A recent ruling by a U.S.-Mexico-Canada Agreement (USMCA) dispute panel on November 24 has issued a disappointing decision for the U.S. dairy industry. The ruling allows Canada to maintain restrictions on dairy access negotiated in the trade agreement. The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) expressed disappointment, asserting that the decision weakens the agreement’s value for American dairy.
In January 2022, a panel had initially ruled that Canada improperly limited access to its market for U.S. dairy products. With some minor changes made by Canada, a second panel now states that no further modifications are required. President and CEO of NMPF, Jim Mulhern said, “It is profoundly disappointing that the dispute settlement panel has ruled in favor of obstruction of trade rather than trade facilitation.”
The U.S. Trade Representative (USTR) launched the dispute case in 2021. Efforts by USDEC and NMPF, in collaboration with USTR, USDA, and Congress, aimed to secure the full use and value of USMCA’s dairy tariff rate quotas (TRQs) for American producers.
Krysta Harden, President and CEO of USDEC, emphasizes the ruling’s dangerous precedent, stating, “By allowing Canada to ignore its USMCA obligations, this ruling has unfortunately set a dangerous and damaging precedent.” She appreciates the support from Congress and the Administration but notes the need to address Canada’s actions affecting dairy imports.
The USMCA, implemented in 2020, established 14 TRQs that aim to provide specified low-tariff access. Canada’s TRQ system, favoring its processors, limited market access for U.S. exporters. This ruling comes after Canada was found to violate the USMCA in January 2022. Canada amended its policies, retaining the supply management system that limits domestic production to protect farmers.
USTR Katherine Tai also expressed dissatisfaction with the panel’s decision, highlighting ongoing concerns about Canada’s implementation of dairy market access commitments. Despite the setback, the U.S. affirms its commitment to using all available tools to enforce trade agreements.
Brian German
Ag News Director / AgNet West