U.S. victory in trade dispute could benefit Canadian dairy consumers

News analysis

Trade agreements to replace NAFTA have put new pressure on Canada’s dairy industry, which has long been operating under government-regulated supply management systems. But while some are concerned about the impact on Canada’s dairy sector, others say the US victory could be good news for Canadian consumers.

Food distribution and policy expert Sylvain Charlevoix said that if the United States wins a trade dispute, Canadians will have more options to maintain the status quo.

“The biggest losers are Canadian consumers, because they can’t get a better product,” said the director of Agrifood Analytics at Dalhousie University in an interview about the status quo.

“Processors are trying to introduce Canadian products to foreign products, even though Canadians should actually have more choices.”

On May 25, US President Joe Biden’s administration launched a formal trade dispute with the Canadian dairy industry under the United States-Mexico-Canada Agreement (USMCA), bringing U.S. consumers into the Canadian market. We investigated whether fair access to the United States was denied.

At the USMCA, signed at the end of 2018, Canada agreed to expand its tariff quota (TRQ) to allow more dairy imports without exorbitant tariffs. According to the United States International Trade Commission, US dairy exports are projected to grow by more than $ 314 million annually if this restricted access is negotiated.

However, Washington claims that Canada fostered unfair protectionism in the way it issued TRQs, and under USMCA provisions, Requested a panel to dominate About the problem.

After ratifying the USMCA in March 2020, Canada maintained its authority over who could issue import licenses and assigned 100% of the dairy TRQ to the following categories: Distributors, processors, and “further processors”. Domestic dairy processors have tended to obtain permits and import low-priced dairy products into high-priced retail products. The United States wants to fully import these higher value products.

Charlevoix said the controversial “devil is in the details”, but the Biden administration has some basis for its claim.

“[Canadian] Processors are really in conflict because they make cheese [and] They sell cheese to Canadians, so they are very careful about what type of product they import. In essence, Americans have the right to be a little upset. “

In Canada, the supply of dairy products, poultry and eggs is artificially controlled, pushing prices up in ways that have a disproportionate impact on the poor.Ah Montreal Institute for Economic Research According to an analysis published in 2016, the number of Canadians driven into poverty by supply management is estimated to range from approximately 133,000 to over 180,000, depending on the income standards used.

Canada Over 12,000 dairy products business Approximately 940,000 dairy cowsMost of them are in Ontario and Quebec, where votes are plentiful. According to Charlebois, dairy farmers have an annual marketing budget of over $ 130 million.

Maurice Doyon, a professor of agricultural food economics at Laval University in Quebec City, says Americans can take advantage of the dairy controversy to justify their protectionist measures.

“It puts some pressure on Canada. Dairy products may not use pressure. That pressure may be due to something else, [such as] We impose tariffs on softwood timber, steel and anything else. “

Doyoung believes Canada will win the conflict, but does not blame Biden for responding to his own domestic dairy group wanting to act.

“Why don’t you go through the process? What am I going to lose? … What bad things will happen to Americans? Nothing, and maybe they will get something. Political surely It’s not bad for them, “he said.

The final report of the dispute panel is scheduled for November. A representative of the Canadian dairy industry told the Epoch Times that he was hoping for a favorable ruling.

“The Government of Canada states that it is confident that its policy is in full compliance with its obligations under CUSMA,” said Matthew Frigon, Chairman and CEO of the Canadian Dairy Processors Association (DPAC). Says.

“DPAC shares this view and is ready to provide the necessary support for the Government of Canada to actively defend our position during the dispute resolution process.”

Similarly, Pierre Lampron, President of Dairy Farmers of Canada, said: “Canada’s TRQ allocation is consistent with the terms of the CUSMA / USMCA. Therefore, we believe that the Government of Canada has a firm claim to make in front of the panel, and ultimately TRQ. Our right to control will be recognized.

US complaints Made for the first time in December Under the Trump administration, it was not resolved in subsequent discussions. The Biden administration has begun the first trade dispute resolution process in Chapter 31 of the USMCA.

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