Washington | Reuters — The United States on Tuesday said it was seeking a second trade dispute settlement panel over Canada’s dairy import quotas, charging that Canada was still not meeting obligations to open its market to U.S. producers.
The U.S. Trade Representative’s office said it was challenging Canada’s revised tariff-rate quota (TRQ) allocations that were put in place last year after a previous dispute panel decision under the U.S.-Mexico-Canada agreement (CUSMA) on trade.
USTR’s new request for a CUSMA dispute settlement panel follows an announcement last month that it would seek consultations on Canada’s TRQs, on top of a previous request it filed last May. The USTR said Tuesday that consultations held Jan. 17 between the parties “were not able to resolve the matter.”
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USTR said in a statement that Canada was unfairly using a market-share approach for determining quota allocations, and had imposed new conditions that effectively prohibit Canadian retailers, food service operators, and other types of importers from utilizing import quota allocations.
Limited access to Canada’s dairy market for U.S. producers was granted as part of the renegotiation of the former North American Free Trade Agreement (NAFTA) in 2018, but tensions over dairy trade ran high even as CUSMA was being signed by then-president Donald Trump.
U.S. producers were unhappy with the way Canada had allocated TRQs, which allow specific quantities of products from raw milk to cheese to cross the border at lower or zero tariffs, reserving them exclusively for Canadian processing firms. After months of consultations, USTR requested a dispute panel in 2021, which ruled that Canada’s practices violated its CUSMA obligations.
“Although the United States won a previous (CUSMA) dispute on Canada’s dairy TRQ allocation policies, the Canadian government’s revised measures have not fixed the problem,” Ambassador Katherine Tai said in a statement, adding that she would use all available tools to ensure that U.S. farmers, dairy processors and workers receive the “full benefits” of CUSMA.
Canada’s trade minister, Mary Ng, said in a statement issued in Ottawa that she was ‘disappointed’ in the U.S. move and would defend Canada’s longstanding supply management system that protects Canadian dairy farmers with production quotas and high tariffs on dairy imports.
“We will stand firm against attempts to re-negotiate during this dispute settlement panel process,” Ng said.
— Reporting for Reuters by David Lawder in Washington, additional reporting by Steve Scherer in Ottawa. Includes files from Glacier FarmMedia Network staff.
