On May 25, the International Dairy Foods Association (IDFA), U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) applauded the U.S. government’s announcement that it would once again initiate consultations, the first step in a formal dispute settlement case, over Canada’s continued manipulation of dairy tariff rate quotas (TRQs) in violation of Canada’s commitments under the United States-Mexico-Canada Agreement (USMCA).

The Office of the U.S. Trade Representative (USTR) initiated a similar dispute settlement case exactly one year ago, Washington, D.C.-based IDFA noted. In December, a USMCA dispute panel found Canada to be noncompliant with its dairy TRQ commitments under USMCA.

However, Canada was unwilling to reform its trade-distorting practices on dairy and continued to ignore the dispute panel, IDFA said. IDFA and the U.S. dairy industry have consistently rejected Canada’s manipulation and continue to urge the U.S. government to hold Canada accountable for trade-distorting practices that go against both the intent and the letter of the USCMA agreement.

“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,” said Michael Dykes, D.V.M., president and CEO of IDFA. “However, the U.S. government cannot allow Canada to continue to deny U.S. exporters the access it promised under the agreement.

“USTR, the White House and USDA must remain vigilant and continue to expose Canada’s nontransparent, market-distorting practices at every turn when it deviates from USCMA commitments,” he continued. “The U.S. dairy industry has made clear from the start that U.S. dairy exporters demand real TRQ reform that will permit the market access Canada agreed to. Our government officials must stay the course.”

Krysta Harden, president and CEO of Arlington, Va.-based USDEC, noted that USDA and USTR “have shown dogged determination” to uphold 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,” she said. “If we allow Canada to simply ignore its clear obligations, it will set a dangerous and damaging precedent for future trade disputes that will reach far beyond the millions of jobs supported by the American dairy industry.”

Canada’s updated TRQ system continues to block key stakeholders in the Canadian food and agriculture sector, including retailers, from accessing the TRQs, USDEC and NMPF noted. It uses an allocation method that provides inequitable advantages to Canadian dairy processors and fails to employ good regulatory practices to encourage effective use of the TRQs allocated to a given company.

“Prime Minister Trudeau regularly pledges Canada supports a rules-based global order built on cooperation and partnership, yet Canada continues to flout these trade commitments and plays games rather than meet its signed treaty commitments,” said Jim Mulhern, president and CEO of Arlington, Va.-headquartered NMPF. “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.

“At the same time, given Canada’s history of persistent violations and the high likelihood Ottawa will once again disregard its USMCA obligations, USTR and USDA must be prepared to deploy the strongest-possible retaliatory measures envisioned under the USMCA should this ‘whack-a-mole’ approach continue,” he said. “Canada’s actions must have consequences.”