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Canada already backpedaling on USMCA dairy provisions

TAGS: Policy
nevodka/iStock/Thinkstock Dairy products including milk, cheese, butter and yogurt displayed on white wood
Proposed tariff-rate quotas could thwart intent to increase market access for U.S. dairy products.

Canada’s allocation of tariff-rate quotas (TRQs) under the U.S.-Mexico-Canada Agreement (USMCA) released June 15 drew sharp criticism from the U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF). The dairy groups called attention to the fact that these TRQ allocations undermine the intent of the USMCA dairy provisions by thwarting the ability of the U.S. dairy industry to make full use of the trade agreement’s market access opportunities.

USMCA will enter into force on July 1, 2020, and contains important provisions to the U.S. dairy industry that will facilitate the smooth flow of U.S. dairy products throughout North America at a time of critical need and economic uncertainty. However, Canada has announced the distribution of the TRQs in such a way as to discourage high-value foodservice or retail products from entering the market. Most of the TRQs are given to competitors who have no incentive to import products.

In a news release, USDEC and NMPF said they have repeatedly warned that the full benefits of this carefully negotiated trade agreement will not materialize without close monitoring and stringent enforcement of Canada’s USMCA commitments. The U.S. dairy industry is urging the U.S. Trade Representative (USTR) to immediately raise this issue with Canada and insist that Canada adheres faithfully not just to the letter of its commitments under USMCA but to the spirit of the agreement as well.

“Canada’s administration of previous TRQs under existing free trade agreements gave the U.S. dairy industry ample cause for concern, which has, unfortunately, been confirmed by the announced TRQ allocations,” USDEC president and chief executive officer Tom Vilsack said. “Canada’s actions place the U.S. dairy industry at a disadvantage by discouraging utilization of the full use of the TRQs and limiting the market access granted by USMCA. We urge the U.S. government to act immediately to ensure that these provisions are implemented in good faith so that the U.S. dairy industry is able to reap the full range of benefits negotiated by USTR and its interagency partners at U.S. Department of Agriculture.”

“U.S. dairy farmers and cooperatives are ready to help increase deliveries of high-quality U.S. dairy products to the Canadian market, but Canada’s TRQ allocations fall far short of the full potential of its commitments under USMCA,” NMPF president and CEO Jim Mulhern said. “Canada has chosen once again to manipulate its access commitments in order to protect its tightly controlled dairy market, and U.S. farmers will bear much of the brunt of this biased interpretation of USMCA’s dairy provisions. USTR should act quickly to ensure Canada is held strictly responsible for abiding by the intent of USMCA to promote fairer trade between our nations.”

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