The White House has initiated a dispute process against the Canadian dairy industry, triggering for the first time the formal mechanism of the new U.S.-Mexico-Canada Agreement (USMCA).
The U.S. dairy industry has long complained about policies in Canada that prevent sales in their market, and the issue has won the support of many members of Congress who represent major dairy- producing states.
Canada’s dairy protection was one of the key sticking points during negotiations on the trade deal. The U.S. alleges in the dispute that Canada is not upholding the terms of the agreement.
“Launching the first panel request under the agreement will ensure our dairy industry and its workers can seize new opportunities under the USMCA to market and sell U.S. products to Canadian consumers,” said U.S. Trade Rep. Katherine Tai.
The U.S. alleges Canada has used a complex system of tariff-rate quotas that sets aside a share of the dairy market exclusively for Canadian dairy processors, and that the system is in violation of its trade agreement with the U.S. and Mexico.
The complaint predates the current administration. The Trump administration filed the initial complaint in December. The U.S. and Canada discussed the complaint then but failed to resolve it.
This escalation of the dispute requests review by a formal panel. If the U.S. prevails with the panel, Canada will have to bring its practices into compliance. If Canada does not comply, the U.S. could eventually impose tariffs.
“Canada is disappointed that the United States has requested a dispute settlement panel,” said Canadian Trade Minister Mary Ng. She said Canada is “confident that our policies are in full compliance,” with the agreement and “will vigorously defend our position during the dispute settlement process.”
Source: Wall Street Journal