Canada undermines U.S. dairy provisions of USMCA

Newly released Canadian tariff-rate quotas discourage U.S. dairy retail products from entering Canada, depriving U.S. dairy farmers and exporters the market access USMCA promised.

The new U.S.-Mexico-Canada Agreement (USMCA) goes into effect on July 1 and Canada is already undermining terms of the deal by limiting U.S. access to a Canadian dairy market that remains tightly controlled.

Canada on Tuesday released details of tariff-rate quotas (TRQ) that are supposed to give U.S. dairy suppliers more access to the Canadian market under agreed-upon terms of USMCA. In reality, Canada's new TRQs discourage U.S. dairy retail products and high-value food service from entering Canada.

In a Wednesday news release, the U.S. Dairy Export Council (USDEC) and National Milk Producers Federation (NMPF) sharply criticized Canada's allocation of its tariff-rate quotas (TRQ).

"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 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."

USMCA contains important provisions to the U.S. dairy industry that are supposed to facilitate the smooth flow of U.S. dairy products throughout North America at a time of critical need and economic uncertainty.

However, Canada has announced the distribution of the TRQs in such a way as to discourage high-value food service or retail products from entering its domestic market. 

USDEC and NMPF have repeatedly warned that the full benefits of USMCA will require careful monitoring and stringent enforcement of Canada's USMCA commitments.

For example, in a January interview with RFD-TV captured in a tweet below, Vilsack cautioned that ratification of USMCA is not enough. He said USDEC will closely monitor the dairy details of implementation to ensure USMCA delivers as promised. 

"We are keeping a wary eye on our Canadian friends," Vilsack told RFD-TV in January, "because they do, from time to time, reinterpret agreements, and cause the market not to be as open as we'd like it to be."

#USMCA solidifies the U.S. dairy industry’s No. 1 export market in Mexico and opens up to a certain extent the Canadian market, USDEC’s Tom Vilsack tells @OfficialRFDTV. His comments come the same day President Trump signs trade deal. pic.twitter.com/hYhrcvta64

— U.S. Dairy Exporter (@USDairyExporter) January 29, 2020

In the news release, NMPF said if Canada doesn't come through as promised, U.S. dairy farmers will pay the price.

"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 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."

Mark O'Keefe is vice president of editorial services at the U.S. Dairy Export Council.

Learn more:

• U.S. Dairy Industry Criticizes Canada TRQ Allocations, Urges U.S. Government to Insist on Good Faith Implementation of USMCA
• Why USMCA is a big win for U.S. Dairy (VIDEOS)
• Vilsack: Agreement makes USMCA "even better deal" for U.S. dairy industry

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The U.S. Dairy Export Council fosters collaborative industry partnerships with processors, trading companies and others to enhance global demand for U.S. dairy products and ingredients. USDEC is primarily supported by Dairy Management Inc. through the dairy farmer checkoff. How to republish this post.