The Washington, D.C.-based International Dairy Foods Association (IDFA), speaking on behalf of the U.S. dairy supply chain, said on May 16 that it rejects the government of Canada’s changes to how dairy tariff rate quotas (TRQs) are allocated under the United States-Mexico-Canada Agreement (USMCA).

In December 2021, a USMCA dispute panel found Canada to be noncompliant with its dairy TRQ commitments under USMCA. Canada responded to the ruling with plans showing it was unwilling to reform their trade-distorting practices on dairy, IDFA said. On May 16, Canada made good on its plan to ignore the dispute panel and published changes on how the government will allocate dairy TRQs going forward.

IDFA said it rejects these changes and calls on the Office of the U.S. Trade Representative (USTR) to hold Canada accountable for trade-distorting practices that go against both the intent and the letter of the USCMA agreement.

“This outcome is completely unacceptable,” said Michael Dykes, D.V.M., president and CEO of IDFA. “Canada’s publication today clearly shows they are ignoring their trade commitments agreed to in the USMCA and refusing to administer their dairy TRQs in a manner compliant with the agreement.

“The U.S. dairy industry has made clear from the start that U.S. dairy exporters demand real TRQ reform that will permit the market access Canada agreed to,” he added. “The U.S. met with Canada a week ago on this very matter and expected a good faith effort. Instead, Canada continues to deny U.S. dairy products from reaching their full capacity under the terms of the deal and continues to deny the existence of any obligations. IDFA thoroughly rejects the Canadian policy published today and demands a swift response from USTR.”

In a joint press release, the U.S. Dairy Export Council (USDEC) and the National Milk Producers Federation (NMPF), both headquartered in Arlington, Va., called on the U.S. government to levy retaliatory tariffs on Canada.

“USTR, USDA and scores of members of Congress from both sides of the aisle have worked diligently to ensure American dairy farmers and manufacturers benefit from USMCA. They deserve our deepest thanks for bringing us this far,” said Krysta Harden, president and CEO of USDEC. “Unfortunately, Canada simply refuses to institute real reform, and such actions must have consequences. Retaliatory tariffs are both fair and necessary in this circumstance, as clearly provided for by USMCA.”

USDEC and NMPF said they filed public comments on the matter on April 19 with Global Affairs Canada. The filing noted, “Canada’s proposed allocation and administration policy changes in response to the CUSMA report continue to fall woefully short of full compliance with Canada’s CUSMA obligations. This has consequences not only for the agreed-upon CUSMA benefits denied U.S. and Canadian stakeholders, but also for the credibility of CUSMA enforcement procedures undergoing their first test in this dispute and for the success of CUSMA itself. We urge Canada to consider its larger interest in the success of the CUSMA and modify its dairy TRQ allocation and administration policies to give effect, in good faith, to Canada’s CUSMA commitments.”

Jim Mulhern, president and CEO of NMPF, said: “Canada made a clear choice to thumb its nose at both the United States government and its international treaty obligations. It has completely disregarded the USMCA agreement signed just a few short years ago.

“Ottawa’s decision today is clearly designed to test our resolve by doubling down on its longstanding dairy trade violations, ignoring both the spirit and the letter of its trade agreements,” he continued. “That decision demands retaliatory action by the U.S. government. Otherwise, our trade agreements will be seen as toothless before the ink is dry.”