WASHINGTON, D.C. (Reuters) — The United States said it intends to challenge Canada’s allocation of dairy tariff-rate quotas under the Canada-United States-Mexico Agreement (CUSMA).
“Canada’s measures violate its commitments and harm U.S dairy farmers and producers,” U.S. Trade Representative Robert Lighthizer said in a statement.
If the U.S. and Canada are not able to resolve Washington’s concerns through consultations, the U.S. may request the establishment of a CUSMA dispute settlement panel, the USTR said.
In Ottawa, Canadian International Trade Minister Mary Ng told reporters that “I’m very confident that Canada is meeting its obligations under the (CUSMA).”
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Canada’s entrenched supply management system of steep tariffs, quotas and price supports for its dairy sector was a point of contention for Lighthizer during more than two years of negotiations to revamp the 1994 North American Free Trade Agreement.
As part of the new trade deal, Canada agreed to provide U.S. dairy farmers access to about 3.5 percent of the $16 billion a year market allowing for increased exports of some products like skim milk and milk proteins to Canada. The deal keeps supply management largely intact.
USTR said Canada has the right to maintain tariff rate quotas (TRQs), which impose tariffs on imports above certain volumes, on 14 dairy products from ice cream to cheese. But it said that Canada in October published notices it reserves a percentage of the quotas for processors and “further processors”, which it says limits U.S. access and violates the agreement.
