May 26, 2022

After consultation with Canadian stakeholders and deliberation with the United States, Canada announced changes to its CUSMA dairy tariff rate quota or TRQ policies earlier this month

The revised CUSMA dairy tariff-rate quota (TRQ) allocation mechanism will eliminate a ‘processors-reserved pool’ and replace it with a single pool available to processors and distributors on the basis of their production or sales.

These changes are the result of a CUSMA dispute settlement panel decision that US claims that Canada’s allocation mechanisms for CUSMA dairy TRQ were not consistent with its commitments under Article 3.A.2.11(b) of the Treaty to not “limit access to an allocation to processors”. 

DPAC welcomed the government’s announcement. In its view, the new dairy TRQ allocation mechanism as it is fully consistent with the Panel’s decision, but does not go beyond what the decision required. This mechanism will ensure that Canada continues to have the predictability in imports and strong domestic processing capacity required to support its supply management system. 

It was this sentiment that the Minister of International Trade based part of the government’s rationale. In her statement, Minister Ng stated: “We will always stand up for its dairy industry, farmers and workers and the communities they support, and at a time when global food security is under threat, it is even more important that we strengthen and maintain a strong and vibrant domestic dairy industry.”

The news was not as well received by all though. The US dairy lobby. Bodies like USDEC and NMPF were quick to request retaliatory measures. However, retaliatory measures would likely be unjustified. As the revised allocation mechanism does conform to the panel decision, any formal complaints would require a new panel to be struck. 

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