Canada wins dairy dispute with US

While we, of course, have nothing but fondness for our southern neighbours, we also love beating them on the hockey rink, the soccer pitch, and in trade dispute court.

Driving the news: Canada came out on top of a major trade dispute with the US over dairy imports, with the U.S.-Mexico-Canada Agreement’s (USMCA) dispute resolution panel finding that Canada’s dairy policies were “not inconsistent” with the trade deal’s rules.

Catch up: US complaints centre on Canada’s use of tariff rate quotas (TRQs), which control how much of certain US dairy products can enter Canada at a lower tariff rate.

  • According to the US, Canada uses TRQs to make it more difficult for US dairy exporters to compete in the Canadian market and unfairly advantage Canadian producers.

  • Specifically, the US argues Canada allocates too much of its TRQs to Canadian dairy processors, who then only import the bare minimum, rather than distributors or retailers who might buy more US dairy.

Why it matters: Canadian trade reps say the government already operates in compliance with the USMCA, and that even if their policy benefits Canadian farmers, there’s nothing in the trade deal that forbids it — the new ruling is a validation of that argument.

Bottom line: The decision is a win for Canadian farmers, but the rift has certainly put a sour taste (no pun intended) in the mouth of the country's most important trade partner.—LA