WASHINGTON – Leaders within the International Dairy Foods Association (IDFA), US Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) voiced their support for a Jan. 31 announcement that US Trade Representative Katherine Tai established a second formal dispute settlement case regarding Canada’s alleged manipulation of dairy tariff-rate quotas under the United States-Mexico-Canada Agreement (USMCA).

USDEC and NMPF stated that Canada’s unwillingness to abide by the tariff-rate quota provisions of USMCA has been an issue since the agreement’s implementation began.

IDFA shared that the formal move to establish a second panel came after a third round of consultations with Canada that added new legal claims against the country’s administration of tariff-rate quotas.

Upon agreeing to increase US dairy access to the Canadian market for milk, cheese, butter, cream, skim milk powder, yogurt, whey and ice cream through tariff-rate quotas, IDFA argued, Canada constructed rules for its dairy tariff-rate quotas that discourage those products from entering the country. Through reserving a large percentage of each dairy tariff-rate quota for Canadian dairy processors, IDFA argued, it limits the ability of US companies to export, which doesn’t match commitments made under USMCA.

Should the panel confirm allegations of Canada violating obligations under USMCA, USDEC and NMPF pointed out, the US would have the right to impose retaliatory duties if Canada fails to change its tariff-rate quota practices.

In 2022, Canadian policies withheld allocations to dairy importers due to the Canadian government’s concerns with US electric vehicle tax credit legislation.

“Although Canada has since rescinded the policy, many other Canadian TRQ policies concerning to IDFA members remain in place,” said IDFA president and chief executive officer Michael Dykes, “including Canada’s policies to manipulate quota allocations in order to favor Canadian processors, prohibit retailers and foodservice operators from receiving quota, and require constant import activity in a manner that prevents new importers from being eligible to obtain quota.”

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.”

Added Jim Mulhern, president and CEO of NMPF: “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. USTR’s action is an important step in righting this wrong and sending a message that the US will fight violations of trade deals in Canada and wherever else they may be committed.”

IDFA shared that the US Dairy industry exports approximately 18% of all milk production. The organization stated that as milk production increases in the next 10 years and other countries see dairy production decrease, the US government “must ensure there are functioning, efficient avenues for U.S. dairy exports to meet growing global demand in North America and around the world.”