The U.S. lost its latest challenge against Canadian dairy trade practices, but there may be more of a fight ahead.
U.S. dairy organizations along with elected officials and ag leaders are expressing disappointment over Friday’s decision by the USMCA dispute panel in the challenge against Canada’s dairy trade quotas. The U.S. charged that the quotas don’t line up with the U.S.-Mexico-Canada trade agreement (USMCA). Last year, a USMCA panel ruled with the U.S. However, Executive Vice President for Policy Development and Strategy for the National Milk Producers Federation and the U.S. Dairy Export Council Jaime Castaneda says that case didn’t solve the problem.
“The problem was that the first case didn’t go far enough to argue that Canada had to actually truly open their market and allow for a number of different players in Canada, who would be able to actually import, like retailers, food distributors, restaurants, pizza chains and so on,” he said.
He says those users should have automatically been included, but since they weren’t specifically named, Canada excluded them and that’s what the U.S. challenged this year. Castaneda says despite this year’s decision going to Canada, there are more steps the U.S. can take. United States Trade Representative Katherine Tai said she will continue to fight the Canadian policy in a statement issued about the USMCA ruling.
“Despite the conclusions of this report, the United States continues to have serious concerns about how Canada is implementing the dairy market access commitments it made in the Agreement. While the United States won a previous USMCA dispute on Canada’s dairy TRQ allocation measures, Canada’s revised policies have still not fixed the problem for U.S. dairy farmers,” the statement read. “We will continue to work to address this issue with Canada, and we will not hesitate to use all available tools to enforce our trade agreements and ensure that U.S. workers, farmers, manufacturers, and exporters receive the full benefits of the USMCA.”
U.S. Agriculture Secretary Tom Vilsack also said the work will continue. “The United States won the first USMCA case on Canada’s dairy TRQ allocation system with the ultimate goal of securing fair market access for U.S. dairy farmers, workers, processors, and exporters. Although we are disappointed in the outcome of this second case, we brought this case to refine and expand upon our win in the first case,” Vilsack said. “We will continue to voice deep concerns about Canada’s system. We remain focused on securing the market access we believe Canada committed to under the USMCA and we will continue exploring all avenues available to achieve that goal.”
(USTR/WASHINGTON/Nov. 27, 2023) — On Friday, a dispute settlement panel established under the United States – Mexico – Canada Agreement (USMCA) released a report regarding Canada’s dairy tariff-rate quota (TRQ) allocation measures.
In 2022, the U.S. won favorable consideration with a USMCA panel that agreed with the U.S. that Canada was breaching its USMCA commitments by reserving most of the in-quota quantity in its dairy TRQs for the exclusive use of Canadian processors. Canada updated its TRQ measures, but the U.S. challenged that Canada’s dairy TRQ allocation measures still posed undue restraint on U.S. dairy exporters in the Canadian market. In the report released on Friday, two of three panelists determined that the updated TRQ measures satisfied Canada’s USMCA obligations.
While disappointed with the outcome, the pursuit of the panel reflects Ambassador Tai’s strong commitment to enforce the USMCA and ensure that America’s farmers, processors, and exporters receive the benefits they were promised.
Following the release of the panel decision, government leaders and stakeholders underscored the importance of enforcing the USMCA and praised Ambassador Tai for fighting for American farmers.
Read more about what they are saying:
U.S. Secretary of Agriculture Tom Vilsack: “The United States won the first USMCA case on Canada’s dairy TRQ allocation system with the ultimate goal of securing fair market access for U.S. dairy farmers, workers, processors, and exporters. Although we are disappointed in the outcome of this second case, we brought this case to refine and expand upon our win in the first case. We will continue to voice deep concerns about Canada’s system. We remain focused on securing the market access we believe Canada committed to under the USMCA and we will continue exploring all avenues available to achieve that goal.”
House Committee on Ways and Means Chairman Jason Smith (MO-08): “The panel’s decision leaves in place a status quo of Canadian dairy restrictions that is simply unacceptable. American farmers deserve a level playing field, and Canada must uphold both the spirit and the letter of its obligations under USMCA. Improved agricultural market access and enhanced enforcement mechanisms were key victories achieved under the USMCA for American farmers and workers. They were some of the many reasons the agreement received overwhelming bipartisan support. I will continue working with partners and stakeholders to ensure transparent and equitable access to Canadian markets for U.S. dairy producers.”
House Agriculture Committee Chairman GT Thompson (PA-15) and Ranking Member David Scott (GA-13): “We are disappointed in today’s announcement and the decision of the dispute panel. It is critical the U.S. encourage and enforce USMCA, and this decision allows Canada to continue their questionable protectionist practices that disallow fair access to Canadian markets. We appreciate Ambassador Tai and the Biden Administration’s continued pursuit to ensure fair market access for U.S. dairy producers.”
Congresswoman Elise Stefanik (NY-21): “It is entirely unacceptable that the current Canadian dairy restrictions harming U.S. farmers are allowed to continue. Our dairy farmers in Upstate New York and the North Country work hard to provide delicious and nutritious products for our communities and deserve the market access they were promised under USMCA. This USMCA dispute panel’s decision allows the status quo to continue. This is untenable. I will continue to work to ensure that USMCA is enforced to allow fair market access for our dairy farmers.”
Congressman Adrian Smith (NE-03): “I remain fully supportive of holding Canada to its USMCA commitments & am disappointed in the dispute settlement panel’s ruling on Canada’s dairy TRQ allocation measures. This does not take away from the panel’s 2022 determination that Canada breached its USMCA commitments.”
Krysta Harden, President and CEO of the U.S. Dairy Export Council:“We do however want to express our appreciation for allies in Congress and the Administration for their efforts and commitment to fighting for U.S. dairy…We are committed to working with USTR and USDA to evaluate efforts to address Canada’s continued harmful actions that depress dairy imports while simultaneously evading USMCA’s dairy export disciplines.”
Michael Dykes, D.V.M, President and CEO of the International Dairy Foods Association (IDFA): “First and foremost, IDFA commends the hard work of the U.S. government team that worked on this dispute; the outcome of this dispute is not an indication of the government’s efforts in this particular matter.”
Jim Mulhern, President and CEO of the National Milk Producers Federation: “Despite this independent panel’s adverse ruling, we’d like to thank the Biden Administration and the many members of Congress who supported us for their tireless pursuit of justice for America’s dairy sector.”
Sabrina Halvorson
National Correspondent / AgNet Media, Inc.
Sabrina Halvorson is an award-winning journalist, broadcaster, and public speaker who specializes in agriculture. She primarily reports on legislative issues and hosts The AgNet News Hour and The AgNet Weekly podcast. Sabrina is a native of California’s agriculture-rich Central Valley.