Monday, March 7, 2022

Americans reject Canadian dairy proposal

Americans are not satisfied with the Canadian response to a panel ruling that Canada violated dairy import rules under the trade agreement among Canada, the United States and Canada.

The Americans successfully complained about the federal government’s issuance of import permits for U.S. cheeses and other dairy products. 

They said too many went to Canadian dairy processing companies and not enough to wholesale distributors and that retailers should also get some.

Canada’s response has not done enough to correct this imbalance, said Jaime Castaneda, executive five president of the U.S. National Milk Producers Federation and the U.S. Dairy Export Council.

“For us, this is just moving the chairs around, but it’s the same chairs,” he said.

Assistant U.S. Trade Representative for Media and Public Affairs Adam Hodge said “the United States has not agreed to a resolution with Canada, but we continue to talk about implementation of the panel’s findings and hope to reach a resolution.”

A core component of the NMPF and USDEC rejection is Canada’s insistence that major Canadian dairy processors would maintain control over their ability to use the quotas for U.S. cheese, condensed milk, skim milk powder, yogurt, buttermilk, whey, ice cream and other products.

As the situation stands now, Canadian processors get 85 per cent of the quota for cheese and Canadian distributors get 15 per cent.

The permits are valuable because they allow imports at much-redeuced tarrif rates.

Furthermore, the processors get access based on market share, meaning the biggest companies get the biggest share. Distributors, meanwhile, get allocations on a straight “equal share basis,” the Americans complain.

The Canadian proposal would alter the cheese quota to give all of the allocation to both processors and distributors. 

The problem, says Castaneda, is that it would all be on a “market share basis” and that means the large processors would again have control by the reason of their size. 

The Americans also want some of the quota to be granted to Canadian retailers.

It looks to me like the Canadian response was prepared by the Canadian dairy farmers and milk processors and completely ignored the broader Canadian public interest.