Trade Representative Katherine Tai announced on Wednesday that the United States is seeking, for the second time, dispute settlement consultations with Canada under the United States-Mexico-Canada agreement to address restrictions. imposed by Canada which, according to the United States, are contrary to its commitments to the USMCA. .
Specifically, the United States challenges Canada’s tariff rate quota (TRQ) allocation measures for dairy products, which deny access to the allocation to eligible applicants, including retailers, foodservice operators and other types of importers, and impose new conditions on the allocation and use of TRQs, the USTR said in a press release.
The United States also takes issue with Canada’s failure to fully allocate its annual dairy TRQs. The USTR said, “Canada instead allocates a quota a few months at a time. By these measures, Canada is undermining the market access it has agreed to provide under the USMCA.
In January, a USMCA panel agreed with the United States that Canada’s allocation of dairy TRQs, in particular the reservation of a percentage of each dairy TRQ exclusively to Canadian processors, is inconsistent with Canada’s commitment not to “limit access to an allocation to processors.”
On March 2, 2022, Global Affairs Canada launched public consultations regarding proposed changes to its policies regarding the allocation of Canadian USMCA dairy TRQs and explained that the changes are intended to implement the findings of the USMCA special group. On May 16, Canada released changes to its policies, but the United States dismissed the changes as insufficient.
“I am deeply troubled by Canada’s decision to extend its tariff restrictions on dairy products,” Tai said. “We have made it clear to Canada that its new policies do not comply with the USMCA and prevent American workers, producers, farmers and exporters from fully benefiting from the market access to which Canada has committed under the USMCA. ‘USMCA. We will continue to work with the USDA to ensure that our dairy industry can provide a wide range of high quality American products to Canadian customers.
“Canada’s protectionist dairy policies are a major concern for the U.S. Department of Agriculture under the Biden-Harris administration,” Agriculture Secretary Tom Vilsack said. “Canada has not honored or implemented its commitments to the USMCA by removing trade restrictions that disadvantage and deter US dairy producers and exporters from real and meaningful access to the Canadian market. Obtaining this access remains a top priority for the administration, and we are considering all available options to achieve this goal.
International Dairy Foods Association President and CEO Michael Dykes said the IDFA “applauds the aggressive action taken today by the USTR to hold Canada accountable for trade commitments made under of the USMCA and refuse to administer its dairy TRQs in a manner consistent with the agreement”. But Dykes added: “However, the US government cannot allow Canada to continue to deny US exporters the access it promised under the agreement. The USTR, the White House, and the USDA must remain vigilant and continue to speak out against non-transparent and market-distorting practices in Canada at all times when it deviates from the USCMA commitments. The US dairy industry has made it clear from the outset that US dairy exporters are demanding real tariff rate quota reform that will deliver the market access Canada agreed to. Our government officials must stay the course.
The National Federation of Dairy Producers and the US Dairy Export Council also applauded the Biden administration’s action.
“Prime Minister Trudeau regularly promises that Canada supports a rules-based global order based on cooperation and partnership, but Canada continues to flout those trade commitments and play games instead of honoring the commitments that he signed under the treaties,” said Jim Mulhern, president and CEO of the NMPF. “Dairy producers appreciate the USTR’s continued dedication to aggressively pursuing the full expansion of Canadian market access that the USMCA was intended to provide. At the same time, given Canada’s history of persistent violations and the high likelihood of Ottawa once again failing to meet its obligations to the USMCA, the USTR and USDA must be prepared to deploy the strongest possible retaliation measures contemplated within the framework of the USMCA if this “mole swoop” approach continues. Canada’s actions must have consequences.
“The USTR and USDA have shown a dogged determination to defend the USMCA despite Ottawa’s clear refusal to engage in real reform to comply with the agreement,” said Krysta Harden, President and CEO of USDEC. “Dairy farmers and processors appreciate the administration’s and Congress’ clear bipartisan commitment to enforcing the USMCA and the insistence on securing all of the export benefits that the United States so painstakingly negotiated. . If we allow Canada to simply ignore its clear obligations, it will set a dangerous and damaging precedent for future trade disputes that will go far beyond the millions of jobs supported by the US dairy industry.