In today’s world, we all need to work together. Countries depend on one another’s imports and exports to ensure that everyone has what they need and that there are thriving economies.
Unfortunately, Canada isn’t making it easy – and it’s all because of dairy.
Ottawa has a number of strict dairy import policies, and according to DC, it is harming American dairy farmers. As such, a second formal trade complaint has been filed.
There’s a US-Mexico-Canada Agreement that lays out who gets what from whom – and even specific quantities. There have been dispute settlement consultations going on because Ottawa has made changes to the dairy quota system, and it violates the trade agreement.
According to Katherine Tai, a US Trade Representative, the policy current is preventing “US workers, producers, farmers, and exporters from getting the full benefit of the market access that Canada committed to under the USMCA.”
Isn’t everything hard enough? Now, farmers who have always relied on exporting to Canada are unable to do so. We should be able to count on the neighbors to the north and south to hold up their ends of agreements, especially one as important as this.
The number of American dairy exports have been limited. This includes everything from milk to ice cream to butter.
The way that Canada is doing this is through a system known as tariff rate quotas (TRQs) – and US officials are saying that it is extremely restrictive for US producers.
Tai went on to explain that “I am deeply troubled by Canada’s decision to expand its dairy tariff-rate quota restrictions.”
Once the North American Free Trade Agreement was created in 1994, Canada made modifications under the CUSMA, which took place on July 1, 2020. This allowed them to use the TRQ system on 14 dairy product lines. It sets up a preferential tariff to a set volume of product – and then a higher duty for amounts that are above that set volume.
The first complaint was filed by Washington in December 2020.
A panel ruled that Washington was correct and that Canada needed to make modifications.
Canada, apparently, doesn’t see it that way.
According to Mary Ng, Canada’s trade minister, “Canada has met its obligations under CUSMA to ensure our TRQ system is compliant.”
Essentially, they are looking out for themselves regarding their dairy supply management system – and they are perfectly willing to look the other way on the agreements that they have made with the United States.
American dairy groups are understandably upset because their production volumes are based on being able to sell certain amounts to Canada. Without the ability to do so, product is being wasted and producers are experiencing considerable financial setbacks.
Many of the dairy groups are calling on the Biden administration to impose tariffs on Canadian goods. They identify that such action is required by the USMCA trade pact.
While US Agriculture Secretary Tom Vilsack has acknowledged that Canada has failed to honor its commitments under the USMCA, there’s no telling what will be done.
What we do know is that there are a lot of dairy producers and exporters that currently don’t have access to the Canadian market in the way that they have in the past.
This is a time when we depend on our allies to show just how committed they are – not only within NATO membership or foreign policies but even within trade agreements. Canada needs to be very careful as it doesn’t seem like they’re being a very good ally at the moment.