American groups say Canada’s revisions to tariff rate quota allocations still don’t follow U.S.-Mexico-Canada Agreement
Two American dairy organizations last week urged Washington to retaliate against Canada for failing to meet international trade obligations.
The National Milk Producers Federation and the United States Dairy Export Council issued a joint statement saying Canada had not complied with an earlier ruling regarding tariff rate quota (TRQ) applications.
They said revisions made to Canada’s TRQ allocation process announced May 16 don’t meet the United States-Mexico-Canada Agreement requirements.
“Canada made a clear choice to thumb its nose at both the United States government and its international treaty obligations,” said NMPF chief executive officer Jim Mulhern, after Canada announced the opening of TRQ applications for 2022-23.
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Global Affairs Canada said amendments to its process under the USMCA had been made after the December 2021 dispute panel ruling that the country could not reserve all of its allocation for domestic processors.
“The new policies end the use of processor-specific TRQ pools,” said international trade minister Mary Ng.
“We are confident that the new policies fully comply with the panel’s findings and its recognition that Canada has the full discretion to administer its TRQs under (USMCA) in a manner that supports Canada’s supply management system for dairy.”
Applications are open until June 15 for TRQs and previously unallocated quota for the 2022-23 dairy year.
Global Affairs Canada said under the USMCA dairy policies Canada had removed all allocation holder pools under dairy TRQs and included distributors as eligible under the industrial cheeses TRQ.
“Please note that given Canada’s deep concerns with the discriminatory electric vehicle tax credits proposed in the Build Back Better bill under U.S. Congress consideration, a decision regarding the potential allocation of the previously unallocated quota under the 2022 (USMCA) calendar year dairy TRQs will be taken as the issue evolves, but not later than July 31,” the department said. “Any previously allocated and unused quota under the 2022 (USMCA) calendar year dairy TRQs will remain valid until Dec. 31, 2022.”
Mulhern said the announcement doubled down on long-standing violations and retaliatory tariffs should follow.
USDEC’s president Krysta Harden agreed.
“Unfortunately, Canada simply refuses to institute real reform, and such actions must have consequences. Retaliatory tariffs are both fair and necessary in this circumstance, as clearly provided for by USMCA,” she said.
U.S. agriculture secretary Tom Vilsack told American media outlets he was disappointed that Canada wasn’t going to import more dairy products and told the industry to “stay tuned” on the issue of retaliation.
He said he raised the issue with Canadian agriculture minister Marie-Claude Bibeau during the recent G7 meeting in Stuttgart, Germany.
The Dairy Processors Association of Canada said it had urged the government to meet its obligations but not go beyond what was required by the decision.
“In DPAC’s view, the revised allocation mechanism announced today does just this,” the organization said in a statement. “Canada’s revised (USMCA) dairy TRQ allocation mechanism eliminates, in conformity with the panel’s decision, the ‘processors-reserved pool’. In its place, a single pool will be created whereby TRQ is allocated to processors and distributors on the basis of their production or sales.”
Dairy Farmers of Canada also said the mechanism provides predictable imports to maintain strong domestic processing capacity.
