A group of 67 dairy companies and associations urged U.S. Trade Representative (USTR) Katherine Tai to initiate a dispute settlement case with the Canadian government over its dairy tariff-rate quota (TRQ) administration if ongoing consultations and a U.S. Mexico-Canada Agreement (USMCA) Free Trade Commission meeting do not result in immediate resolution.

The USTR started consultations in December 2020 with Canada over its TRQ policies as part of its obligations under USMCA, a step that the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) said they strongly supported. Several months post-consultations, it is not readily apparent that progress has been made on resolving Canada’s circumvention of its trade obligations. In a letter sent to Ambassador Tai, the U.S. dairy industry urged USTR to establish a Dispute Settlement Panel in the event there is not an immediate, positive resolution in the consultations.

“The U.S. dairy industry proudly worked with USTR and members of Congress on a bicameral and bipartisan basis during the 116th Congress to secure strong, enforceable dairy provisions in the USMCA,” said Krysta Harden, president and CEO of Arlington, Va.-based USDEC. “Even while we knew it was important to secure strong text in the agreement, we also knew it was going to be just as critical for the provisions to be properly implemented and enforced. This is why we need USTR to take bold action to ensure the U.S. dairy industry fully benefits from the hard-fought wins included in the USMCA.”

USDEC and NMPF said they have closely monitored Canada’s actions regarding its USMCA commitments even prior to the agreement’s entering into force. Canada’s TRQ allocations are designed to discourage the full utilization and value of the TRQs, limiting U.S. dairy-product imports. Specifically, Canada is reserving the bulk of quota access to Canadian processors and is not providing fair or equitable procedures in administering the TRQs.

“America’s dairy farmers appreciated USTR initiating consultations with Canada on its dairy TRQ allocation measures and the decision to hold USMCA Free Trade Commission discussions to pursue reforms,” said Jim Mulhern, president and CEO of NMPF, Arlington, Va. “But Canada has always been obstinate on dairy, and at this stage it is increasingly clear that further action is needed to ensure a fair and transparent enforcement of USMCA.

“This is why America’s dairy farmers are asking USTR to initiate a dispute settlement case should talks with Canada this week fail to yield a full resolution,” he continued. “We look forward to working closely with the administration as they pursue every option available to them to ensure America’s dairy farmers fully benefit from the USMCA’s market access provisions.”