What They Are Saying: United States Prevails in USMCA Dispute on Canadian Dairy Restrictions

January 04, 2022

WASHINGTON – United States Trade Representative Katherine Tai today announced that the United States prevailed in the first dispute settlement panel proceeding ever brought under the United States-Mexico-Canada Agreement (USMCA).  A USMCA panel agreed with the United States that Canada is breaching its USMCA commitments by reserving most of the in-quota quantity in its dairy tariff-rate quotas (TRQs) for the exclusive use of Canadian processors.  
Here is what they are saying about today’s announcement:
Wall Street Journal: U.S. Prevails Over Canada in Dairy Dispute
“The U.S. prevailed over Canada in a long-running dispute over Canadian policies aimed at shielding its dairy industry from American competition, according to a ruling published Tuesday from the first dispute resolution panel under the new U.S.-Mexico-Canada Agreement. The USMCA panel ruled that Canada’s policies violated its obligations under the trade deal between the three countries, which was agreed upon in 2018 and took effect in 2020. Canada has until Feb. 3 to bring its policies into compliance, or else face possible tariffs or other countermeasures from the U.S.” [01/04/22]
Politico: U.S. claims victory over Canada in closely watched dairy trade dispute 
“Ottawa violated the terms of the U.S.-Mexico-Canada Agreement by giving its own dairy industry preferential treatment under the trilateral trade pact, a dispute panel said. The decision, which was made public on Tuesday, notches another enforcement win for the Biden administration since the Trump-era agreement took effect in July 2020. U.S. trade and labor officials have previously settled two labor complaints against factories in Mexico.” [01/04/22]
Reuters: Canada violated USMCA trade pact by reserving dairy quotas - dispute panel 
“The U.S. Trade Representative's office said Washington had prevailed in the first dispute settlement panel ever brought under the U.S.-Mexico-Canada Trade Agreement (USMCA). The report found Canada's practice "inconsistent" with the trade deal. The official said the United Sates expected Canada to resolve the issue by a deadline of Feb. 3 and its goal was not to impose retaliatory measures but it had the right to do so if Ottawa did not remove the restrictions.” [01/04/22]
Bloomberg: U.S. Wins Canada Trade Spat as Panel Says Dairy Rules Defy Pact 
“The case is the first-ever ruling by a dispute-settlement panel under the trade pact that also includes Mexico. The panel decision was delivered to the parties as a final report on Dec. 20, the U.S. Trade Representative said in a statement. Canada now has until Feb. 3 -- 45 days from when that final report was issued -- to respond or adjust its rules comply with the panel’s ruling, the USTR said.” [01/04/22]
Inside Trade: Panel sides with U.S. in ruling that Canadian dairy TRQs violate USMCA
“A U.S.-Mexico-Canada Agreement dispute settlement panel has sided with the United States in finding that Canada’s reservation of tariff-rate quotas for dairy processors violates the terms of the deal. … In a statement, U.S. Trade Representative Katherine Tai called the panel ruling a ‘historic win’ that ‘will help eliminate unjustified trade restrictions on American dairy products, and will ensure that the U.S. dairy industry and its workers get the full benefit of the USMCA to market and sell U.S. products to Canadian consumers.’ At issue areCanada’s allocations of its dairy TRQs, specifically Canadian regulations that allocate 85 to 100 percent of a TRQ to processors. Dairy processors purchase raw milk from provincial milk boards and before processing it into consumable products, such as butter, cheese and yogurt.” [01/04/22]
Agri-Pulse: US claims victory in Canada dairy dispute
“The panel agreed that Canada effectively lowered the value of USMCA quotas designed to increase U.S. access to Canada’s market for milk, cheese, cream, skim milk powder, butter, ice cream and whey…The USTR, at the urging of the U.S. dairy industry, called for the panel on May 25 and asked it to rule on whether Canada should have the ability to prevent imports of higher-priced dairy products like cheese in order to protect domestic producers from foreign competition.” [01/04/22]
CBC: U.S. defeats Canada in first dispute under new North American trade pact 
“The U.S. says Canada now has a few weeks to comply with the ruling, or face the possibility of a trade penalty such as a tariff. The finding comes amid a succession of trade disputes between the countries that risk souring the bilateral relationship. ‘We prevailed — as we thought we would,’ a senior official in the U.S. Trade Representative's office told reporters in a briefing Tuesday. ‘Now the goal is to work with Canada…The end goal is not to put retaliatory tariffs in place.’” [01/04/22]
