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Biden administration following USMCA regarding Canada dairy

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Last month, the U.S. Trade Representative’s office initiated the second U.S.-Mexico-Canada Agreement dispute regarding Canadian dairy tariff-rate quota policies. The U.S. is requesting dispute settlement consultations regarding Canada’s dairy tariff-rate quota (TRQ) allocation measures. The TRQs deny allocation access to eligible applicants, including retailers, food service operators, and other types of importers, and impose new conditions on the allocation and use of the TRQs. U.S. Representative Ron Kind (D-WI) said it’s a matter of getting Canada to comply with the terms of the USMCA.

“We’ve been having some problems with them complying with the terms of the trade agreement that we struck with them a couple of years ago,” Kind said. “And it’s all black and white language, they know what they need to do. They’ve been hedging their bets, but I’m glad the Biden administration is treating this seriously. They are enforcing it the way it’s supposed to be. That was one of the reasons it took a little longer to get the Mexico-Canada-U.S. trade agreement finalized, is making sure we had strong enforcement language in it so that these terms would mean something. And that’s what we’re using right now to get Canada to comply. They know what they need to do, and I expect that the end of the day, they’ll get there.”

Should the issue escalate, Kind said there are actions the U.S. can take under the USMCA.

“We have trade remedies, we can hit them with some sanctions, specifically targeted to their industry and some tariffs that are available to again under the terms of the trade agreement, so that there should be no surprises, that if you’re not complying,” Kind said. “And we’re not at that step yet, we’re still in earnest discussions with them as they say, but we hope to get this resolved shortly.”

This is the second dispute the United States has brought under the USMCA regarding Canada’s allocation of its dairy TRQs. While the United States prevailed in the first dispute, Canada’s implementation measures and other actions have moved Canada further away from full compliance with its USMCA obligations, according to USTR.