Canada is facing a trade dispute with New Zealand over dairy imports, in what experts say will be an uphill battle for a government already beleaguered by accusations of failing to meet its trade obligations.
In a statement last week, New Zealand Trade Minister Damien O’Connor said Canada’s implementation of dairy imports was ‘inconsistent with its obligations’ under the partnership agreement. Global and Progressive Transpacific, or CPTPP. The United States filed a similar complaint against Canada last year – a dispute that ultimately found Canada had breached its agreements.
“The CPTPP sets high standards for all parties,” O’Connor wrote in his statement. “And it is important that these standards are maintained to ensure that our exporters can benefit from the agreement in a fair and commercially meaningful way.”
As part of the 2018 deal, Canada agreed to grant trading partners duty-free access to the Canadian market for a small amount of imported dairy products. But much of the product import quota was allocated to Canadian dairy companies, which subsequently left much of that quota unfilled.
According to the Dairy Companies Association of New Zealand, or DCANZ, only 8% of the quota was filled last year. That unfulfilled quota represented approximately $55 million in lost market access for New Zealand over two years, according to the complaint.
New Zealand is a major exporter of dairy products, producing around 21 billion liters of milk each year.
“Trade deals are only good as long as they are implemented,” Malcolm Bailey, president of DCANZ, said in a statement.
“Canada has taken an approach to administering CPTPP quotas that violates the rules of the agreement and has severely restricted the use of limited market access,” he said.
Alice Hansen, spokesperson for Trade Minister Mary Ng, called Canada a “fair trading partner” that takes its commitment to the CPTPP seriously.
“Our government will always stand up for Canada’s dairy industry, farmers and our supply management system. We have always said that we will work with the industry and with New Zealand on this issue, and we will continue to do so,” she said.
A spokesperson for the Dairy Processors Association of Canada said it is aware of the complaint and intends to “work cooperatively with the Government of Canada to defend our country’s ability to design and implement TRQ allocation mechanisms that respect its trade obligations and support the domestic dairy industry.
But Canada is guilty of “not keeping its signed promises,” said Sylvain Charlebois, director of the agri-food analysis laboratory at Dalhousie University in Halifax.
Ottawa’s decision to allocate quota to existing Canadian dairy processors, he said, set up a system that was stacked in favor of the domestic industry.
“All these companies that have their own brands that they want to promote,” he said. “Why would they want to import products from abroad? »
Lawrence Herman, an international trade lawyer with a long history in government, pointed to the January 2022 ruling in the U.S.-Canada trade dispute.
In that case, the United States-Mexico-Canada Agreement panel found that Canada reserved about 85 percent of imports for Canadian processors. The panel concluded that Canada had breached its USMCA promises.
“In the case of the United States, it is clear that the Government of Canada was not meeting its trade obligations. And that reflects the influence of the dairy industry and the pressure it puts on the Canadian government,” Herman said.
“And I will go on to say that a lot of that influence is because there are votes in rural ridings in Quebec and Eastern Ontario that are important to the government of the day – that whether it is a Conservative government or a Liberal government.
Professor Charlebois predicted that European countries could soon follow suit with their own trade complaints.
And ultimately, he said, it’s Canadian consumers who lose out — on product choice, variety and price.
“Right now, food prices are a huge issue for a growing number of households,” he said.
And while imported products don’t guarantee lower prices, “if you don’t allow more competition, you’re never going to see lower prices,” he said.
“You’re just going to see prices go up no matter what.”
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