Secretary of Agriculture Tom Vilsack: “Good news for U.S. dairy farmers. This enforcement action reflects the Biden-Harris Administration’s deep commitment to enforcing the USMCA and to ensuring that U.S. trade policy works for American farmers.” [Tweet, 01/04/22]
Senate Finance Committee Chairman Ron Wyden [D-OR]: “The United States’ win today against Canadian trade barriers for U.S. dairy products proves that trade done right can deliver real results for our farmers and workers. Despite agreeing to open its market to a host of American dairy products in the USMCA, Canada denied our farmers these benefits. USTR’s monitoring of USMCA implementation identified this failure and held Canada to its promise. Democrats insisted on strong enforcement in this deal, so I am particularly pleased USTR was able to take effective action to ensure that our farmers received what we bargained for in USMCA.” [Statement, 01/04/22]
House Ways and Means Committee Chairman Richard E. Neal [D-MA-01]: “Throughout House Democrats’ work to improve the USMCA, we knew that strong enforcement mechanisms would be key to the deal’s success. The improvements to the USMCA that we negotiated finally made the agreement enforceable by preventing a country from being able to block the formation of a dispute settlement panel. Today’s landmark victory illustrates how important enforcement of our trade agreements remains to ensure that America’s workers, farmers, and industries benefit from these deals. I applaud the Biden Administration and USTR Ambassador Tai for their leadership in implementing the USMCA and standing up for our nation’s interests by holding our trading partners accountable for the commitments they have made under the agreement.” [Statement, 01/04/22]
House Ways and Means Committee Ranking Member Kevin Brady [R-TX-08]: “I commend USTR for using USMCA’s powerful new enforcement mechanism to achieve this important result. Canada must now do the right thing and come into full compliance with its obligations on dairy.” [Tweet, 01/04/22]
Congresswoman Suzan DelBene [D-WA-01]: “This is a big win for WA dairy farmers & workers and highlights the importance of USMCA.” [Tweet, 01/04/22]
Congressman Ron Kind [D-WI-03]: “After calling for these enforcement measures, I commend Ambassador Tai and the Biden Administration for delivering this historic win for our hardworking dairy farmers. This decision will ensure American dairy farmers and producers are able to compete on the even playing field they deserve. [Statement, 01/04/22]
Congressman Dan Kildee [D-MI-05]: “Today’s decision will protect Michigan jobs and support our state’s dairy farmers that have been struggling to compete against unfair trade practices. I applaud Ambassador Tai and the Biden administration for their actions to protect Michigan workers.” [Statement, 01/04/22]
Congressman Antonio Delgado [D-NY-19]: “The USMCA is a critical agreement for American dairy farmers that helps ensure they can sell their products throughout North America. However, for this agreement to work, it must be followed by all trading partners. In May, I called on United States Trade Representative Ambassador Katherine Tai and Secretary of Agriculture Thomas Vilsack to move forward with enforcement measures negotiated in USMCA to support U.S. dairy farmers. I am proud of this win that will help upstate farmers during a challenging farm economy.” [Statement, 01/04/22]
Senator Deb Fischer [R-NE]: “USMCA provides great opportunities for NE families, ag producers and manufacturers. Good news today for dairy farmers in our state and nationwide.” [Tweet, 01/04/22]
Congressman Adrian Smith [R-NE-03]: Big win for American dairy farmers with today’s #USMCA dispute settlement panel ruling against Canada’s dairy tariff-rate quotas. I supported USMCA because it provided this mechanism to hold our trading partners accountable for their commitments.” [Tweet, o1/04/22]
Congresswoman Michelle Fischbach [R-MN-07]: “Good news for MN dairy producers. The USMCA provides dairy producers parity in market access and holds our northern neighbor to its promises to American producers.” [Tweet, 01/04/22]
Jim Mulhern, President and CEO of the National Milk Producers Federation: “Today’s decision is an important victory for U.S. dairy farmers and the millions of Americans whose jobs are tied to the U.S. dairy industry. America’s dairy farmers appreciate the Biden Administration’s dedication to preserving dairy export opportunities and the many members of Congress that have also stressed the importance of aggressive enforcement of dairy access rights in our trade agreements.” [Statement, 01/04/22]
Krysta Harden, President and CEO of the U.S. Dairy Export Council: “On behalf of America’s dairy farmers and manufacturers, we want to thank Ambassador Katherine Tai for launching the dispute settlement process and Congressional leaders for strongly supporting the need to uphold USMCA’s dairy provisions. We expect Canada to abide by its trade commitments so that the American dairy industry can fully access the Canadian markets just as USMCA promised.” [Statement, 01/04/22]