the first of its kind under the United States-Mexico-Canada Agreement (USMCA), under which Ottawa as committed to loosen the procedures put in place to protect domestic producers by controlling production and imposing high tariffs on imports, among other measures. This includes an agreement to expand the volume of US dairy imports permitted to enter Canada without prohibitive tariffs, known as a tariff-rate quota (TRQ). However, Ottawa later allocated 85 to 100 per cent of the quota to its domestic processors, a move which triggered complains from American producers, who claim that Canadian processors often import bulk product and turn it into higher-value goods, instead of importing expensive, retail-ready products.
Accordingly, the US took the issue to a dispute resolution panel, which ruled on last week that Ottawa’s system of allocating quota was in violation of the treaty. The decision was described as a “historic win” by US Trade Representative Katherine Tai, while Canada’s Trade Minister Mary Ng commended the panel for recognising the fact that Canada continues to have the discretion to decide who gets quota.
“They now have a better shot at getting quota. But it’s by no means clear how much they’re actually going to get,” Nicolas Lamp, a former dispute settlement lawyer at the World Trade Organization, said. “It’s really important to understand how limited this ruling is… No one is telling Canada, ‘This is exactly how you have to allocate the quota.’”
