The arbitrators have released their final report on U.S. complaints over Canada’s interpretation of North American trade rules regarding dairy imports – and both countries are claiming victory.
US Trade Representative Katherine Taï formally asked a dispute settlement panel last May to examine claims by US producers that Canada is denying them fair access to the Canadian market. This panel, established under the dispute settlement system of the Canada – United States – Mexico Agreement (CUSMA), makes it clear that Canada’s practices are “inconsistent” with the commitments set out in the trade agreement. M’s officeme Tai said he had “prevailed” in the dispute, which accused Canada of unfairly favoring Canadian processors, thereby depriving American farmers of their fair share of the supply managed Canadian market.
However, in their own statement, Canada’s Trade Minister Mary Ng and Agriculture Minister Marie-Claude Bibeau argued that the move was “largely in favor” of Canada’s dairy industry.
The Canadian statement acknowledges the findings of the report on quotas for dairy processors, but offers no clue as to whether the federal government plans to appeal or otherwise challenge the decision.
“Our government, as it takes the next steps in the process, will continue to work closely with the Canadian dairy industry,” the ministers said, adding that Canada takes its international trade obligations seriously.
The statement also describes the decision as an approval of Canada’s supply management system for dairy products and its right to exercise discretion in the management of tariff allocations. “The Government of Canada will continue to stand up for its dairy industry, its farmers, its workers and the communities they support, and it will continue to preserve, protect and defend the supply management system,” it wrote. .
The distribution of discord
At the heart of the dispute is how Canada has allocated its tariff rate quotas – the quantities of certain dairy products like milks, cheeses, powders, yogurt and even ice cream – which can be imported at tariff levels. lower under the terms of CUSMA.
U.S. trade officials and dairy industry advocates say a large chunk of these quotas has been allocated to processors rather than producers, depriving U.S. farmers of their fair share of the Canadian market under management. the offer.
“The current Canadian system, which reserves large volumes of TRQs only for processors, does not meet the requirements of the treaty,” the panel concluded. However, nothing in the panel ruling limits Canada’s discretion to administer its TRQ as it wishes, within the limits set by the treaty. “
The United States Trade Representative has long insisted that Canada’s tariff rate quota practices are expressly prohibited under the text of the agreement. Canadian officials say, however, that the allocations are in line with the rules of the trade deal, which went into effect in July 2020.
“We are satisfied with the report of the dispute settlement panel, which spoke largely in favor of Canada and its dairy industry,” said the joint statement by Ministers Ng and Bibeau. “Above all, it is important to note that the panel expressly recognizes the legitimacy of Canada’s supply management system. The panel also confirms that Canada can manage at its discretion its tariff rate quota allocation policies for dairy products under CUSMA so as to support its supply management system, ”they add.