Trade dispute settlement proceeding a positive move for USMCA

The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) commended tthe announcement that the U.S. Trade Representative has formally moved to advance a U.S.-Mexico-Canada Agreement (USMCA) dispute settlement proceeding and establish a second panel to determine whether Canada has been in violation of its market access obligations under the agreement.

Canada’s unwillingness to abide by the tariff-rate quota provisions of USMCA has been an issue since the agreement’s implementation began. The United States won its first dispute panel on the matter in Dec. 2021, which found that Canada was reserving most of its preferential dairy TRQs for Canadian processors that have little incentive to import product. Canada’s revised approach to USMCA TRQs, released in May, also provided inequitable advantages to Canadian processors.

“Canada’s TRQ allocation system is not only a violation of USMCA — it directly harms American dairy farmers, processors, and other workers by unfairly restricting access to their market,” said Jim Mulhern, president and CEO of NMPF. “USTR’s action is an important step in righting this wrong and sending a message that the U.S. will fight violations of trade deals in Canada and wherever else they may be committed.”

If the panel ultimately confirms that Canada has been violating its obligations under USMCA, the U.S. would be granted the right to impose retaliatory duties should Canada fail to fix its unfair TRQ administrative practices.

“The U.S. dairy community greatly appreciates the Biden Administration’s decision to prioritize steps to address Canada’s USMCA violations,” said Krysta Harden, president and CEO of USDEC. “Unfortunately, Canada has shown a pattern of not living up to the dairy commitments it has made in trade agreements. As long as they continue to drag their feet, we’ll continue to work with USTR and USDA to fight back, and propose retaliatory action if necessary.”

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