At the heart of the dispute is not simply the overall volume of dairy entering Canada, but who receives import licenses to distribute it. The United States argues that Canada’s TRQ allocation framework unfairly discriminates against American exporters by granting import permits primarily to domestic dairy processors and distributors while excluding grocery retailers. Washington contends that because Canadian retailers were granted direct quota access under Canada’s Comprehensive Economic and Trade Agreement (CETA) with the European Union, U.S. specialty cheese manufacturers are placed at a competitive disadvantage in reaching Canadian supermarket shelves directly.

Speaking to BNN Bloomberg, Al Mussell, agricultural economist and fellow-in-residence at the C.D. Howe Institute, cautioned that granting direct import rights to major grocery chains is not in Canada’s economic interest. Mussell pointed out that opening direct retail channels would not increase total cheese import volumes—as existing CUSMA quotas are already essentially filled—but would instead shift high-margin retail shelf space away from Canadian manufacturers. Furthermore, because domestic dairy plants rely on regulated, planned raw milk allocations under supply management, dislodging domestic processing volumes would complicate pooling operations and farmgate planning.