News USMCA
US and Canada in dispute over dairy tariffs
The United States and Canada are at loggerheads over the import tariffs that Canada applies on American dairy. According to Canada, there is nothing wrong and they meet the requirements of the USMCA treaty. The US government thinks otherwise.
During the revision of the 1994 North American Free Trade Agreement, Canada's strict inventory management system consisting of tariffs, quotas and price support measures, among other things, came under fire. With the new USMCA (United States-Mexico-Canada) agreement, Canada still has the right to apply tariffs on imports of surplus on fixed volumes of 14 dairy products.
America disadvantaged?
According to the United States Trade Representative (USTR), Canada reserves a percentage of these tariffs for processors and so-called 'further processors', which according to USTR spokesman Robert Lighthizer is not in line with the agreements and the country would harm American dairy farmers and producers. Canadian Secretary of International Trade Mary says she is confident Canada is complying with the requirements of the USMCA agreement.
The renewed trade agreement works with a disputes committee that deals with topics such as these. Lighthizer is disappointed that this USMCA panel has already had to take action after only 5 months. In the US, the USTR has already received support from key trade lawmakers in Congress who are both Republican and Democrat. According to the top Republican on the House Ways and Means Committee, Kevin Brady, Lighthizer is right to use the dispute panel.
Canadian market entry
By accepting the renewed deal, Canada agreed to grant US dairy farmers access to 3,5% of Canada's $16 billion annual dairy market. As a result, there is a chance that the export of products such as skimmed milk and milk proteins from the US to Canada will increase. Despite that, the Canadians' strict inventory management would hardly be compromised.
Jorine Cosse
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