Canada imposes trade barriers to imports of dairy products, chickens, turkeys and eggs originating in the United States, according to the White House Trade Representation (USTR).
All of this is done through supply management to regulate their industries of those products.
Canada’s supply management regime includes production quotas, producer and trader boards to regulate price and supply, and tariff quotas for imports.
From the USTR’s point of view, Canada’s supply management regime severely limits the ability of US producers to increase exports to Canada above TRQ levels and inflates the prices Canadians pay for goods. dairy and poultry products.
Under the current system, US imports above quota levels are subject to prohibitively high tariffs (for example, 245 percent for cheese and 298 percent for butter).
The Agreement between Mexico, the United States and Canada (USMCA) expands market access opportunities for dairy products through new tariff quotas exclusively for US products.
For example, for year six of the USMCA, the quota volumes will reach 50,000 metric tons (MT) of liquid milk, 10,500 MT of cream, 4,500 MT of butter and cream powder, 12,500 MT of cheese and 7,500 MT of skimmed milk powder.
According to the T-MEC, Canada will eliminate tariffs on whey in 10 years and margarine in five years.
Likewise, Canada will open new tariff quotas for chicken from the United States. (The volume of the quota will reach 57,000 MT for the sixth year of the T-MEC) and for eggs and egg products from the United States. (The quota volume will reach the equivalent of 10 million dozen eggs by the sixth year of the USMCA).
In addition, Canada will expand access for turkey from the United States.
Also Canada and the United States agreed to strict rules to ensure that TRQs are administered in a fair and transparent manner to help ensure that exporters benefit from the full market access negotiated in the USMCA.
The United States remains concerned about possible Canadian actions that would further limit US exports to the Canadian dairy market.
According to the USDA, the United States continues to closely monitor any tariff reclassification of dairy products to ensure that access to the US market is not adversely affected.
Canada sets discounted prices for milk components for sales to domestic manufacturers of dairy products used in processed food products under the Special Milk Classes Permit Program (SMCPP).
These prices are “discounted”, are lower than normal Canadian milk class prices for dairy manufacturers, and are tied to US prices or world prices.
The SMCPP is designed to help Canadian manufacturers of processed food products compete with imported processed food into Canada and foreign markets.
An agreement reached between Canadian dairy producers and processors in July 2016 introduced a new class of domestic milk (Class 7), with discounted prices for a wide range of Canadian dairy ingredients used in dairy products, to decrease imports of United States milk protein substances.
In Canada and increase Canadian exports of skimmed milk powder to third country markets.
The provincial milk marketing boards (Canadian provincial government agencies) began implementing Class 7 in February 2017.
The United States has expressed serious concerns about Class 7 with Canada bilaterally and in the Committee on Agriculture of the World Trade Organization (WTO).
Under the T-MEC, Canada is required to remove Class 7 within six months of its entry into force.
In addition, Canada is required to ensure that the price of nonfat solids used to make skimmed milk powder, milk protein concentrates and infant formula is not less than a level based on the USDA price for nonfat dry milk. .
Transparency provisions oblige Canada to provide the information necessary to monitor compliance with these commitments. Canada is required to charge exports of skimmed milk powder, milk protein concentrates and infant formulas that exceed the thresholds specified in the USMCA.