Home News Ag Economics U.S. Retaliatory Tariffs Required as Canada Refuses USMCA Obligations

U.S. Retaliatory Tariffs Required as Canada Refuses USMCA Obligations

The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) today called on the U.S. government to levy retaliatory tariffs on Canada after Ottawa made clear that it refuses to meet its signed treaty obligations under the U.S.-Mexico-Canada Agreement (USMCA) concerning dairy market access.

In January, a USMCA dispute resolution panel initiated by the U.S. found that Canada’s dairy tariff-rate quotas (TRQs) system violates the terms of USMCA. Canada issued a new TRQ proposal in March which included only inconsequential changes. Today’s announcement shows no indication that Canada intends to comply with its USMCA commitments on dairy TRQs.

“Canada made a clear choice to thumb its nose at both the United States government and its international treaty obligations. It has completely disregarded the USMCA agreement signed just a few short years ago,” said Jim Mulhern, president and CEO of NMPF. “Ottawa’s decision today is clearly designed to test our resolve by doubling down on its longstanding dairy trade violations, ignoring both the spirit and the letter of its trade agreements. That decision demands retaliatory action by the U.S. government. Otherwise, our trade agreements will be seen as toothless before the ink is dry.”

“USTR, USDA and scores of members of Congress from both side of the aisle have worked diligently to ensure American dairy farmers and manufacturers benefit from USMCA. They deserve our deepest thanks for bringing us this far,” said Krysta Harden, president and CEO of USDEC. “Unfortunately, Canada simply refuses to institute real reform, and such actions must have consequences. Retaliatory tariffs are both fair and necessary in this circumstance, as clearly provided for by USMCA.”

As an April 5 bipartisan letter on the matter sent to Ambassador Tai and Secretary Vilsack from several leading members of the U.S. House of Representatives stated, “A deal’s a deal; it’s not too much to ask that our trading partners live up to their end of the bargain.”

On April 19, USDEC and NMPF filed public comments on the matter with Global Affairs Canada. The filing noted, “Canada’s proposed allocation and administration policy changes in response to the CUSMA report continue to fall woefully short of full compliance with Canada’s CUSMA obligations. This has consequences not only for the agreed-upon CUSMA benefits denied U.S. and Canadian stakeholders, but also for the credibility of CUSMA enforcement procedures undergoing their first test in this dispute and for the success of CUSMA itself. We urge Canada to consider its larger interest in the success of the CUSMA and modify its dairy TRQ allocation and administration policies to give effect, in good faith, to Canada’s CUSMA commitments.”

The International Dairy Foods Association (IDFA) also shared their distaste with Canada’s actions. “This outcome is completely unacceptable,” said Michael Dykes, D.V.M., president and CEO of IDFA. “Canada’s publication today clearly shows they are ignoring their trade commitments agreed to in the USMCA and refusing to administer their dairy TRQs in a manner compliant with the agreement. The U.S. dairy industry has made clear from the start that U.S. dairy exporters demand real TRQ reform that will permit the market access Canada agreed to. The U.S. met with Canada a week ago on this very matter and expected a good faith effort. Instead, Canada continues to deny U.S. dairy products from reaching their full capacity under the terms of the deal and continues to deny the existence of any obligations. IDFA thoroughly rejects the Canadian policy published today and demands a swift response from USTR.”

He continued, “Canada cannot be permitted to blatantly disregard their trade obligations after having been found non-compliant by a neutral and expert panel, only to then ignore their obligations without consequence. We are pleased to see USDA responding forcefully and hope that USTR does the same. Our government must hold Canada accountable.”

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