ICYMI: Senator Murray urged the U.S. to take action to protect dairy producers in Washington state and across the country – MORE HERE
(Washington, D.C.) – Today, U.S. Senator Patty Murray (D-WA) applauded the announcement that the United States has prevailed in the first dispute settlement panel proceeding ever brought under the United States-Mexico-Canada Agreement (USMCA). A USMCA panel agreed with the U.S. that Canada is breaching its USMCA commitments to give U.S. dairy producers fair market access. Prior to this decision, Canada was not complying with the trade agreement, distorting access to Canadian markets for U.S. dairy producers and workers. The USMCA panel decision, once enforced, will help open up Canadian markets to Washington state dairy farmers and workers.
The decision comes following Senator Murray writing a letter in August 2020 to then Agriculture Secretary Sonny Perdue and then U.S. Trade Representative Ambassador Robert Lighthizer expressing concerns about Canadian dairy tariff and pricing compliance with the USMCA and urging the U.S. government to push for compliance with the trade agreement.
“We fought for enforcement of provisions in the USMCA to make sure our dairy producers were operating on a fair playing field because, simply put, Canada wasn’t playing by the rules here,” said Senator Murray. “I’m glad to see the USMCA panel taking action to ensure Canada follows the trade agreement and gives Washington state dairy producers a chance to compete in Canadian markets. As a voice for all our state’s livestock and agricultural producers, I will always fight to make sure Washington state farmers get the support they need to succeed.”
Following Senator Murray’s letter, the U.S. requested that a panel be established on May 25, 2021 under Chapter 31 of the USMCA. The panel issued its final report to the parties on December 20, 2021. Under USMCA rules, Canada has 45 days from the date of the final report to comply with the Panel’s findings. From January through October 2021, the United States exported $478 million of dairy products to Canada, which is the third largest export destination for U.S. dairy products.
A tariff-rate quota (TRQ) applies a preferential rate of duty to an “in-quota” quantity of imports and a different rate to imports above that in-quota quantity. Under the USMCA, Canada has the right to maintain 14 TRQs on the following dairy products: milk, cream, skim milk powder, butter and cream powder, industrial cheeses, cheeses of all types, milk powders, concentrated or condensed milk, yogurt and buttermilk, powdered buttermilk, whey powder, products consisting of natural milk constituents, ice cream and ice cream mixes, and other dairy.
In notices to importers that Canada published in June and October 2020 and May 2021 for dairy TRQs, Canada set aside and reserved a percentage of the quota for processors and for so-called “further processors,” contrary to Canada’s USMCA commitments. As a result of this restriction, Canada has been undermining the value of its dairy TRQs for U.S. farmers and exporters since entry into force of the USMCA by limiting access to in-quota quantities negotiated under the Agreement.
A USMCA panel agreed with the United States that Canada’s allocation of dairy TRQs, specifically the set-aside of a percentage of each dairy TRQ exclusively for Canadian processors, is inconsistent with Canada’s commitment in Article 3.A.2.11(b) of the USMCA not to “limit access to an allocation to processors.” The panel additionally found that the agreement makes no distinction between initial processors and “further processors”, and that therefore, the restriction in Article 3.A.2.11(b) applies to all processors, including specific subsets.
A copy of the panel report is available here.
###
English 
Spanish