New Zealand, Australia and the United States are outraged that Canada’s highly-protected dairy industry is exporting cheap milk proteins.
New Zealand grew even angrier when United States President Donald Trump hit its dairy sales to the U.S. with 10 per cent tariff, but not Canadian dairy.
New Zealand milk protein exports to the U.S. already faced a 3.5 per cent tariff compared to zero for Canadian exports under the US-Mexico-Canada (USMCA) free trade agreement.
“The reality of what has happened in the past week is we are paying a 10 per cent additional tariff on those protein products and the Canadians are accessing the market completely duty-free under the USMCA,” said Simon Tucker, Fonterra’s director of global stakeholder affairs.
In a January 8 letter, the main dairy export lobbies in the U.S., N.Z. and Australia wrote to their respective governments calling on them to “use all available tools” to tackle Canada’s system of tariffs and subsidies.
These enable Canadian dairy processors to sell on global markets below their cost of production while protecting them from imported competition at home.
Dairy Companies Association of N.Z.’s executive director Kimberly Crewther said the 10 per cent tariff had left N.Z. milk protein exports to the U.S. at a further “significant disadvantage” to Canadian competitors.
In their January letter, it and its fellow U.S. and Australian dairy lobbies said Canada’s milk pricing policies coupled with new investment in processing capacity had the potential to unleash a fresh wave of subsidised dairy production on global markets.
“It is ironic that we have been concerned and the U.S. has been concerned about the artificially low-priced product being dumped into markets, and now that [Canadian] product has a tariff preference [in the U.S.] above any other source,” Crewther said.