The International Dairy Foods Association (IDFA) today applauded the Office of the U.S. Trade Representative (USTR) for announcing that it is initiating consultations with the government of Canada under the U.S.-Mexico-Canada Agreement (USMCA) over Canada’s failure to ensure its tariff rate quota (TRQ) administration for dairy products meets the terms of USMCA. IDFA has expressed its concern and engaged the U.S. and Canadian governments on Canada’s TRQ administration since USMCA went into force in July 2020.

“IDFA commends the U.S. government for pursuing accountability and for standing firm on Canada’s obligations under USMCA. This step by USTR shows they are dedicated to ensuring all parties to USMCA honor their commitments and obligations,” said Michael Dykes, D.V.M., president and CEO of IDFA.

USMCA text prohibits the introduction of any new conditions or eligibility requirements on the utilization of a TRQ beyond those set forth in the text. However, the proposed TRQs for many dairy products impose eligibility and allocation calculation conditions that clearly fall outside of Canada’s commitments. One egregious example, in IDFA’s view, is limiting access to the “Cheese of All Types” TRQ to just 15% for distributors and allocating 85% to processors, where there is no such restriction in USMCA and, in fact, the agreement requires parties to ensure that they do not “limit access to an allocation to processors”.  There are many other Canadian conditions on allocation and eligibility that also are inconsistent with USCMA and negatively impact the ability of U.S. dairy to take advantage of the benefits offered by the agreement.

IDFA Vice President of Trade Policy and International Affairs Becky Rasdall said, “We have tremendous appreciation for our U.S. government colleagues who have worked so hard to understand, document, and elevate our concerns with Canada’s TRQ administration under USMCA rules. Today’s announcement acknowledges what we have believed for some time, that Canada’s open use of its TRQ conditions to limit imports while using pricing policies to bolster domestic production continues to limit the ability of U.S. dairy exporters to take full advantage of USMCA.”

U.S. dairy exports hit $667 million to Canada in 2019 and have reached $572 million from January through September 2020, a pace which would fall short of the additional $227 million in annual dairy exports to Canada estimated to occur under USMCA by the U.S. International Trade Commission. IDFA looks forward to all members honoring the commitments and obligations made in the agreement.

The International Dairy Foods Association (IDFA), Washington, D.C., represents the nation’s dairy manufacturing and marketing industry, which supports more than 3 million jobs that generate $159 billion in wages and $620 billion in overall economic impact. IDFA’s diverse membership ranges from multinational organizations to single-plant companies, from dairy companies and cooperatives to food retailers and suppliers, all on the cutting edge of innovation and sustainable business practices. Together, they represent 90 percent of the milk, cheese, ice cream, yogurt and cultured products, and dairy ingredients produced and marketed in the United States and sold throughout the world. Delicious, safe and nutritious, dairy foods offer unparalleled health and consumer benefits to people of all ages.