The U.S. Trade Representative has started the first step of the dispute process with Canada under the U.S. Mexico Canada Agreement, which took effect on July 1, 2020, for how it has implemented its dairy quotas. U.S. Trade Representative Robert Lighthizer could announce the enforcement action as early as this week, according to a U.S. industry source familiar with the matter.
Dairy groups and lawmakers had been pressing the Trade Rep to take action against Canada after the country in June announced their quotas which reserved a percentage exclusively for processors. The U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation are applauding the action, saying only when Canada is held fully accountable to its trade commitments will America’s dairy farmers be able to realize the full benefit of the provisions.
In a letter to his Canadian counterpart, Mr. Lighthizer said the U.S. was exercising its rights to enforce the USMCA, adding that Washington may request the establishment of a USMCA dispute-settlement panel if the U.S.’s concerns aren’t addressed.
“Canada’s measures violate its commitments and harm U.S dairy farmers and producers,” Mr. Lighthizer said in a written statement. “We are disappointed that Canada’s policies have made this first ever enforcement action under the USMCA necessary to ensure compliance with the agreement.”
A spokesperson for Mary Ng, Canada’s Minister of Small Business, Export Promotion and International Trade, says Canada is following the rules of the agreement.
“Like all aspects of the Canada-U.S. trade relationship, Canada takes its obligations very seriously. Canada’s administration of its dairy TRQs is in full compliance with its commitments under the new NAFTA,” says Youmy Han, in a statement shared with RealAgriculture.
“Our government will always stand up for our dairy farmers and a strong supply management system in Canada, which ensures the viability of our family farms and the vitality of our rural areas,” continues the spokesperson for Minister Ng.
If the United States and Canada are not able to resolve the United States’ concerns through consultations, the U.S. may request the establishment of a USMCA dispute settlement panel to examine the matter, the initial step in the dispute settlement process under CUSMA or USMCA, after which the responding country has 15 days to engage regarding any complaints about perishable items, such as milk, and 30 days to respond for other products. If the countries fail to reach a deal through consultations, the complainant can request the creation of a dispute settlement panel to examine the issue.
