US files formal trade complaint against Canada over dairy restrictions

US is challenging Canada's dairy tariff-rate quota allocation measures, which deny allocation access to eligible applicants, including retailers, foodservice operators, and other type of importers

US Trade Representative Katherine Tai on Wednesday announced that the United States is, for the second time, requesting dispute settlement consultations with Canada under the United States - Mexico - Canada Agreement (USMCA) to address dairy restrictions by Canada that are contrary to its USMCA commitments. Specifically, the United States is challenging Canada's dairy tariff-rate quota (TRQ) allocation measures, which deny allocation access to eligible applicants, including retailers, foodservice operators, and other types of importers, and impose new conditions on the allocation and use of the TRQs. According to an official release by the US Trade Representative, the United States is also challenging Canada's failure to fully allocate its annual dairy TRQs; Canada is instead parceling out a few months' quota at a time. Through these measures, Canada undermines the market access that it agreed to provide in the USMCA. "I am deeply troubled by Canada's decision to expand its dairy tariff-rate quota restrictions," Ambassador Katherine Tai said. "We communicated clearly to Canada that its new policies are not consistent with the USMCA and prevent U.S. workers, producers, farmers, and exporters from getting the full benefit of the market access that Canada committed to under the USMCA. We will continue to work with USDA to ensure that our dairy industry can bring a wide range of high-quality American products to Canadian customers." "Canada's protectionist dairy policies are a top concern for the U.S. Department of Agriculture under the Biden-Harris Administration," Secretary of Agriculture Tom Vilsack said. "Canada has failed to honor and implement its USMCA commitments by removing the trade restrictions that disadvantage and deter U.S. dairy producers and exporters from enjoying real and meaningful access to the Canadian market. Obtaining that access remains a top priority for the Administration and we are considering all options available to achieve this objective." 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.

If the United States and Canada are not able to resolve U.S. concerns through consultations, the United States may request the establishment of a panel under the USMCA, the office of the US trade representative said.