US Politicians and Industry Groups Complain Ottawa is Not Living Up to Promise
The United States has threatened trade action against Canada over the country’s handling of dairy imports under the United States-Mexico-Canada Agreement (USMCA). The move comes after US politicians and industry groups complained that Ottawa was not making good on its promise to loosen restrictions on dairy imports.
U.S. Trade Representative Set to Announce Enforcement Action
According to reports from Politico and Bloomberg News, US Trade Representative Robert Lighthizer is set to announce the enforcement action soon. This would represent the first enforcement action under the new trade deal.
Canadian Government’s Quota Allocation Plan Criticized by US Industry Groups
The Canadian government’s decision to give much of the new quota to domestic dairy processors through import permits has riled US politicians and industry groups. The concern is that Canadian processors are more likely to import lower-value milk products and turn them into higher-value, retail-ready products, rather than just importing high-value products.
U.S. Dairy Export Council Calls Out Canada’s Quota Allocation Plan
The U.S. Dairy Export Council described Canada’s quota allocation plan as a show of "disregard for its USMCA dairy commitments." Jaime Castaneda, the council’s senior vice-president of trade policy, said in a statement that Canada was "implementing its dairy tariff rate quota system in a manner designed to discourage full use of U.S. market access rights."
Bipartisan Pressure on Lighthizer
For months, Lighthizer has been under significant bipartisan pressure from Congress to address the issue. A group of 25 senators wrote to Lighthizer in August, asking him to use measures laid out in USMCA "to hold our trading partners accountable to their trade commitments."
Canadian Government Denies Allegations
Canadian International Trade Minister Mary Ng’s office declined to comment on the reports of the coming action. But spokesperson Youmy Han denied allegations that Canada isn’t making good on its dairy commitments under the agreement.
Expert Weighs In: Dispute Over Compliance with USMCA
Nicolas Lamp, a former WTO dispute settlement lawyer and expert in international trade law, said the dispute over whether Canada is in compliance with USMCA is "a really tricky question." He added that while Canada may not be following the spirit of the agreement, he doesn’t see how they’re violating the letter of the agreement.
What’s Next?
The move by Lighthizer represents a significant escalation of tensions between the two countries. It remains to be seen what actions will follow and whether the dispute can be resolved through diplomacy or if it will lead to further trade restrictions and potential economic consequences for both countries.
Timeline of Events
- June: Canadian government announces quota allocation plan, giving much of the new quota to domestic dairy processors
- August: 25 senators write to Lighthizer asking him to use measures laid out in USMCA to hold trading partners accountable
- Present day: Reports suggest Lighthizer will announce enforcement action soon
