The U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) sharply criticized Canada’s allocation of its tariff-rate quotas (TRQ) under the United States-Mexico-Canada Agreement (USMCA), released on June 15. USDEC and NMPF call attention to the fact that these TRQ allocations undermine the intent of USCMA’s dairy provisions by thwarting the ability of the U.S. dairy industry to make full use of the trade agreement’s market access opportunities.

USDEC and NMPF said they have repeatedly warned that the full benefits of this carefully negotiated trade agreement will not materialize without careful monitoring and stringent enforcement of Canada’s USMCA commitments. They urge the U.S. Trade Representative (USTR) to immediately raise this issue with Canada and insist that Canada adheres faithfully not just to the letter of its commitments under USMCA, but also to its spirit.

“Canada’s administration of previous TRQs under existing free trade agreements gave the U.S. dairy industry ample cause for concern, which has unfortunately been confirmed by the announced TRQ allocations,” said Tom Vilsack, president and CEO of Arlington, Va.-based USDEC. “Canada’s actions place the U.S. dairy industry at a disadvantage by discouraging utilization of the full use of the TRQs and limiting the market access granted by USMCA. We urge the U.S. government to act immediately to ensure that these provisions are implemented in good faith so that the U.S. dairy industry is able to reap the full range of benefits negotiated by USTR and its interagency partners at U.S. Department of Agriculture.”

USMCA will enter into force July 1, 2020, and contains important provisions to the U.S. dairy industry that will facilitate the smooth flow of U.S. dairy products throughout North America at a time of critical need and economic uncertainty. However, Canada announced the distribution of the TRQs in such a way as to discourage high-value foodservice or retail products from entering the market, USDEC and NMPF said. Most of the TRQs are given to competitors that have no incentive to import products.

“U.S. dairy farmers and cooperatives are ready to help increase deliveries of high-quality U.S. dairy products to the Canadian market, but Canada’s TRQ allocations fall far short of the full potential of its commitments under USMCA,” said Jim Mulhern, president and CEO of Arlington, Va.-based NMPF. “Canada has chosen once again to manipulate its access commitments in order to protect its tightly controlled dairy market, and U.S. farmers will bear much of the brunt of this biased interpretation of USMCA’s dairy provisions. USTR should act quickly to ensure Canada is held strictly responsible for abiding by the intent of USMCA to promote fairer trade between our nations.”