USMCA Dispute Panel Initiated over Dairy TRQs

The United States Trade Representative (USTR) announced that the United States has requested and established a dispute settlement panel under Chapter 31 (Dispute Settlement) of the United States-Mexico-Canada Agreement (USMCA) to review measures adopted by the Government of Canada that undermine the ability of American dairy exporters to sell a wide range of products to Canadian consumers.

The US is challenging Canada’s allocation of dairy tariff-rate quotas (TRQs), specifically the set-aside of a percentage of each dairy TRQ exclusively for Canadian processors which denies the ability of U.S. dairy farmers, workers, and exporters to utilize the TRQs to realize the full benefit of the USMCA.

Canada has the right to maintain 14 TRQs on the following dairy products under USMCA:

  • Milk
  • Cream
  • Skim milk powder
  • Butter and cream powder
  • Industrial cheeses
  • Cheeses of all types
  • Milk powders
  • Concentrated or condensed milk
  • Yogurt and buttermilk
  • Powdered buttermilk
  • Whey powder
  • Products consisting of natural milk constituents
  • Ice cream and ice cream mixes
  • Other dairy

The U.S. and Canada held consultations on December 21, 2020 but were not able to resolve the dispute. Under the USMCA dispute settlement procedures, the panel is established upon delivery of the request.  The panel is expected to issue a report later this year.

Under the CUSMA dispute settlement chapter, a panel is automatically established upon receipt of a request.  Under the timelines specified by the Agreement, the parties have up to 35 days to finalize the composition of a panel.  The dispute settlement process could take up to 8 months to conclude (in this case, up to December 2021).

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