The International Dairy Foods Association on May 25 lauded U.S. Trade Representative Katherine Tai for initiating a formal dispute settlement case over Canada’s manipulation of dairy tariff-rate quotas under the U.S.-Mexico-Canada Agreement.
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 quotas to discourage the entry of those products by reserving a large percentage of each dairy quota 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 the fair and equitable administration of its quotas that Canada has committed to do under USMCA.
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 quota obligations, and ultimately a report published by the panel.
Editor’s note: A tariff-rate quota allows a certain amount of goods into a market at a low tariff rate. After that allotment is filled, the product can still be imported but at a higher tariff.