market news | Canada challenged by U.S. once again over tariffs on foreign dairy imports ▶

Canada’s trade minister says she isn’t worried about the United States reviving complaints about Canadian trade practices around dairy imports, since the domestic dairy industry is abiding by North American rules.

A statement from U.S. Trade Representative Katherine Tai on Tuesday said Washington is requesting new dispute settlement consultations under the Canada-U.S.-Mexico Agreement (CUSMA) trade deal related to Canadian dairy import tariff policies.

The request expands an earlier U.S. challenge of Canada’s policies on quotas for determining tariff rates on dairy imports to focus on Canada’s “use of a market-share approach” for determining allocations, according to the statement.

The U.S. initiated dispute consultations over some Canadian dairy tariff-rate quotas in May and their “concerns have only increased” since then, the statement said.

Tai’s office said the U.S. has identified “additional aspects of Canada’s measures that appear to be inconsistent with Canada’s obligations under the USMCA,” using the American term for the updated North American trade agreement.

In response, Canadian Trade Minister Mary Ng said previous dispute settlement panels “have repeatedly confirmed that our supply management system is in line with our international trade obligations” and that the CUSMA terms surrounding import tariffs are being upheld.

“We look forward to demonstrating how Canada is meeting its CUSMA obligations during the new consultations on allocations of dairy tariff-rate quotas,” the minister said in a statement.

“As we have always done, and we will continue to do, we will stand up, work with, and defend our dairy farmers and workers.”

A tribunal ruled in December that Canada violated the terms of CUSMA by setting aside the vast majority of low-tariff imports from the U.S. exclusively for use by its own dairy processors. The final report, released in early January, said Canada’s practices were “inconsistent” with the trade deal.

Yet the decision prompted both countries to declare victory, with Ng saying the ruling was “overwhelmingly in favour” of Canada’s dairy industry.

U.S. exporters argue that Canadian consumers are being forced to pay artificially high prices on dairy products as a result of those practices, despite promises made to let them in.

Prices have only gone up since then, rising about 20 per cent in several provinces as dairy farmers struggle to keep up with record inflation.

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