May 27, 2022

A week after Canada announced its new TRQ allocation mechanism, the United States took the first steps toward a second panel regarding dairy TRQ. The United States Trade Representative claims that Canada continues to restrict dairy in a manner that is inconsistent with the terms of the CUSMA. 

In a statement yesterday, the Minister of International Trade, Export Promotion, Small Business and Economic Development, the Hon. Mary Ng, said of the United States’ request for consultations on Canada’s new dairy tariff rate quota (TRQ) policies under CUSMA:

“Canada has met its obligations under CUSMA to ensure that our TRQ system is compliant. We respect the right of the United States to initiate the dispute resolution mechanism as part of the agreement. Canada will actively participate in CUSMA’s consultation process and stand by our position to administer our TRQs in a manner that supports our dairy supply management system.”

DPAC shares the government’s view that Canada has met its obligations under CUSMA and that its dairy TRQ allocation mechanisms are compliant with the agreement. 

The USTR’s request on May 25 follows Canada’s announcement earlier this month that it had developed a new dairy TRQ allocation mechanism in order to comply with an earlier CUSMA panel decision. In our view, a key outcome of the last panel decision was the acknowledgement that Canada “has significant discretion in designing and implementing its allocation mechanisms.” 

As was the case with the USTR’s first CUSMA challenge, DPAC will continue to work collaboratively with the Government of Canada as it defends its ability to implement a TRQ allocation mechanism that balances trade commitments and the stability of its domestic dairy supply management system.

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