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USMCA: EU begins consultation with Canada on dairy quotas

The USTR requested consultations with the Canadian government to avoid or initiate a dispute resolution panel under the USMCA.

The United States Trade Representative, Robert E. Lighthizer, announced Wednesday that the United States is exercising its rights under the Agreement between Mexico, the United States and Canada (USMCA) to address the measures adopted by the Government of Canada that are contrary to the provisions of that trade agreement and harm, according to the US government, US milk producers.

Specifically, the United States challenges Canada’s allocation of tariff quotas for dairy products.

«By setting aside and reserving a percentage of each dairy TRQ exclusively for processors, Canada has undermined the ability of US dairy farmers and producers to use agreed TRQs and sell a wide range of dairy products to Canadian consumers.» the USTR said in a statement.

USMCA

«President Trump successfully renegotiated the T-MEC to replace the failed NAFTA, and a key improvement was giving US dairy farmers fairer access to Canada’s highly protected dairy market,» Lighthizer said.

“Canada’s measures violate its commitments and hurt US dairy farmers and producers. We are disappointed that Canadian policies have necessitated this first compliance measure under the USMCA to ensure compliance with the agreement. This action demonstrates that the United States will not hesitate to use all available tools to ensure that American workers, farmers, ranchers and businesses enjoy the benefits we have hoped for,” added Lighthizer.

Lighthizer officially notified Canada that it was exercising its rights to enforce the USMCA in a letter addressed to Canada’s Minister of Small Business, Export Promotion and International Trade, Mary Ng.

If the United States and Canada are unable to resolve the United States’ concerns through consultations, the United States may request the establishment of a USMCA dispute resolution panel to examine the matter.

Background

As defined in the T-MEC, a tariff quota is «a mechanism that provides for the application of a preferential rate of customs duty to imports of a particular originating good up to a specific quantity (quantity within the quota), and at a rate different from imports of that good that exceeds that amount”.

Under the Agreement, Canada is entitled to maintain 14 tariff quotas on dairy products, including milk, cream, skimmed milk powder, butter and cream powder, industrial cheeses, cheeses of all kinds, powdered milk, concentrated or condensed milk, yogurt and buttermilk, whey powder, whey powder, products consisting of natural components of milk, ice cream and mixes for ice cream and other dairy products.

According to the USTR, in the notices to importers that Canada published in June and October for the tariff quotas for dairy products, Canada sets aside and reserves a percentage of the quota for processors and for so-called «additional processors», against Canada Treaty commitments.

«This restriction undermines the value of Canada’s TRQs for US producers and exporters by limiting their access to the in-quota quantities negotiated under the USMCA,» the USTR said.

 

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