Dispute Panel Rejects U.S. Complaint Against Canada’s Dairy Market Access
Panel Rejects U.S. Complaint
A trade dispute settlement panel established under a significant North American free trade agreement has dismissed a complaint from the United States alleging that Canada is unduly restricting access to its dairy market, as per an official report released on Friday.
U.S. Accusations and Panel Ruling
The United States had accused Canada of failing to meet its obligations under the 2020 United States-Mexico-Canada Agreement, which aims to open its market to foreign producers. However, the three-person independent panel ruled that Canada had not acted unreasonably, and their report was made public on Friday.
Disappointment from U.S. Trade Representative
U.S. Trade Representative Katherine Tai expressed “very disappointed” feelings about the ruling and emphasized the U.S.’s ongoing concerns regarding Canada’s implementation of dairy market access commitments made in the Agreement. She further stated the intention to utilize all available tools to enforce trade agreements.
Trading Partners’ Perspective
According to trading partners, Canada has, over the years, agreed to provide some dairy market access to foreign firms through a system of tariff-rate quotas. However, they believe that most of these quotas have been improperly allocated to domestic firms.
Canadian Response
Trade Minister Mary Ng welcomed the dispute settlement panel’s findings, stating that all outcomes were clearly in favor of Canada. In January 2022, an earlier USMCA panel had found Ottawa in violation of the accord for not sufficiently opening up the domestic market, prompting Canada to amend its policies.
Impact on Canada’s Dairy Industry
The USMCA agreement maintained Canada’s long-standing supply management system, which restricts domestic production of dairy, eggs, and poultry to stabilize farmers’ incomes and protect them from import competition with high tariffs. The country’s approximately 10,000 dairy farmers, mainly concentrated in Quebec and Ontario, wield significant political influence.
