The U.S. lost its latest dispute with Canada over the country’s operation of a tariff rate quota for dairy imports under the U.S.-Mexico-Canada Agreement, the Office of the U.S. Trade Representative announced Friday.
"I am very disappointed by the findings in the USMCA panel report released today on Canada’s dairy TRQ allocation measures,” USTR Katherine Tai said in a statement.
“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 U.S. declared victory in the first USMCA dairy dispute with Canada after a panel agreed with U.S. claims that Canada effectively lowered the value of USMCA import quotas designed to improve the ability of the U.S. to sell milk, cheese, cream, skim milk powder, butter, ice cream and whey to Canadian buyers.
But it did not take long for the U.S. dairy industry and lawmakers to allege that Canada was turning that loss into a win by consolidating the power of large Canadian processors to control the quotas and block imports of some of some U.S. dairy products.
Jaime Castaneda, executive vice president of the National Milk Producers Federation and the U.S. Dairy Export Council, complained after Canada released its proposal to fix its TRQ system in response to the first USMCA decision last year. “For us, this is just moving the chairs around, but it’s the same chairs,” he said at the time.
Eventually the U.S. filed a second dispute with Canada, claiming that the Canadians were still using the quotas to restrict U.S. exports of some of the highest-value dairy products to Canadian retailers, restaurants and other buyers.
But only one of the three panelists agreed with the U.S. in the latest dispute, according to USTR.
“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,” Agriculture Secretary Tom Vilsack said in the statement released by USTR.
“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.”
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It's unclear what those avenues will be, but Krysta Harden, president and CEO of the U.S. Dairy Export Council, said her group wants to help.
“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,” she said Friday.
The International Dairy Foods Association made it clear that it wants new action.
“This outcome sadly confirms what the U.S. dairy community and U.S. negotiators collectively feared from the outset of USMCA negotiations - that Canada’s supply management system is so imbalanced and so far outside a rules-based and free market trading system that no existing set of rules is comprehensive enough to effectively curb its distortive impacts,” IDFA President and CEO Michael Dykes said Friday,
