The USTR requested a panel against Canada in a dairy case under the Agreement between Mexico, United States and Canada (USMCA).

Therefore, this will be the first time that a panel reviews the fulfillment of the commitments of a member of the USMCA.

Specifically, the United States challenges Canada’s decision, set out in notices issued last June and October, as well as earlier this month, to reserve a percentage of each of its quotas (tariff quotas) for dairy products exclusively for dairy products. Canadian processors.

For the USTR, these measures negate the ability of US dairy producers, workers, and exporters to use TRQs and obtain the full benefits of the USMCA.

«One of the Biden-Harris Administration’s top priorities is to fully enforce the USMCA and ensure that it benefits American workers,» USTR head Katherine Tai said in a press release.

«The launch of the first panel application under the agreement will ensure that our dairy industry and its workers can take advantage of new opportunities under the USMCA to market and sell US products to Canadian consumers,» she added.

USMCA

A TRQ applies a preferential rate of duty to an “in-quota” quantity of imports and a different rate to imports above that in-quota quantity.

According to the USMCA, Canada is entitled to maintain 14 tariff quotas on dairy products: milk, cream, skimmed milk powder, butter and cream powder, industrial cheeses, cheeses of all kinds, powdered milk, concentrated or condensed milk, yogurt and buttermilk powder, buttermilk, whey powder, products consisting of natural components of milk, ice cream and mixes for ice cream and other dairy products.

In the notices to importers that Canada published in June and October 2020 and May 2021 for tariff quotas for dairy products, Canada sets aside and reserves a percentage of the quota for processors and for so-called “additional processors”, against of the USMCA commitments, according to the US government.

But this restriction undermines, according to the USTR, the value of Canada’s dairy TRQs for US farmers and exporters by limiting their access to quota quantities negotiated under the USMCA.

Process

The United States requested consultations with Canada on December 9, 2020.

The Parties held consultations on December 21, 2020, but did not resolve the dispute.

This is the first request for the establishment of a panel submitted pursuant to Chapter 31 (Dispute Settlement) of the USMCA, specifically Article 31.6.1.

According to the USMCA’s ​​revised dispute resolution procedures, the panel is established upon receipt of the request (article 31.6.4).

According to the schedule provided in the USMCA, the panel is expected to issue a report later this year.