The Trump administration said it was challenging Canadian quotas on dairy imports as unfair to U.S. milk producers. The challenge, announced in a letter on Wednesday to Canadian trade minister Mary Ng, was the first under the United States-Mexico-Canada free trade agreement.
“Canada’s measures violate its commitments and harm U.S. dairy farmers and producers,” said U.S. trade representative Robert Lighthizer. In the letter, Lighthizer asked for consultations between the nations to resolve the issue. If that fails, the United States could ask for the creation of a USMCA dispute settlement panel to handle the disagreement.
At issue are so-called tariff-rate quotas (TRQs), which allow a specified amount of goods to enter a country for free or at low tariff rates; higher duties are charged when imports exceed the trigger level. Canada set TRQs on 14 types of dairy products, including milk, cream, and butter, and reserved a portion of the TRQs for “further processors,” which the United States says will reduce the amount of dairy products that can be shipped at the lowest tariff rates.
U.S. dairy groups applauded the request for consultations. “We knew from day one that enforcement would be key to bringing the intended benefits home to America’s dairy industry,” said the U.S. Dairy Export Council.