WHAT THEY ARE SAYING: United States Initiates Second USMCA Dispute on Canadian Dairy Tariff-Rate Quota Policies

May 26, 2022

Yesterday, United States Trade Representative Katherine Tai announced that the United States is, for the second time, requesting dispute settlement consultations with Canada under the United States – Mexico – Canada Agreement (USMCA) to address dairy restrictions by Canada that are contrary to its USMCA commitments. 

“I am deeply troubled by Canada’s decision to expand its dairy tariff-rate quota restrictions,” Ambassador Katherine Tai said.  “We communicated clearly to Canada that its new policies are not consistent with the USMCA and prevent U.S. workers, producers, farmers, and exporters from getting the full benefit of the market access that Canada committed to under the USMCA.  We will continue to work with USDA to ensure that our dairy industry can bring a wide range of high-quality American products to Canadian customers.”

Here's what they are saying about USTR’s announcement:

Reuters: U.S. Requests Second Dispute Settlement Panel on Canadian Dairy Quotas Under USMCA
“The United States is alleging that Canada's dairy tariff-rate quota allocation measures deny access to eligible applicants, including retailers, and other types of importers, and impose new conditions on the allocation and use of the quotas, according to a statement from U.S. Trade Representative Katherine Tai's office.”

Bloomberg: US Seeks Second Set of Dispute-End Talks on Canada Dairy Quotas

“The US is also challenging Canada’s failure to fully allocate its annual dairy quotas, instead giving out a few months’ quota at a time. Through these measures, Canada undermines the market access that it agreed to provide in the US-Mexico-Canada trade agreement, or USMCA, the USTR said. If the US and Canada are unable to resolve US concerns through consultations, the US may request the establishment of a panel under the USMCA.”

Politico: USTR requests new talks with Canada in dairy dispute

“The Biden administration on Wednesday accused Canada of failing to abide by a dispute settlement panel that faulted Ottawa's restrictions on U.S. dairy imports and asked for formal consultations to try to resolve the issue.”

Inside U.S. Trade: U.S. again requests USMCA consultations with Canada over dairy TRQs

“In the statement, U.S. Trade Representative Katherine Tai charged that Canada had decided to “expand” its dairy TRQ restrictions despite an earlier ruling that the country’s policies violated USMCA. Canada earlier this year announced a plan to change its system to comply with USMCA, but the Biden administration and the U.S. dairy industry rejected that plan as inadequate. Canada then proceeded to implement it anyway.”

Agri-Pulse: US initiates new dairy dispute consultations with Canada

“The U.S. is again demanding to enter into official consultations with Canada over complaints that the country manipulates its dairy import quotas to stymie U.S. exports, the Office of the U.S. Trade Representative said Wednesday. Those consultations could lead to the U.S. calling for a second dispute panel under the U.S.-Mexico-Canada Agreement.”

Congressman Ron Kind [WI-03]: “Canada's refusal to reform unfair practices and fully comply with the terms outlined in USMCA is unacceptable - a deal is a deal and they need to live up to their end of the bargain. I applaud Ambassador Tai and the Biden Administration's decision to move forward with this dispute process and I’ll keep advocating to make sure Wisconsin dairy farmers see the full benefits of this historic agreement.” [Statement, 05/25/2022]

Congresswoman Suzan DelBene [WA-01]: “The Biden admin is taking action to defend market access for WA dairy farmers. Right now, Canadian dairy policies are harming U.S. farmers & go against what Canada committed to in the USMCA. Thank you to @USTradeRep @AmbassadorTai for holding our trading partners accountable!” [Tweet, 05/25/2022]

Rep. David Valadao [CA-21]: “Our trade agreements only work if they are enforced, and Canada continues to fail to meet its obligations to the U.S. dairy industry that were negotiated to benefit America and Canada alike,” said Congressman Valadao. “I am glad to see Ambassador Tai and the Biden Administration move forward with this dispute to hold Canada accountable and ensure full compliance with the USMCA.” [Statement, 05/25/2022]

House Agriculture Committee Republicans: “The enforcement mechanisms under the #USMCA exist for a reason, and we are pleased to see them being used to hold Canada accountable to their commitments.” [Tweet, 05/26/2022]

Jim Mulhern, President and CEO of the National Milk Producers Federation: “Dairy farmers appreciate USTR’s continued dedication to aggressively pursuing the full market access expansion into the Canadian market that USMCA was intended to deliver.” [Statement, 05/25/2022]

Krysta Harden, President and CEO of the U.S. Dairy Export Council: “USTR and USDA have shown dogged determination to uphold USMCA despite Ottawa’s clear refusal to engage in real reform to come into compliance with the agreement. Dairy farmers and processors appreciate the clear bipartisan commitment from both the Administration and Congress for enforcing the USMCA and insisting on getting the full export benefits the United States so painstakingly negotiated.” [Statement, 05/22/2022]

Michael Dykes, President and CEO of the International Dairy Foods Association: “On behalf of U.S. dairy, IDFA applauds the aggressive action taken today by USTR to hold Canada accountable for trade commitments made under USMCA and refusing to administer their dairy TRQs in a manner compliant with the agreement.” [Statement, 05/25/2022]

Brody Stapel, President of Edge Dairy Farmer Cooperative: “Edge is thankful for the continued vigilance of the Office of the U.S. Trade Representative in identifying Canada’s methods for skirting the dairy provisions in the USMCA. Commitments were made under the trade deal, and Canada needs to hold up its end of the bargain.” [Statement, 05/25/2022]