US and Canada quarrel over dairy import tariffs

The United States and Canada are at odds with each other about Canada’s import tariffs on American dairy products. According to Canada, there is nothing wrong and they comply with the requirements of the USMCA treaty. The American government feels differently.

During the review of the North American Free Trade Agreement established in 1994, Canada’s strict stock management system, consisting of tariffs, quotas and price support measures, was under attack. With the new USMCA agreement (United States-Mexico-Canada), Canada still has the right to apply tariffs on imports of surplus products at fixed volumes of 14 dairy products.

According to the United States Trade Representative (USTR), Canada reserves a percentage of these tariffs for processors and so-called ‘further processors’, which, according to USTR spokesman Robert Lightizer, is not in line with the agreements and would harm American dairy farmers and producers. The Canadian minister of International Trade, Mary, says that she is convinced that Canada is complying with the demands of the USMCA agreement.

Under the renewed trade agreement, a dispute settlement committee is set up to deal with issues such as these. Lightizer indicates that he is disappointed that this USMCA panel, after only 5 months, should take action. In the US, the USTR has already received support from the main trade legislators in Congress who are both Republican and Democrat. According to the highest Republican on the House Ways and Means Committee, Kevin Brady, Lightizer is right to use the dispute panel.

In accepting the renewed deal, Canada agreed to the fact that American dairy farmers had access to 3.5 percent of the Canadian dairy market, which accounts for an annual turnover of $ 16 billion. This is likely to increase exports of products such as skimmed milk and milk proteins from the USA to Canada. In spite of that, the strict stock management of the Canadians would hardly be called into question.