The United States filed a dispute under the United States-Mexico-Canada Agreement (USMCA) challenging the tariff-rate quotas Canada allocated to dairy products on Wednesday. The dispute accused Canada of restricting access to its dairy market for U.S. dairy farmers. The United States Trade Representative (USTR) said that it was challenging Canada’s tariff-rate quotas (TRQs) because they are reportedly inconsistent with the agreement.
A press release from the USTR said that “by setting aside and reserving a percentage of each dairy TRQ exclusively for processors, Canada has undermined the ability of American dairy farmers and producers to utilize the agreed upon TRQs and sell a wide range of dairy products to Canadian consumers.”
USTR Robert E. Lighthizer reportedly sent notice to Canada in a letter that the United States is enforcing its rights under the USMCA. The letter said that the United States could request a dispute settlement panel under the USMCA if the countries do not resolve the issue through consultations. Under the USMCA, Canada can retain 14 TRQs, but the country has reportedly reserved a percentage of the quota for processors, contrary to the USMCA, which “undermines the value of Canada’s TRQs for U.S. producers and exporters.”
Ambassador Lighthizer said in the press release, “Canada’s measures violate its commitments and harm U.S dairy farmers and producers. We are disappointed that Canada’s policies have made this first ever enforcement action under the USMCA necessary to ensure compliance with the agreement. This action demonstrates that the United States will not hesitate to use all tools available to guarantee American workers, farmers, ranchers, and businesses enjoy the benefits we bargained for.”
According to Real Agriculture, a Canadian news source, the Canadian dairy industry is “not backing down.” The article reported that Jacques Lefebvre, CEO of the Dairy Farmers of Canada, said that the TRQ allocations were within the terms of the agreement and that the steps taken by the United States are only meant to “endear” the outgoing administration with dairy farmers.
The House Agriculture Committee Ranking Member Rep. Michael Conaway (R-Texas) said in a press release, “One of the major flaws of NAFTA in regards to agriculture was the failure to reign in market distorting practices by Canada that wreaked havoc on U.S. dairy producers. I want to applaud USTR Ambassador Lighthizer for not only completing an agreement that made important reforms for dairy producers but also for taking the necessary steps today to ensure Canada complies with its commitments.”
