U.S. Trade Representative Ambassador Katherine Tai announced May 25 that the United States has requested and established a dispute settlement panel under the United States-Mexico-Canada Agreement to review measures adopted by the Government of Canada that USTR says “undermine the ability of American dairy exporters to sell a wide range of products to Canadian consumers.”
Dairy industry groups, including the U.S. Dairy Export Council, National Milk Producers Federation and International Dairy Foods Association, have been calling for full enforcement of Canada’s trade obligations given Canada’s ongoing refusal to change how it handles dairy market access under USMCA. Initiating an official dispute settlement will, under USMCA rules, establish a panel to determine whether Canada has been violating its trade obligations. If the panel determines a lack of compliance, the U.S. would then be granted the right to impose retaliatory duties if Canada fails to fix its problematic TRQ administrative practices.
The United States is challenging Canada’s allocation of dairy tariff-rate quotas, specifically the set-aside of a percentage of each dairy TRQ exclusively for Canadian processors. USTR challenges these measures deny the ability of U.S. dairy farmers, workers and exporters to utilize the TRQs and realize the full benefit of the USMCA, USTR notes.