According to an official report released on Friday, a trade dispute resolution panel established under a key North American free trade agreement has rejected a US allegation that Canada is illegally restricting access to its dairy market.
The US has accused Canada of failing to satisfy its duties under the 2020 US-Mexico-Canada Agreement to open its market to international manufacturers.
The three-member independent panel determined that Canada had not behaved arbitrarily. Their report was made public on Friday.
In a statement, US Trade Representative Katherine Tai said she was “very disappointed” with the verdict.
“The United States continues to have serious concerns about how Canada is implementing the dairy market access commitments it made in the Agreement … we will not hesitate to use all available tools to enforce our trade agreements,” she said in a statement.
Trading partners claim that, although Canada has committed in a number of agreements over the years to grant foreign businesses some dairy market access via a system of tariff-rate quotas, it has been unlawfully assigning the majority of these to local enterprises.
“Canada is very pleased with the dispute settlement panel’s findings, with all outcomes clearly in favour of Canada,” said Trade Minister Mary Ng in a statement.
An previous USMCA tribunal concluded in January 2022 that Ottawa had broken the agreement by not opening up the domestic market enough. Canada later changed its policies.
The USMCA pact maintained Canada’s decades-old supply management system, which limits domestic output of dairy, eggs, and poultry to stabilize dairy farmers’ earnings and shield them from high-tariff import competition.
The nearly 10,000 dairy farmers in Canada comprise one of the most powerful political groups. The majority of farms are located in Quebec and Ontario, the provinces with the most parliamentary seats.
