WASHINGTON—The United States announced Tuesday it is once again turning to a dispute settlement panel in its challenge to Canada’s dairy import policies, which Washington says undermine market access that Ottawa agreed to provide.
Canada’s policies limit a large share of American dairy exports—including milk, butter, yogurt, and ice cream—to Canadian processors under a system known as tariff rate quotas (TRQs).
A TRQ applies a preferential tariff to a set volume or quota of product, and a higher duty for amounts above that level.
US officials argue that the system restricts market access for American producers, despite an earlier attempt by Canada to bring its policies into compliance with commitments under the US-Mexico-Canada Agreement.
“Although the United States won a previous USMCA dispute on Canada’s dairy TRQ allocation policies, the Canadian government’s revised measures have not fixed the problem,” said United States Trade Representative Katherine Tai in a statement Tuesday.
She added that the United States is setting up a dispute settlement panel in an attempt to enforce its trade agreements and ensure its workers, farmers, processors, and exporters receive full benefits of the pact.
According to the United States, Canada’s revised measures impose new conditions that effectively prohibit retailers, food service operators, and other types of importers from utilizing quota allocations.
“Through these measures, Canada undermines the market access it agreed to provide in the USMCA,” said the USTR.
The panel is expected to issue a report later this year.
Canadian Trade Minister Mary Ng said she was disappointed by the move.
Ng said in a statement the trade rules were “implemented as intended,” and Ottawa would “continue to defend our supply management system and the market access that Canada and the United States have agreed on.”
“We will stand firm against attempts to renegotiate agreements during the dispute settlement panel process,” she added.
The US has previously raised concerns about Canada’s dairy TRQ allocation measures, with an earlier dispute panel finding them to be inconsistent with Canada’s obligations under the USMCA.
While Canada has since introduced changes to the measures, the US believes that these new policies are still inconsistent with Ottawa’s commitments.
Washington requested consultations on the matter in May and December last year but after talks held this month, both sides were unable to reach a resolution.