The Canada-EU Comprehensive Economic and Trade Agreement (CETA) entered into force on September 21, 2017. As part of this agreement, Canada allowed for 17.7 million kilograms of cheese to enter the domestic dairy market, duty-free, through the allocation of tariff-rate quota (TRQs).
At the time, DPAC argued that CETA cheese TRQs should be allocated to dairy processors who thoroughly understand the Canadian dairy market, have the experience to import a wide-variety of dairy products in a balanced way. DPAC also argued that allocating these TRQs to dairy processors was also an essential way to help offset losses from the trade deal and recoup some of the $7.5 billion in investments they have made since 2008.
In the end, the federal government allocated less than half of the available cheese TRQs to dairy processors, with more than 50% being allocated to non-dairy processor stakeholders. This decision had serious impacts on the Canadian dairy processing industry by effectively taking the profits of one sector and handing them over to others that weren’t even negatively affected by CETA.
How does CETA impact dairy processors?
Canada has faced criticism for the amount and type of cheeses brought into the country as part of its CETA obligations. To date, most imports from Europe have been easy-to-manage cheeses, like Parmesan, Cheddar and Feta, that have a long shelf life and serve only to displace current similar varieties widely available in the Canadian marketplace.
Worse, a very low number of cheese TRQ have even been filled. The dairy sector now watches, worried about the market disruption a flood of European cheese products could have as other TRQ holders rush to meet their quota obligations by the end of 2018 or risk losing the ability to import.
What is DPAC’s position?
A year later, enough evidence points to the fact that the federal government should review and reallocate the CETA cheese TRQs currently held by other stakeholders to the dairy processing industry which has the experience necessary to ensure these quotas are fully, and correctly, fulfilled in a managed way to complement current Canadian dairy offerings and provide greater consumer choice. This will allow not only the dairy processing industry to recoup a return on past investments, it will also encourage future investments in the Canadian dairy sector—its farms, processing plants, and people.