The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) are calling on the U.S. government to levy retaliatory tariffs on Canada after Ottawa made clear that it refuses to meet its signed treaty obligations under the U.S.-Mexico-Canada Agreement (USMCA) concerning dairy market access.
In January, a USMCA dispute resolution panel initiated by the U.S. found that Canada’s dairy tariff-rate quotas (TRQs) system violated terms of USMCA. Canada announced a new TRQ proposal on May 16.
According to Dairy Farmers of Canada, the new TRQ allocation is based on market share, does not reserve any portion of the USMCA TRQs specifically to Canadian dairy processors, making it fully compliant with the dispute settlement panel decision earlier this year which required Canada to revisit its model that had pools dedicated to processors.
“By allocating USMCA TRQs to processors and distributors, Canada is meeting its trade obligations while ensuring a measure of predictability in dairy imports in a manner that supports supply management, a system based primarily on supplying the needs of Canadian consumers,” DFC said in statement.
According to NMPF, however, the announcement shows Canada does not intend to comply with its USMCA commitments on dairy TRQs.
“Canada made a clear choice to thumb its nose at both the United States government and its international treaty obligations. It has completely disregarded the USMCA agreement signed just a few short years ago,” said Jim Mulhern, president and CEO of NMPF.
“Ottawa’s decision is clearly designed to test our resolve by doubling down on its longstanding dairy trade violations, ignoring both the spirit and the letter of its trade agreements,” Mulhern continued. “That decision demands retaliatory action by the U.S. government. Otherwise, our trade agreements will be seen as toothless before the ink is dry.”
According to Krysta Harden, president and CEO of USDEC, members of Congress from both side of the aisle, along with USDA and the U.S. Trade Representative’s office have worked diligently to ensure American dairy farmers and manufacturers benefit from USMCA.
“They deserve our deepest thanks for bringing us this far,” Harden said. “Unfortunately, Canada simply refuses to institute real reform, and such actions must have consequences. Retaliatory tariffs are both fair and necessary in this circumstance, as clearly provided for by USMCA.”
In a April 5 bipartisan letter sent to Ambassador Tai and Secretary Vilsack from leading members of the U.S. House of Representatives said, “A deal’s a deal; it’s not too much to ask that our trading partners live up to their end of the bargain.”
According to an Agri-Pulse report, Vilsack told reporters he hasn’t ruled out the possibility of retaliatory tariffs but hopes recent conversations with Canada’s Agriculture Minister will result in additional TRQ allocation revisions.
“The first step of the process was actually to convey to Canada the level of disappointment and frustration we have, in the hope that may cause a bit of rethinking on their part before it’s necessary for us to take the next step,” Vilsack said.
International Dairy Foods Association President and CEO Michael Dykes said his organization thoroughly rejected Canada’s most recent proposal and urged a swift response from the USTR.
“Canada continues to deny U.S. dairy products from reaching their full capacity under the terms of the deal and continues to deny the existence of any obligations,” Dykes said.
On April 19, USDEC and NMPF filed public comments on the matter with Global Affairs Canada, challenging Canada’s proposed TRQ allocation fell woefully short of full compliance with Canada’s obligations.
“This has consequences not only for the agreed-upon USMCA benefits denied U.S. and Canadian stakeholders, but also for the credibility of USMCA enforcement procedures undergoing their first test in this dispute and for the success of USMCA itself.
“We urge Canada to consider its larger interest in the success of the USMCA and modify its dairy TRQ allocation and administration policies to give effect, in good faith, to Canada’s USMCA commitments,” they wrote.
Source: michiganfarmnews.com
