U.S. challenges Canada's dairy tariff-rate quotas (updated)
09/12/2020 20:45
(Adds details on dairy provisions, Canadian response)
By Eric Beech
WASHINGTON, Dec 9 (Reuters) - The United States said on
Wednesday it was challenging Canada's allocation of dairy
tariff-rate quotas in the U.S.-Mexico-Canada Agreement (USMCA)
dispute settlement system, marking the first enforcement action
under the 5-month-old trade pact.
"Canada's measures violate its commitments and harm U.S
dairy farmers and producers," U.S. Trade Representative Robert
Lighthizer said in a statement.
If the United States and Canada are not able to resolve
Washington's concerns through consultations, the United States
may request the establishment of a USMCA dispute settlement
panel on the issue, the USTR said.
"We are disappointed that Canada's policies have made this
first ever enforcement action under the USMCA necessary to
ensure compliance with the agreement," Lighthizer said.
In Ottawa, Canadian International Trade Minister Mary Ng
told reporters that "I'm very confident that Canada is meeting
its obligations under the USMCA".
Canada's entrenched "supply management" system of steep
tariffs, quotas and price supports for its dairy sector was a
point of contention for Lighthizer during more than two years of
negotiations to revamp the 1994 North American Free Trade
Agreement.
As part of the USMCA deal, Canada agreed to provide U.S.
dairy farmers access to about 3.5% of the $16 billion a year
market allowing for increased exports of some products like skim
milk and milk proteins to Canada. The deal keeps supply
management largely intact. urn:newsml:reuters.com:*:nL1N2E71XD
USTR said Canada has the right under USMCA to maintain
tariff rate quotas (TRQs), which impose tariffs on imports above
certain volumes, on 14 dairy products from ice cream to cheese.
But USTR said that Canada in October published notices reserves
a percentage of the quotas for processors and "further
processors" which it says limits U.S. access and violates USMCA
commitments.
USTR's move won support from top trade lawmakers in
Congress, including both Democrats and Republicans.
Representative Kevin Brady, the top Republican on the tax-
and trade-focus House Ways and Means Committee, said Lighthizer
"is right to use our powerful new dispute settlement system in
USMCA to challenge Canada’s discrimination against American
dairy products.
Representative Richard Neal, the panel's Democratic chairman
concurred, adding that he looked forward to future USTR
enforcement actions against Mexico "that will effectively
support Mexico’s labor reform and address longstanding and
persistent labor violations in Mexico."
(Additional reporting by David Lawder in Washington and David
Ljunggren in Ottawa; editing by Jonathan Oatis and Grant McCool)
((eric.beech@thomsonreuters.com; 202-898-8322; Reuters
Messaging: eric.beech.reuters.com@reuters.net))