Government claims victory in dairy dispute with New Zealand

Dairy Farmers of Canada disappointed with CPTPP review of New Zealand's claims.Ottawa—While the government was seeing victory in an international ruling on Canadian dairy practices, Dairy Farmers of Canada (DFC) was not cheering the decision by a dispute settlement panel established under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP).President David Wiens said DFC was disappointed with the dispute panel's ruling which found that two of the six elements challenged by New Zealand were inconsistent with Canada's obligations under the trade deal.While the panel found the other four of New Zealand's claims were unfounded, the federal government needs “to do a thorough review of the measures the government of New Zealand has put in place to support its dairy sector to ensure that they are consistent with its international trade obligations.”Meanwhile the Dairy Processors Association of Canada said the panel found that Canada's practice of creating TRQ pools exclusively for processors was inconsistent with Canada's obligations under the agreement. That conclusion mirrors the finding of the CUSMA Panel decision on the same issue in 2021.“Importantly, on the key aspect of eligibility criteria, the Panel found that Canada's inclusion of additional criteria for eligible applicants for a TRQ allocation falls within the discretion provided to Canada in designing its allocation mechanism and is therefore consistent with Canada's CPTPP obligations. DPAC views this as a very important recognition.”DPAC said Canada must ensure that its TRQ allocation mechanism provides a share or pool of a total TRQ is not reserved exclusively for the use of dairy processors. “DPAC will work with the government to identify options to bring its CPTPP allocation mechanisms into compliance.”Trade Minister Mary Ng and Agriculture Minister Lawrence MacAulay said Canada welcomed the panel's report regarding Canada's administration of its dairy tariff rate quotas (TRQs).“Canada is very pleased with the outcome of the panel's report which is a clear victory for Canada,” the minister said. “The Panel has made a significant finding by recognizing Canada's discretion to set TRQ allocation policies, including determining who is eligible to obtain an allocation. We will not negotiate these allocations with countries who seek to weaken Canada's supply management system.“Furthermore, the panel's findings on the use of pools will not undermine Canada's supply management system and is consistent with the approach taken in the Canada-United States-Mexico Agreement (CUSMA).Under the CPTPP rules, Canada and New Zealand must try to agree on a reasonable period of time to eliminate any non-conformity.“The Government of Canada will continue to preserve, protect and defend our supply management system, as well as stand up for Canada's dairy industry, its farmers and workers across the country. We will work closely with the dairy industry as we move towards the next phase of the process,” the ministers said.Canada's dairy sector is a vital pillar of rural communities and a key driver of the economy. There are 9,739 farms and 507 dairy processing plants generated $8.2 billion in farm cash receipts and $17.4 billion in sales respectively in 2022. Together, dairy production and processing activities account for more than 70,000 jobs.