The Canada-United States-Mexico Agreement (CUSMA) came into force on July 1, 2020. CUSMA is just the latest in a series of free trade agreements that have seriously undermined a decade of strong growth and investment in Canada’s dairy sector. With CUSMA, Canada has conceded close to 4% market access which will result in more than $140 million in losses per year for Canada’s dairy processors.
When combined with the Canada-EU Comprehensive Economic and Trade Agreement (CETA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Canada’s market access commitments climb to almost 10%. The resulting losses will total more than $300 million annually or $2 billion over the course of implementation.
A Global Affairs Canada study reported that CUSMA is a one-sided deal when it comes to dairy. At full implementation, the value of US imports will be five times the value of Canadian exports to the US.
Issues with CUSMA go beyond market access. The inclusion of additional provisions which limit Canada’s ability to export and fully direct its domestic dairy production threaten the long-term viability of the domestic dairy sector. CUSMA, more than any other trade agreement, has created significant instability and disruption in Canada’s domestic dairy market.
Mitigating the negative impacts of CUSMA
When CUSMA was signed, the Canadian government stated that it would provide full and fair compensation to the dairy sector. Despite continued promises, this compensation has yet to materialize. DPAC continues to call on the government for a full mitigation program to help dairy processors transition to the new market reality caused by recent trade agreements like CUSMA and ensure the viability of a domestic dairy processing industry for years to come.
More information on CUSMA
- Report (Agri-Food Economic Systems, February 2019): The Canadian Dairy Sector in Relation to the Canada-US-Mexico Agreement and Comprehensive and Progressive Agreement for TransPacific Partnership
- Global Affairs Canada: Supply Managed Tariff Rate Quota
- Global Affairs Canada: Dairy export thresholds