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 (TRQ).
It is expected that CETA will result in approximately $670 million in lost market share and diminished returns on investment for dairy processors. By the time that CETA, and subsequent trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Canada-United States-Mexico Agreement (CUSMA), are fully implemented, dairy processors’ losses will total $2 billion.
DPAC firmly believes that dairy TRQ resulting from any free trade agreement must always go to dairy processors. Allocating TRQ to dairy processors allows them to invest in the new import market, helping them to adapt to new market realities and partially offset economic harm.
Since 2008, dairy processors have invested over $7.5 billion to grow the domestic dairy market. When the government allocated more than 50% of CETA cheese TRQ to non-dairy stakeholders, it also gave away returns on a decade’s worth of investments. This decision has had serious impacts on dairy processing facilities in Canada.
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 CETA and ensure the viability of a domestic dairy processing industry for years to come.
More information on CETA
- Global Affairs Canada – CETA: Cheese of All Types Tariff Rate Quota
- 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