According to Doug McKalip, chief agricultural trade negotiator for the United States Trade Representative’s office, Canada’s second attempt at allocating dairy tariff quotas shut out most of the firms, providing only a fraction of the access promised in the trade agreement between the United States, Mexico, and Canada.
“Under the USMCA, Canada pledged to open its market to U.S. dairy goods, and dairy producers anticipate receiving the market access advantages promised,” McKalip added.
On January 31, the United States Trade Representative (USTR) requested a USMCA dispute settlement panel for the second time, claiming that Canada’s revised quota allocation rules failed to address issues that prompted an initial dispute panel to rule last year that Canada’s practises violated its USMCA obligations.
In response, Canada’s trade minister, Mary Ng, has committed to defend the supply management system and accused USTR of attempting to “renegotiate” the provisions of the USMCA agreement via the dispute resolution process.
The first panel held that Canada had improperly reserved the majority of its quotas for raw milk imports by Canadian processors, blocking Canadian merchants and food service companies from importing several higher-value US dairy products.
According to McKalip, Canada’s quota modifications “fallen again, well short of real market access.”
Additionally, the agricultural trade official, who was approved by the US Senate on December 23, told Reuters that he urged Mexico to explain the science behind its prohibition on genetically modified maize, paving the way for another USMCA trade dispute case.
As part of the USMCA trade agreement, which was signed in 2020, Canada agreed to provide US dairy farmers access to around 3.5% of its $17 billion yearly market and to enable greater US skim milk and milk protein exports to Canada.
The agreement maintained Canada’s decades-old supply management system, which limits local dairy, egg, and poultry output to stabilise revenue and safeguard against foreign competition with hefty tariffs.
Tariff-rate quotas are intended to enable certain amounts of dairy imports duty-free while imposing tariffs if the limitations are met.
Yet, McKalip claims that Canada continues to restrict merchants and food service enterprises access to quotas, which should be made available to all buyers and sellers.
“It should work the same way it does for almost any commodity and any type of relationship of this kind, in that they truly do provide market access and that dairy farmers and various dairy products here in the United States are able to compete and be part of selling to willing buyers,” McKalip said.
“We’re not asking them to do anything they didn’t agree to when they agreed to the clauses of USMCA,” McKalip said of the United States’ stance.
A Goulburn Valley water body wants to know what governments will do when the Murray-Darling Basin Plan ends.
