New Zealand on Friday triggered mandatory negotiations over longstanding dairy disagreement.

The federal government says it will defend Canada’s dairy sector after New Zealand escalated a long-running trade dispute over Canadian dairy market access.

“Canada is very disappointed that New Zealand has decided to continue to challenge Canada’s dairy TRQ system,” said federal Trade Minister Mary Ng and Agriculture Minister Lawrence MacAulay in a statement on Saturday.

“We have been through this before and have consistently and successfully defended our dairy sector and supply management from trade challenges under CUSMA and the CPTPP.”

New Zealand launched a claim against Canada in May 2022, arguing that Ottawa’s implementation of dairy tariff rate quotas under the trade pact were against the agreement’s rules.

In particular, New Zealand claims that although Canada agreed to allow some dairy market access to foreign firms through a system of tariff-rate quotas, it was in fact improperly allocating some of them to domestic firms.

“As a matter of principle, the New Zealand Government expects our trade partners to treat our exporters fairly and within the rules of our agreements,” McClay said in a statement. “Canada is not doing that in respect to the dairy quotas that were negotiated and agreed with New Zealand.”

Ng and MacAulay said Canada will always defend the supply-managed system, but will engage with New Zealand “in good faith.”

“We are confident that Canada’s new policies fulfill Canada’s obligation to eliminate the non-conformity identified by the panel.”

New Zealand said on Friday that Canada had not complied with the findings within a reasonable amount of time.

This is the first dispute New Zealand has taken under a free trade agreement, and the first dispute that has been taken by any party under CPTPP, the New Zealand government said.

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