WASHINGTON – After recently calling for action on the matter, leaders within the International Dairy Foods Association, US Dairy Export Council and National Milk Producers Federation shared their approval of the US government initiating a second US-Mexico-Canada Agreement dispute panel regarding Canada’s approach to dairy trade obligations.

The US Trade Representative’s Office announced it will conduct a new round of consultations, the first step in a formal dispute settlement case. Earlier in May, USDEC, NMPF and IDFA leaders publicly rejected Canada’s altering of dairy tariff rate quotas. 

A previous USMCA dispute panel launched by the US government found Canada in violation of the agreement’s dairy tariff rate quota provisions. Canada then published its final revised tariff rate quotas approach without addressing those problems, leading to the current circumstances.

The IDFA, USDEC, NMPF and other industry leaders have continued to reject Canada’s approach, while urging the US government to, as the IDFA put it, “hold Canada accountable” for not following the USMCA agreement.

“On behalf of US dairy, IDFA applauds the aggressive action taken (May 25) by USTR to hold Canada accountable for trade commitments made under USMCA and refusing to administer their dairy TRQs in a manner compliant with the agreement,” said Michael Dykes, DVM, president and chief executive officer of IDFA. “However, the US government cannot allow Canada to continue to deny US exporters the access it promised under the agreement. USTR, the White House and USDA must remain vigilant and continue to expose Canada’s non-transparent, market-distorting practices at every turn when it deviates from USCMA commitments. The US dairy industry has made clear from the start that US dairy exporters demand real TRQ reform that will permit the market access Canada agreed to. Our government officials must stay the course.”

Krysta Harden, president and chief executive officer of USDEC, said the USTR and USDA displayed “dogged determination” to uphold the USMCA, despite Canada’s “clear refusal to engage in real reform” and comply with the agreement.

“Dairy farmers and processors appreciate the clear bipartisan commitment from both the administration and Congress for enforcing the USMCA and insisting on getting the full export benefits the United States so painstakingly negotiated,” Harden said. “If we allow Canada to simply ignore its clear obligations, it will set a dangerous and damaging precedent for future trade disputes that will reach far beyond the millions of jobs supported by the American dairy industry.”

NMPF’s president and chief executive officer, Jim Mulhern, said Canada continues to openly disregard its trade commitments and “play games.”

“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,” Mulhern said. “Canada’s actions must have consequences.”

The first dispute settlement panel found that across more than a dozen categories of dairy products, 85 to 100 % of the lower tariff quotas were reserved for Canadian processors, putting Canada in breach of its USMCA commitment.

IDFA has advocated for tariff rate quota reform and the initiation of retaliatory tariffs. It also has urged the US government to evaluate disputing Canada’s subsidized milk protein exports under World Trade Organization rules.

Per the USDEC, Canada’s approach to the tariff rate quotas blocks key stakeholders in the Canadian food and agriculture sector, “including retailers, from accessing the TRQs, using an allocation method that provides inequitable advantages to Canadian dairy processors.”