The dairy dispute between the United States and Canada turns sour

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A long-running dispute between the United States and Canada over dairy imports reached new heights this week, as the Biden administration sparked a formal examination of the issue under the still young trade treaty that officially replaced the North American Free Trade Agreement (NAFTA) last summer.

The move marks the first time that a signatory to the United States-Mexico-Canada Agreement (USMCA) has undertaken such a review under the New Trade Pact. It is, in short, a formal accusation by the United States that its northern neighbor is in violation of the treaty.

International trade disputes tend to be rickety, acronym-riddled affairs, and this one is no different. The US dairy industry has complained for years about what it calls protectionist trade policies in Canada, where the dairy industry operates under what is called a “supply management system”, which sets minimum prices and limits production and imports as a means of controlling supply. In this particular case, the United States specifically challenges Canada’s tariff rate quotas, or tariff quotas, which impose a lower rate of tax on a specified quantity of imported goods, and then a higher rate on goods above that initial threshold. The United States claims that Canada allocates these dairy TRQs in a manner that unfairly favors Canadian processors over US processors and producers.

“A top priority for the Biden-Harris administration is to fully enforce USMCA and ensure that it benefits American workers,” said Katherine Tai, U.S. Trade Representative and Senior Trade Advisor to President Joe Biden , in a press release. “The launch of the first panel request under the agreement will allow our dairy industry and its workers to seize new opportunities under USMCA to market and sell US products to Canadian consumers.

The Canadian government, of course, sees it differently from the Biden administration. (Rightly, the two countries give themselves the first place in the acronym of the treaty: it is the USMCA in the United States and CUSMA Canada.) “We are confident that our policies are fully in line with our CUSMA TC obligations, and we will vigorously defend our position during the dispute resolution process,” said Canada’s Minister of Trade, Mary Ng, in his own statement.

Dairy tariff quotas were a point of friction between the two countries during the trade negotiations which led to the new treaty, and also remained a point of contention even after the entry into force of the pact in the summer of 2020. In December last, then-President Donald Trump’s trade representative filed a first complaint about the TRQ issue – also a first under USCMA – and the two countries met later in the month to discuss , but have not been able to reach an agreement.

A lot, obviously, has changed since the Trump administration (unwillingly) has given way to the Biden administration, but not the official U.S. position on this particular issue. Indeed, it is a rare example of bipartisan coherence in Washington. The Trump administration started the fight with the backing of Republicans and Democrats; the Biden administration is also lobbying with the support of members of both parties.

One of the reasons for this is that the American dairy industry covers a large part of the country and has a strong presence in the blue states like California and New York, the red states like Texas and Idaho and the fields of battle like Wisconsin and Pennsylvania. While the industry tends to favor the GOP when it comes to its political spending, the fact remains spread out his campaign cash to Democrats too. In the 2020 election, for example, he gave Donald Trump nearly $ 400,000, Joe Biden around $ 200,000, and Senator Bernie Sanders around $ 85,000, according to the Center for Responsive Politics. Another contributing factor, of course, could very well be that Agriculture Secretary Tom Vilsack was one of the main lobbyists for the US dairy industry between his first period of service at the agency under the president. of the Barrack Obama era and its current under Biden. Vilsack, of course, knows the complaints of his former colleagues intimately.

Such bipartisan support, however, belies criticism from labor groups and their allies who believe the United States should be learning of the Canadian dairy industry instead of attacking it. “The US government has been trying to dismantle Canada’s federal and sub-federal supply management systems for years, not for the benefit of American farmers or workers, but rather the interests of dairy companies,” a group of about 20 organizations, including the Institute for Agriculture and Trade. Monitoring policies and food and water, wrote to Vilsack and Tai earlier this year in a letter asking them to drop the problem. “Continuing to pursue this complaint is clearly out of step with the new administration’s stated commitments to reform the United States’ trade agenda to be pro-workers rather than a status quo approach that actively favors workers. multinational companies. “

According to the USCMA letter, the United States’ formal request for a review panel automatically triggers the establishment of a panel, which will now occur within the next 30 days. The panel will then issue a preliminary report in the coming months and a final decision by the end of the year, likely around November. If the panel ultimately sided with the United States, Canada would be forced to make the necessary changes to bring its import rules into line with the ruling. If Canada refused, the United States could potentially impose retaliatory tariffs on Canadian products.





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