March 30, 2022

Canada’s proposed USMCA deemed unacceptable by dairy groups

Canada’s proposed USMCA deemed unacceptable by dairy groups 

By: Sydney Sheffield 

Earlier this year, the United States won the first dispute settlement under the U.S. Mexico Canada Agreement (USMCA) regarding Canada infringing on its USMCA commitments by reserving most of the in-quota quantity in its dairy tariff-rate quotas for the use of Canadian processors exclusively. Canada has proposed new changes, but U.S. dairy groups believe it will not fix the issues at hand.

All that American dairy farmers want is fair and good-faith implementation of USMCA’s dairy provisions. That doesn’t seem like a high bar, yet it appears to be insurmountable for Canada based on yesterday’s proposed dairy TRQ scheme changes,” said Jim Mulhern, President, and CEO of the National Milk Producers Federation (NMPF). “We urge the administration to demand that Canada go back to the drawing board until it can genuinely deliver on providing the U.S. dairy industry the full benefit of USMCA.”

Among others, the proposed changes would not allow U.S. exporters to ship directly to the lucrative retail sector, a major concern for Edge Dairy Farmer Cooperative’s members throughout the Midwest. “It’s clear that Canada is not seeking to provide actual market-based allocations,” Edge President Brody Stapel, a Wisconsin dairy farmer, said. “With passage of the USMCA, Edge was hopeful that the expanded quotas for dairy would get us closer to having real access to the Canadian market, including for high-value retail products. Excluding retailers from the new proposal will continue to keep out an important and growing segment of U.S. dairy.” 

Under the USMCA, U.S. dairy producers were granted increased market access to Canada through preferential tariff rates for in-quota quantities of certain products. Less than a year after implementation of the agreement, the Biden administration requested a dispute settlement panel be established to consider Canada’s failure to comply with the dairy TRQ provisions.

Michael Dykes, D.V.M., President and CEO of the International Dairy Foods Association (IDFA), said the Canadian plan is a nonstarter. “The plan makes true access to the Canadian market unattainable through a series of gimmicks. It comes as no surprise that Canada is unwilling to reform their trade-distorting practices on dairy.”

The U.S. government is in the process of deciding whether the proposal brings Canada into compliance and has not indicated when there will be a decision on the next steps. Collectively, the dairy organizations hope for U.S. dairy farmers to experience the full benefits of the USMCA.