U.S. Agriculture Secretary Tom Vilsack said Saturday that Canada’s second proposal for modifying its tariff rate quotas for U.S. dairy is unacceptable and that key changes are needed before the dispute is resolved.
Ottawa is proposing to exclude Canadian retailers – major sellers of U.S. dairy products like cheese – in Canada.
Vilsack, speaking to Agri-Pulse after he met with Canadian Agriculture Minister Marie-Claude Bibeau on the sidelines of a G7 summit of ministers in Germany this weekend, stressed that “there is a need for Canada to make a much better effort than they’re making right now.”
A three-member USMCA dispute panel agreed in December that Canada was manipulating its dairy quotas. Canada then agreed to alter its quotas that were originally intended to increase U.S. access to Canada’s market for milk, cheese, cream, skim milk powder, butter, ice cream and whey.
Canada published its first proposal in response to the panel’s ruling in March, and it was quickly rejected by the U.S. government, U.S. dairy groups and even some Canadian importers who wanted more access to U.S. cheese and other products.
Industry insiders have been speculating that Global Affairs Canada had finished and submitted to the U.S. a second proposal to fix the quotas, but it has not been made public.
Vilsack confirmed Saturday that he was speaking in reaction to that second proposal and stressed that he conveyed his objections to Bibeau last week and again on Saturday.
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“I very forcefully conveyed our significant disappointment in the response to the panel’s discussion under USMCA on the issue of whether or not Canada would open up the TRQ under USMCA for dairy to include their retailers,” Vilsack said.
The exclusion of Canadian retailers from Canada’s dairy quota system – in both the quotas set up by Canada after USMCA was implemented and in the first proposal published earlier this year - was the source of a key objections by U.S. dairy groups like the National Milk Producers Federation and the U.S. Dairy Export Council.
The March proposal out of Global Affairs Canada would have altered the cheese quota to give 100% of the allocation to processors and distributors while not including Canadian retailers. The unpublished second proposal would continue to omit retailers from the quota, according to Vilsack.
The core problem with the Canadian proposals, says Jaime Castaneda, executive vice president of the National Milk Producers Federation and the U.S. Dairy Export Council, is that Canada is giving an unfair advantage to its powerful dairy processors.
“Canada made a clear choice to thumb its nose at both the United States government and its international treaty obligations,” says NMPF President and CEO Jim Mulhern. “It has completely disregarded the USMCA agreement signed just a few short years ago.”
NMPF and USDEC told Agri-Pulse in a statement that they are calling on the Biden administration “to levy retaliatory tariffs on Canada after Ottawa made clear that it refuses to meet its signed treaty obligations under the UMCA concerning dairy market access.”
