WASHINGTON, May 25, 2021—The International Dairy Foods Association today lauded U.S. Trade Representative Katherine Tai for initiating a formal dispute settlement case over Canada’s manipulation of dairy tariff rate quotas (TRQs) under the US-Mexico-Canada Agreement (USMCA).
Canada had agreed to increase U.S. dairy access to its market for milk, cheese, butter, cream, skim milk powder, yogurt, whey, and ice cream by establishing tariff-rate quotas for those items. But Canada has constructed its dairy TRQs to discourage the entry of those products by reserving a large percentage of each dairy TRQ to its own dairy processors, who have no incentive to import U.S. products that they themselves produce. That action, IDFA argues, limits the ability of U.S. suppliers to export and is not fair and equitable administration of its TRQs, as Canada has committed to do under USMCA.
IDFA and other dairy organizations have repeatedly cited Canada’s circumvention of its trade agreement obligations in several meetings with USTR officials and in an open letter to Ambassador Tai on May 14. The Trump administration had accused Canada of violating the agreement last December by initiating pre-dispute consultation proceedings, which were temporarily put on hold when the Biden administration came into office.
“We are very grateful to Ambassador Tai for moving forward with this enforcement action against Canada, the resolution of which is a critically important matter for U.S. dairy producers and processors. We appreciate Ambassador Tai’s open commitment to enforcing U.S. trade agreements to their fullest and maintaining a rules-based trading system,” said IDFA President and CEO Michael Dykes.
Under the USMCA, which in 2020 replaced the North American Free Trade Agreement, Canada, the U.S., or Mexico may invoke a formal dispute settlement process if it believes one of the trading partners has failed to carry out a treaty obligation. Issuing a request for a dispute settlement panel is the first step in that process, followed by the formation of the panel, and the panel’s review of the U.S. complaint of Canada’s TRQ obligations, and ultimately a report published by the panel.
“Our negotiators and our dairy companies work too hard for the market access obligations in these agreements to be ignored,” said IDFA Trade Policy and International Affairs Vice President Becky Rasdall. “We’re indebted to Ambassador Tai and the teams at USTR and USDA for their efforts to advance this dispute.”
The IDFA represents the United States’ dairy manufacturing and marketing industry and has a membership that represents 90 percent of the milk, cheese, ice cream, yogurt and cultured products, and dairy ingredients produced and marketed in the United States and sold throughout the world. The group’s membership supports more than 3 million jobs that generate $159 billion in wages and $620 billion in overall economic impact. The U.S. shipped a record $735 million worth of dairy products to Canada in 2020.
IDFA’s diverse membership includes multinational organizations, dairy companies and cooperatives, food retailers and suppliers, all on the cutting edge of innovation and working to apply sustainable business practices throughout the dairy supply chain.
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The International Dairy Foods Association (IDFA), Washington, D.C., represents the nation’s dairy manufacturing and marketing industry, which supports more than 3 million jobs that generate $159 billion in wages and $620 billion in overall economic impact. IDFA’s diverse membership ranges from multinational organizations to single-plant companies, from dairy companies and cooperatives to food retailers and suppliers, all on the cutting edge of innovation and sustainable business practices. Together, they represent 90 percent of the milk, cheese, ice cream, yogurt and cultured products, and dairy ingredients produced and marketed in the United States and sold throughout the world. Delicious, safe and nutritious, dairy foods offer unparalleled health and consumer benefits to people of all ages.