The second arbitration proceedings initiated under the North American Free Trade Agreement (USMCA) ended on Friday with an opinion in favor of Canada in the almost three-year-old conflict between Canada and the USA over product quotas in the dairy industry.
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The special regulations group, set up last January at Washington’s request to find a solution to the trade conflict, estimated by two votes to one that Canada’s rules related to dairy product quotas did not conflict with the provisions of the USMCA, it says a press release from the Services of the US Trade Representative (USTR).
Canada says milk quotas may not affect a range of sectors, such as retail or foodservice, something the United States disputes and says they penalize American companies.
American representative Katherine Tai expressed “very disappointment” with the report’s conclusions and said that “the United States continues to have serious concerns about the way in which Canada implements the rules governing access to the dairy market under the Agreement.
Unsurprisingly, Canada was “very satisfied” with the report’s conclusions.
“This is good news for Canada’s dairy industry and for our supply management system,” said Canadian International Trade Minister Mary Ng. “The Government of Canada will continue to preserve and defend the Canadian supply management system, which supports producers by giving them the opportunity to receive a fair income for their work and investments.
The two countries are in dispute over the granting of tariff quotas as provided for in the agreement. This mechanism imposes a zero or low duty rate on imports of certain products up to a certain quantity.
Washington laments the fact that much of these quotas are given to Canadian producers, who tend to import cheap American cheese, effectively shutting out other American products.
This is the second time the United States has established a mediation panel in this dispute. The first was established in May 2021 and concluded in January 2022 that the milk quotas introduced by Canada were in conflict with the provisions of the free trade agreement.
But “the Canadian government’s revised measures have not solved the problem,” Ms. Tai reiterated.
“We will continue to work to resolve this issue with Canada and we will not hesitate to use the tools available to enforce the terms of the agreement and ensure that American workers, businesses and farmers benefit fully from the USMCA,” he said. she added.
The United States had requested consultations with Canada on the issue in May 2022 and again in December. Talks between the two countries on January 17 failed to make any progress.
This conflict was the first after the USMCA, the North American Free Trade Agreement signed by former President Donald Trump, replaced NAFTA signed in 1994 on July 1, 2020.