Canada’s dairy sector had the honour last week of triggering the first US enforcement action under CUSMA, the country’s new free trade deal with the US and Mexico that took effect July 1.
US Trade Representative Robert Lighthizer says Canada’s reservation of tariff rate quotas (TRQs) specifically for dairy processors prevents the US dairy sector from accessing the market in Canada. Fourteen types of products are covered under the TRQs.
“Canada’s measures violate its commitments and harm US dairy farmers and producers,” Lighthizer claims. “We are disappointed that Canada’s policies have made this first ever enforcement action under the USMCA necessary to ensure compliance with the agreement.”
Lighthizer issued a letter December 9 demanding consultations with Canada; should these discussions not work, the US may escalate the matter to a dispute settlement panel.
Dairy Farmers of Canada, which objected to the implementation of CUSMA with only a month to go before the end of the last dairy year, dismissed the move as mere politics.
“TRQ allocations by the federal government are consistent with the terms of the agreement,” says DFC CEO Jacques Lefebvre. “Anyone who reads the text of CUSMA would see this, but the outgoing administration may feel that, by taking this approach, it will endear itself with family-owned dairy farms in the US.”
Canada’s own government recently endeared itself to dairy producers in this country by announcing an accelerated timeline for delivering compensation in respect of market access granted under free trade agreements with Pacific trading partners and the EU. It has yet to determine compensation for market access under CUSMA, which industry estimates say have cost the dairy sector close to $9 million this year.