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Dairy Groups Praise USTR Move to Hold Canada Responsible for USMCA Violations

The National Milk Producers Federation (NMPF), International Dairy Foods Association and U.S. Dairy Export Council (USDEC) commended the recent announcement that the U.S. Trade Representative has formally moved to advance a U.S.-Mexico-Canada Agreement (USMCA) dispute settlement proceeding and establish a second panel to determine whether Canada has been in violation of its market access obligations under the agreement.

Canada had agreed to increase U.S. dairy access to its market for milk, cheese, butter, cream, skim milk powder, yogurt, whey, and ice cream by establishing TRQs for those items. But Canada continues to construct its dairy TRQ rules in a manner that discourages those products from entering the country by reserving a large percentage of each dairy TRQ for its own dairy processors, who have no incentive to import U.S. products that they themselves produce. That action, IDFA argues, limits the ability of U.S. suppliers to export and is not fair and equitable administration of its TRQs, as Canada has committed to do under USMCA.

Canada’s unwillingness to abide by the tariff-rate quota provisions of USMCA has been an issue since the agreement’s implementation began. The United States won its first dispute panel on the matter in Dec. 2021, which found that Canada was reserving most of its preferential dairy TRQs for Canadian processors that have little incentive to import product. Canada’s revised approach to USMCA TRQs, released in May, also provided inequitable advantages to Canadian processors.

“Canada’s TRQ allocation system is not only a violation of USMCA — it directly harms American dairy farmers, processors, and other workers by unfairly restricting access to their market,” said Jim Mulhern, president and CEO of NMPF. “USTR’s action is an important step in righting this wrong and sending a message that the U.S. will fight violations of trade deals in Canada and wherever else they may be committed.”

“IDFA is very grateful to Ambassador Tai and the entire U.S. government team for moving forward with this enforcement action against Canada, the resolution of which is a critically important matter for U.S. dairy producers and processors,” said IDFA President and CEO Michael Dykes. “We appreciate Ambassador Tai’s open and vigilant commitment to enforcing U.S. trade agreements to their fullest and maintaining a rules-based trading system.”

“The U.S. dairy community greatly appreciates the Biden Administration’s decision to prioritize steps to address Canada’s USMCA violations,” said Krysta Harden, president and CEO of USDEC. “Unfortunately, Canada has shown a pattern of not living up to the dairy commitments it has made in trade agreements. As long as they continue to drag their feet, we’ll continue to work with USTR and USDA to fight back, and propose retaliatory action if necessary.”

If the panel ultimately confirms that Canada has been violating its obligations under USMCA, the U.S. would be granted the right to impose retaliatory duties should Canada fail to fix its unfair TRQ administrative practices.

The National Milk Producers Federation, based in Arlington, VA, develops and carries out policies that advance dairy producers and the cooperatives they own. NMPF’s member cooperatives produce more than two-thirds of U.S. milk, making NMPF dairy’s voice on Capitol Hill and with government agencies. For more, visit www.nmpf.org.

The International Dairy Foods Association (IDFA), Washington, D.C., represents the nation’s dairy manufacturing and marketing industry, which supports more than 3.3 million jobs that generate $41.6 billion in direct wages and $753 billion in overall economic impact. IDFA’s diverse membership ranges from multinational organizations to single-plant companies, from dairy companies and cooperatives to food retailers and suppliers, all on the cutting edge of innovation and sustainable business practices.

The U.S. Dairy Export Council (USDEC) is a non-profit, independent membership organization that represents the global trade interests of U.S. dairy producers, proprietary processors and cooperatives, ingredient suppliers and export traders. Its mission is to enhance U.S. global competitiveness and assist the U.S. industry to increase its global dairy ingredient sales and exports of U.S. dairy products.

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