US Seeks Fresh Dispute-End Trade Talks on Canada Dairy Quotas

(Bloomberg) — The US is requesting dispute-settlement consultations for a third time over Canada’s dairy quotas, saying it has found more areas of “deep concern” and that the nation’s measures are inconsistent with its obligations under a North American trade pact.

Washington is expanding its challenge to include Canada’s use of a market-share approach for determining the quotas, the Office of the US Trade Representative said in a statement Tuesday. It said Ottawa’s method prohibits eligible applicants—including retailers and food-service operators—from accessing allocations.

This is the third time Washington is challenging Ottawa over the dairy issue using provisions in the US-Mexico-Canada agreement, after raising concerns in both January and in May. If the countries aren’t able to resolve the matter through consultations, the US may request the establishment of a panel under the USMCA, the USTR said.

“Canada remains in violation of its commitments under the USMCA by not removing its trade restrictions on American dairy producers,” Secretary of Agriculture Tom Vilsack said in the statement.

Under the USMCA that took effect in July 2020, Canada granted to granting more duty-free or lower tariff access across dairy products including milk, cream, cheese, yogurt and ice cream via a tariff-rate quota, or TRQ. But Canada was allocating the bulk of those imports to processors, limiting the ability of other groups like retailers to buy US product.

Canada “looks forward” to demonstrating that it’s meeting its obligations under the trade deal, Trade Minister Mary Ng said in an emailed statement.

“Dispute-settlement panels have repeatedly confirmed that our supply-management system is in line with our international trade obligations,” Ng said. The terms negotiated under the trade deal “are being respected and upheld,” she added.

–With assistance from Stephen Wicary.

(Updates with comment from Canadian trade minister in sixth paragraph.)

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