U.S. files trade complaint with Canada over dairy

On May 25, local time, according to the “U.S. Reference” of the U.S. Department of State’s Bureau of International Information, the dispute between the United States and Canada over the sale of U.S. dairy products north of the border continues to escalate.

On the 24th local time, U.S. Trade Representative Dai Qi formally requested the establishment of a dispute settlement panel to review allegations by U.S. producers that Canada denied them fair access to the Canadian market.

At the heart of the dispute is how Canada allocates its tariff quotas (TRQs), the quantities of certain dairy products such as milk, cheese, milk powder, yogurt and ice cream that can be imported at lower tariff levels.

U.S. trade officials and dairy practitioners say a significant portion of those quotas are allocated to processors, not producers, effectively depriving U.S. farmers of their fair share of the Canadian supply management market.

The requirement marks a significant escalation in U.S. complaints about the way Canada has allocated its supply-managed dairy market access under the U.S.-Mexico-Canada Agreement (USMCA). The USMCA, which came into effect on July 1, 2020, replaced the 1994 North American Free Trade Agreement.

Canadian Trade Minister Ng Fengyi said Canada was “disappointed” by the USTR’s decision and that the quota allocation was fully within the scope of the agreement. She asked for a task force to align the dairy industry with the ongoing softwood lumber dispute as the two most prominent trade-related pain points in Canada-U.S. relations.

Advocates of dairy farmers in both countries reacted quickly to the USTR decision, but with very different views. Pierre Lampron, president of the Canadian Dairy Farmers Association, said the allocation was “in line” with the terms of the agreement. “Canada has not taken the necessary action to comply with the USMCA,” Jim Mulhern, president and CEO of the National Federation of Milk Producers, said in a statement.