U.S. expands dispute settlement consultations over Canadian dairy tariff policies

The Biden administration said on Tuesday it was requesting new dispute settlement consultations under the U.S.-Mexico-Canada Agreement (USMCA) trade deal related to Canadian dairy import tariff policies.

U.S. farmers have complained that Canada's supply management system favors Canadian processors and hurts their ability to export to their northern neighbor.

The United States initiated dispute consultations over some Canadian dairy tariff-rate quotas in May, alleging Canada's allocations deny U.S. retailers access to its markets and undermine the agreement.

A statement from U.S. Trade Representative Katherine Tai said "concerns have only increased" since May and Washington has identified additional aspects that appear to be inconsistent with Canada's obligations under the North American trade pact.

Canada's Trade Minister Mary Ng responded in a statement that Ottawa has respected and upheld the terms negotiated under the USMCA, which took effect in 2020.

"We look forward to demonstrating how Canada is meeting its ... obligations during the new consultations," Ng said.

The new request expands a U.S. challenge to include Canada's use of a "market-share approach for determining tariff-rate quota allocations," according to Tai's statement.

Last year, the United States requested the creation of a panel under USMCA rules to resolve a dispute over Canadian dairy quotas after failing to settle the issue with Ottawa.

The panel in a 50-page report in January said Canada violated the trilateral trade accord by reserving most of its preferential dairy tariff-rate quotas for Canadian processors. Canada has said that it amended its allocation policies for dairy quotas after the panel report.