Americans whose jobs are tied to the U.S. dairy industry.”
TRQs are a system of tariffs negotiated between countries that allow a predetermined quantity of imports at a specified tariff rate, where that rate is often at or near zero. Any additional imports above that predetermined quantity are subject to significantly higher tariffs. In the case of U.S. dairy products, these additional Canadian tariffs typically price U.S. dairy products out of Canada’s market, making fair access to Canadian dairy TRQs vital to maximizing exports to that market.
When the Office of the U.S. Trade Representative (USTR) brought the case in May, it argued that Canada has maintained dairy TRQ measures that run counter to its market access obligations under USMCA. USMCA specifically requires that Canada open its TRQ application process to anyone active in the Canadian food and agriculture sector. Yet USTR noted that Canada designates the bulk of its quotas to Canadian dairy processors who have little incentive to import, does not provide fair or equitable procedures for administering the quotas, and does not give retailers any access to them. These measures deny the ability of U.S. dairy farmers, workers, and exporters to use the TRQs and fully benefit from USMCA.
While the United States tried to resolve the matter through consultations with Canada before initiating the Dispute Settlement Panel, Canada refused to change its policies. NMPF and USDEC engaged USTR and Congress, achieving broad bipartisan support from more than 125 members of the House and Senate for bringing this matter to the USMCA Dispute Settlement Panel. There, a panel of legal experts evaluated Canada’s current dairy trade policies against its commitments under USMCA and found Canada was not meeting its USMCA obligations.
The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) celebrated a landmark decision published today which found Canada is improperly restricting access to its market for U.S. dairy products in violation of its U.S.-Mexico-Canada Agreement (USMCA) tariff-rate quotas (TRQs) commitments. The case is the first of any kind brought before a USMCA Dispute Settlement Panel and was launched with broad bipartisan support last May at the urging of NMPF and USDEC. NMPF and USDEC urged Canada to comply swiftly with the panel’s ruling.
“The United States and Canada negotiated specific market access terms covering a wide variety of dairy products, but instead of playing by those mutually agreed upon rules, Canada ignored its commitments. As a result, U.S. dairy farmers and exporters have been unable to make full use of USMCA’s benefits,” said Jim Mulhern, president and CEO of NMPF. “Today’s decision is an important victory for U.S. dairy farmers and the millions of Americans whose jobs are tied to the U.S. dairy industry. America’s dairy farmers appreciate the Biden Administration’s dedication to preserving dairy export opportunities and the many members of Congress that have also stressed the importance of aggressive enforcement of dairy access rights in our trade agreements.”
“On behalf of America’s dairy farmers and manufacturers, we want to thank Ambassador Katherine Tai for launching the dispute settlement process and Congressional leaders for strongly supporting the need to uphold USMCA’s dairy provisions. We expect Canada to abide by its trade commitments so that the American dairy industry can fully access the Canadian markets just as USMCA promised,” said Krysta Harden, president and CEO of USDEC. “While this is an essential victory, it is one step in a much longer journey. Our work to uphold the full benefits of USMCA continues, as we strive to reduce supply chain disruptions for our exports and ensure Mexico’s adherence to the dairy provisions of the USMCA, among other key matters.”
TRQs are a system of tariffs negotiated between countries that allow a predetermined quantity of imports at a specified tariff rate, where that rate is often at or near zero. Any additional imports above that predetermined quantity are subject to significantly higher tariffs. In the case of U.S. dairy products, these additional Canadian tariffs typically price U.S. dairy products out of Canada’s market, making fair access to Canadian dairy TRQs vital to maximizing exports to that market.
When the Office of the U.S. Trade Representative (USTR) brought the case in May 2021 following persistent advocacy from NMPF and USDEC, it argued that Canada has maintained dairy TRQ measures that run counter to its market access obligations under USMCA. USMCA specifically requires that Canada open its TRQ application process to anyone active in the Canadian food and agriculture sector. Yet USTR noted that Canada designates the bulk of the TRQs to Canadian dairy processors who have little incentive to import, does not provide fair or equitable procedures for administering the TRQs, and does not give retailers any access to the TRQs. These measures deny the ability of U.S. dairy farmers, workers, and exporters to utilize the TRQs and realize the full benefits of the USMCA.
While the United States tried to resolve the matter through consultations with Canada before initiating the Dispute Settlement Panel, Canada refused to change its policies. NMPF and USDEC engaged USTR and Congress, achieving broad bipartisan support from more than 125 members of the House and Senate for bringing this matter to the USMCA Dispute Settlement Panel. There, a panel of legal experts evaluated Canada’s current dairy trade policies against its commitments under USMCA and found Canada was not meeting its USMCA obligations.
As NMPF continues to reiterate to the U.S. government the need for greater market access opportunities for U.S. dairy, the Trade Policy team is highlighting a need for strong enforcement of agreements already in place to ensure American dairy producers are provided the access already negotiated – notably the U.S.-Mexico-Canada Agreement (USMCA).
In two National Association of State Departments of Agriculture (NASDA) meeting sessions on Oct. 21 and 26 with state agricultural commissioners in October, NMPF staff highlighted the importance of the ongoing dispute settlement proceedings over Canada’s allocation and administration of dairy tariff-rate quotas that run counter to its commitments under the new trade pact. In addition, NMPF emphasized the need for diligence regarding Canada’s other USMCA dairy commitments and for a heightened focus on preserving smooth trade flows with our largest export partner, Mexico.
NMPF’s Senior Vice President for Trade, Shawna Morris, discusses Canada’s latest efforts to evade the USMCA trade deal on the “Adams on Agriculture” podcast.
