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January 07, 2022

Canada and U.S. are both claiming victory in CUSMA trade panel’s dairy dispute ruling

A dispute settlement panel issued its report under the Canada-United States-Mexico Agreement (CUSMA) regarding Canada’s administration of its dairy tariff rate quota (TRQ) policies.

The panel agreed with the United States that Canada is breaching its commitments under CUSMA by reserving most of the in-quota quantity in its TRQs for the exclusive use of Canadian processors. United States Trade Representative Katherine Tai announced that the United States has prevailed in this first dispute settlement panel proceeding ever brought under CUSMA.

Canada’s Minister of International Trade, Mary Ng, issued a statement in response to the release of the panel’s report, saying “We are pleased with the dispute settlement panel’s report, which ruled overwhelmingly in favour of Canada and its dairy industry. In particular, it is important to note that the panel expressly recognizes the legitimacy of Canada’s supply management system. The panel also confirms that Canada has the discretion to manage its TRQ allocation policies under CUSMA in a manner that supports Canada’s supply management system.”

“We have taken note of the panel’s finding regarding Canada’s practice of reserving TRQ pools for the use of dairy processors. Our government, as it proceeds with the next steps in the process, will continue to work closely with the Canadian dairy industry.”

Within 45 days of the final report-no later than February 3, 2022-the parties to the dispute settlement panel must endeavour to agree on a resolution of the dispute

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