An arbitration group ruled on Tuesday that Canada has been improperly restricting access to its market for U.S. dairy products in violation of its U.S.-Mexico-Canada Agreement tariff-rate quotas commitments. The case is the first of any kind brought before a USMCA Dispute Settlement Panel and was launched with broad bipartisan support last spring at the urging of dairy groups, such as the National Milk Producers Federation and U.S. Dairy Export Council.
"The United States and Canada negotiated specific market access terms covering a wide variety of dairy products, but instead of playing by those mutually agreed upon rules, Canada ignored its commitments," said NMPF CEO Jim Mulhern. "As a result, U.S. dairy farmers and exporters have been unable to make full use of USMCA's benefits."
Under the USMCA, U.S. dairy producers were granted increased market access to Canada by way of preferential tariff rates for in-quota quantities of certain products. Less than a year after implementation of the agreement, the Biden administration requested a dispute settlement panel be established to consider Canada's failure to comply with the dairy TRQ provisions.
The panel determined that Canada's implementation of the TRQs restricted access of U.S. dairy products by setting aside quotas specifically for Canadian processors. Per the findings of the report, Canada must now come into compliance with its dairy TRQ obligations within the next month.
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