Tuesday, the US said it wanted a second trade dispute settlement panel to look into Canada’s dairy import quotas. The US said Canada was not living up to its obligations to open its market to US producers. The move is the latest fight between the two trade partners over Canada’s protected dairy industry, which has been going on for a long time.
What is the structure of Canada’s dairy industry?
Since the 1970s, Canada has tightly controlled the supply of milk, eggs, and chicken by putting high tariffs on imports and putting limits on how much farmers can produce.
Quotes limit how much farmers can make based on how much is needed in their own country.
Import quotas limit the amount of goods from other countries that can come into Canada at a low rate of duty.
The Canadian Dairy Commission, which is a government agency, sets the price that farmers will get for their milk each year.
In 2002, a WTO panel sided with the US and said that Canada broke its trade obligations by helping dairy farmers. Because of the WTO decision, Canada can’t export as much dairy as it used to.
WHY ARE THE UNITED STATES UPSET?
U.S. companies that process dairy want to sell more to Canada, but high tariffs make that hard to do.
The U.S. Trade Representative’s Office says that Canada’s way of figuring out quota allocations under the U.S.-Mexico-Canada Agreement on Trade is unfair. This means that Canadian retailers and food service operators can’t use the allocations, which is bad for business.
Mary Ng, Canada’s trade minister, said she was disappointed by the U.S. move and that she would fight against any attempts by the U.S. to “re-negotiate” during the settlement process.
HOW MUCH IS CANADA’S DAIRY SECTOR WORTH?
Canada’s farm dairy sales are worth C$7.39 billion ($5.54 billion) each year. The government says that processed dairy shipments are worth C$16,2 billion in 2021.
CANADA WANT TO KEEP THE SYSTEM BECAUSE?
All of the major political parties say that they support supply management because it keeps dairy farmers’ incomes stable.
Prices have gone up and down a lot for producers in other countries.
There are 9,739 dairy farmers in Canada. They are one of the most powerful groups in the country. Most farms are in Quebec and Ontario, which are the two provinces in Canada with the most seats in parliament.
The opinions of others?
Other countries that make dairy products, like New Zealand, say that Canada’s controls are an unfair way to protect its dairy industry.
Some groups in Canada say that supply management keeps the country from becoming an export power in dairy, like it is in grain and meat. They say that putting a lot of restrictions on imports makes food prices in Canada go up.
