Canada violated a trade accord with the United States and Mexico by reserving most of its preferential dairy tariff-rate quotas for Canadian processors, a dispute panel found.
The U.S. Trade Representative’s office claimed victory in the first dispute settlement panel ever brought under the U.S.-Mexico-Canada Trade Agreement (USMCA) that took effect in 2020.
U.S. Rep. Tom Reed, R-Corning, said Wednesday the trade ruling was welcome news for New York’s dairy industry.
“We care about our dairy farmers and it is only fair that Canada is held to the full terms of the USMCA trade agreement,” Reed said in a statement. “We will always do everything we can to make sure our dairy farmers are treated fairly.”
In May, Reed signed on to a bipartisan letter to U.S. Trade Representative Katherine Tai and Secretary of Agriculture Thomas Vilsack urging that Canada be held accountable for trade practices that go against USMCA.
U.S. Senate Majority Leader Charles Schumer and U.S. Sen. Kirsten Gillibrand, both New York Democrats, said the ruling will allow Upstate dairy farmers, many of them still struggling from the economic impacts of the pandemic, to fully benefit from the expanded market access opportunities and will eliminate unfair practices that hurt their bottom lines.
“Dairy farmers are the lifeblood of the Upstate economy, and today’s ruling is a massive win for them,” Schumer said in a press release. “This decision will ensure the Upstate New York dairy industry fully benefits from the USMCA agreement’s expanded market access opportunities, unimpeded by unreasonable trade barriers, and will help our dairy farmers churn up profits and mitigate the huge losses they have suffered this year.”
Gillibrand said Canada’s violation of USMCA dairy provisions was putting New York’s regional economies at risk, and this decision will hold Canada accountable moving forward.
“Dairy is New York’s primary agricultural product and this win is needed now more than ever as economic disruptions from the pandemic continue hurting industry,” she said.
Schumer, supported by New York milk producers, raised concerns in June 2020 that the unfair way Canada was allocating its TRQs weakened the intent of the USMCA and as a result, New York dairy farmers and exporters were unable to make full use of USMCA’s benefits.
Despite the ruling, the Financial Post of Canada reported that Canadian trade officials believe the report found “overwhelmingly” in its favor because it supports the legitimacy of the country’s supply management system.
Canadian officials said that they were “pleased ” with the panel’s report because it “expressly recognizes the legitimacy of Canada’s supply-management system.”
Under USMCA, Canada conceded to granting more duty-free or lower tariff access across dairy products including milk, cream, cheese, yogurt and ice cream via a tariff-rate quota, or TRQ.
But Canada is allocating 80% to 85% of those imports to processors, limiting the ability of other groups, such as retailers, to buy U.S. product.
