U.S. Requests Dispute Settlement Panel On Dairy TRQs Under CUSMA

On Tuesday, Minister of Small Business, Export Promotion and International Trade Mary Ng issued the following statement in response to the United States’ request for the establishment of a dispute settlement panel regarding Canada’s administration of its dairy tariff rate quota (TRQ) policies under the Canada-United States-Mexico Agreement (CUSMA):

“Canada is a strong proponent of rules-based multilateral trade and believes that international trade will play an important role in the global recovery from COVID-19.

“We take our obligations under international agreements seriously. This includes those under CUSMA with the United States, our closest trading partner.

“Canada is disappointed that the United States has requested a dispute settlement panel.

“Under CUSMA, Canada agreed to provide some additional market access to the United States for dairy while successfully defending our supply management system and dairy industry.

“We are confident that our policies are in full compliance with our CUSMA TRQ obligations, and we will vigorously defend our position during the dispute settlement process.

“Our government will continue to stand up for Canada’s dairy industry, farmers and workers and will continue to preserve, protect and defend our supply management system.”

Tuesday's announcement follows dispute settlement consultations that took place on December 21, 2020. The United States alleged that Canada’s allocation of dairy TRQs is inconsistent under certain CUSMA provisions. Under the CUSMA dispute settlement chapter, a panel is automatically established upon receipt of a request. Under the timelines specified by the Agreement, the parties have up to 35 days to finalize the composition of the panel.

The dispute settlement process could take up to 8 months to conclude (in this case, up to December 2021).

Dairy Farmers of Canada (DFC) President Pierre Lampron issued the following statement:

“Canada’s allocation of its TRQs is consistent with the terms of CUSMA/USMCA, thus we believe the Canadian government has a solid case to present before the panel and ultimately our right to administer TRQs will be recognized.”