January 5, 2022 –

The Canada-United States-Mexico Agreement (CUSMA) dispute settlement panel published its report regarding Canada’s administration of its dairy tariff rate quota (TRQ) yesterday. The report acknowledges that Canada “has significant discretion in designing and implementing its allocation mechanisms.” DPAC views this as an important recognition.

Canada will still need to ensure that its tariff-rate quota allocation mechanism conforms to the CUSMA Panel’s decision by ensuring that a share (or ‘pool’) of a total TRQ is not reserved exclusively for the use of dairy processors. DPAC will work with the government to identify options to bring its CUSMA allocation mechanisms into compliance.  

Quick details

  • The Panel determined that Canada’s practice of creating TRQ pools for processors does not align with the intent of the agreement
  • Both the Government of Canada and DPAC are committed to working collaboratively toward a solution to resolve the dispute
  • The Government of Canada welcomed the Panel’s report as it recognizes the legitimacy of Canada’s supply management system, and the government’s need to manage TRQs in a manner that supports supply management
  • Canada’s dairy processors have a long history of fully utilizing their TRQ under WTO and CETA.They have a proven track record as serious importers, with deep expertise and knowledge of consumer preferences and trends.

The full final Panel report is available via the USTR here.

A joint statement from the Ministers of Trade and Agriculture and Agri-Food is available here.