Dairy cows leave the barn after being milked on a farm in Granby, Quebec, July 26, 2015. CHRISTINNE MUSCHI / REUTERS
Canada is facing a trade dispute from New Zealand over dairy imports, which experts say will be a tough battle for a government already plagued by allegations of non-compliance.
In a statement last week, New Zealand’s Secretary of Commerce, Damien O’Connor, said the implementation of Canadian dairy imports was “incompatible with its obligations” under the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP). The United States filed a similar lawsuit against Canada last year, a dispute that ultimately found that Canada was violating its agreements.
“CPTPP sets high standards for all countries,” Mr O’Connor wrote in a statement. “And it is important that these standards are maintained to ensure that our exporters can benefit from the agreement in a way that is fair and commercially significant.
As part of the 2018 agreement, Canada has agreed to allow trading partners duty-free access to the Canadian market for small quantities of imported dairy products. But much of the import quota was allocated to Canadian dairy companies, which subsequently left much of that quota unfilled.
According to the New Zealand Dairy Association or DCANZ, only 8 percent of the quota was filled last year. This unfulfilled quota represents about $ 55 million in lost market access for New Zealand in two years, according to the complaint.
New Zealand is a major exporter of dairy products, producing about 21 billion liters of milk each year.
“Trade agreements are as good as their implementation,” said Malcolm Bailey, chairman of DCANZ.
“Canada has taken an approach to administering CPTPP quotas, which violates the rules of the agreement and severely restricts the use of restricted market access,” he said.
Alice Hansen, a spokeswoman for Commerce Secretary Mary Ng, called Canada an “honest trading partner” who took his commitment to the CPTPP seriously.
“Our government will always stand up for the Canadian dairy industry, farmers and our supply management system. We have always said that we will work with industry and New Zealand on this issue and we will continue to do so, “she said.
A spokesman for the Canadian Dairy Association said she was aware of the complaint and intended to “work with the Government of Canada to protect our country’s ability to design and implement tariff quota allocation mechanisms that meet its trade obligations.” and support the local dairy industry. “
But Canada is to blame for “not keeping its signed promises,” said Sylvain Charlebois, director of the Agricultural Food Analysis Laboratory at Dalhousie University in Halifax.
Ottawa’s decision to allocate a quota to existing Canadian dairy processors, he said, created a system that was set up for the benefit of local industry.
“All these companies that have their own brands want to promote,” he said. “Why would they want to import products from abroad?”
Lawrence Herman, a long-time international trade lawyer with the government, cited the January 2022 decision in the US-Canada trade dispute.
In this case, the US-Mexico-Canada agreement group found that Canada retained about 85 percent of imports for Canadian processors. The panel found that Canada was breaking its promises to the USMCA.
“In the case of the United States, it is clear that the Canadian government is not fulfilling its trade obligations. And this is a reflection of the influence of the dairy industry and the pressure it is putting on the Canadian government, “Mr Herman said.
“And I will continue to say that much of this influence is due to the fact that there are votes in rural Quebec and eastern Ontario that are important to the government of the day – whether it’s the Conservative government or the Liberal government.”
Prof. Charlebois predicts that European countries may soon follow suit with their own trade complaints.
And in the end, he said, Canadian consumers are the losers – in product choices, variety and price.
“Currently, food prices are a huge problem for a growing number of households,” he said.
And although imported products do not guarantee lower prices, “if you do not allow more competition, you will never see lower prices,” he said.
“You’ll just see prices go up no matter what.”
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