Beth Hughes, IDFA Director of International Affairs
Beth Hughes, IDFA director of international affairs, traveled last week to Ottawa, Canada, to meet with officials from the Canadian government, several embassies and the dairy industry. The two-day trip focused on Canada’s national ingredients strategy, current provincial policies that are displacing U.S. dairy exports and implementation of Canada’s Comprehensive Economic and Trade Agreement (CETA) with the European Union. Hughes explained that proposed Canadian policies and the agreement with the EU would further restrict already limited trade with U.S. dairy and possibly violate existing trade agreements.
"We have valid issues with the current and future dairy polices in Canada and their impact on our members," said Hughes. "Unfortunately, the Canadians have been brushing off our concerns and continuing to violate their trade obligations, so these meetings provided a great opportunity for me to share our concerns in person. Until they start playing by the rules, we'll keep pounding at their door.”
IDFA plans to raise these issues forcefully with the Trump Administration’s transition team, appropriate members of the new administration once they’re in place and Canadian stakeholders in the United States and Ottawa. Fair access to the Canadian market is important for members, and IDFA will insist on fair treatment, Hughes said, adding that working aggressively on these issues will be a trade priority for IDFA going forward.
Ingredients Strategy and Provincial Policies
The Dairy Farmers of Canada and the Dairy Processors Association of Canada concluded negotiations this past summer on a national ingredients strategy, called the “Agreement in Principle,” but it has not been released yet to the public. The agreement favors using Canadian dairy ingredients instead of ingredients imported from the United States and other countries, and subsidizes the export of Canadian dairy products, allowing them to compete unfairly with products from around the globe. The agreement requires final ratification before its scheduled implementation date, February 1, 2017.
In September, IDFA and dairy organizations around the world issued a joint letter asking officials in Australia, New Zealand, Mexico, the United States and the European Union Commission to initiate a World Trade Organization (WTO) dispute-settlement proceeding to challenge the agreement once its details are announced. The agreement breaches Canada’s trade obligations under the WTO and the North American Free Trade Agreement (NAFTA).
Prior to this, the province of Ontario implemented last April its own ingredients strategy, which created a new ingredient class and priced it to compete with imports. This strategy has had a negative impact on U.S. companies selling ultra-filtered milk to Canadian processors, who have imported the products duty-free under NAFTA for years to make cheese.
With the implementation of Canada’s Comprehensive Economic and Trade Agreement with the European Union expected in March or April 2017, the Canadian government last month announced “an investment of $350 million for two new programs to support the competitiveness of the dairy sector.” The government will invest:
- $250 million over five years for a Dairy Farm Investment Program that will provide targeted contributions to help Canadian dairy farmers update farm technologies and systems and improve productivity through upgrades to their equipment. This could include the adoption of robotic milkers, automated feeding systems and herd management tools.
- $100 million over four years for a Dairy Processing Investment Fund that will help dairy processors modernize their operations and, in turn, improve efficiency and productivity, as well as diversify their products to pursue new market opportunities.
IDFA has been critical of CETA since the details of the agreement were released more than two years ago. Specifically, the provisions on geographical indications are particularly alarming because they grant automatic protection to the EU for several generic cheeses, including asiago, feta, fontina, gorgonzola and munster. Canada also reallocated 800 metric tons of its 20,412 metric ton WTO tariff-rate quota for cheese to the EU, further restricting the limited access that U.S. cheese exporters have to the Canadian market.
Lawmakers Voice Concern
Numerous congressmen and governors whose states depend on dairy exports to Canada have spoken out against Canada’s protectionist dairy policies.
- Senators Tammy Baldwin (D-WI) and Charles Schumer (D-NY) sent a letter to the U.S. Department of Agriculture and the Office of the U.S. Trade Representative stating that companies in their states “have already lost considerable export sales as a result of the Ontario dairy policy introduced this past spring.”
- New York Governor Andrew Cuomo sent a letter to Canada’s prime minister, Justin Trudeau, opposing proposed regulations by Canada that could result in a $50 million market loss for New York's dairy industry.
- Wisconsin Governor Scott Walker stated, “The protectionist trade actions taken by the Canadian government are harming Wisconsin's dairy industry right now.”
- A bipartisan delegation of 22 New York legislators wrote to President Obama, urging his administration to “take all necessary action” to eliminate Canada’s unfair barriers to U.S. dairy exports.
For more information, contact Beth Hughes, IDFA director of international affairs, at email@example.com.