Explainer: Spilt milk? Why are the US and Canada fighting over dairy?

WINNIPEG, Manitoba (Reuters) – The United States said on Thursday it is seeking a second trade dispute settlement committee over Canada’s dairy import quotas, opening up its markets to U.S. producers. He accused him of not fulfilling his duty to do so. The move is the latest salvo in longstanding tensions between trading partners over Canada’s protected dairy industry.

How does Canada’s dairy system work?

Canada has tightly controlled its dairy, egg and poultry supply since the 1970s, restricting how much farmers can produce and restricting imports with onerous tariffs.

Quotas limit how much a farmer produces to meet domestic demand.

Import quotas limit the quantity of products that can be imported into Canada from other countries at low tax rates.

The Canadian Dairy Commission, a government agency, sets the price of milk that dairy processors pay farmers each year.

WTO panel ruling in 2002 Canada violated its trade obligations through its support of dairy products and sided with the United States.As a result of the WTO ruling, Canada is not allowed to export many dairy products.

Why is America upset?

U.S. dairy processors want to sell more to Canada, but high tariffs are a hindrance.

The Office of the U.S. Trade Representative has said that Canada uses an unfair approach in determining quota quotas under the U.S.-Mexico-Canada Agreement on Trade, and that some Canadian retailers, food service operators, and others of market participants are effectively prohibited from using quotas.

Canada’s Trade Minister Mary Ng said she was disappointed with the US move and opposed US attempts to “renegotiate” during the reconciliation process.

What is the value of Canada’s dairy sector?

Annual sales of Canadian farm dairy products reach C$7.39 billion ($5.54 billion). According to 2021 government figures, processed dairy shipments will be worth C$16.2 billion.

Why does Canada want to keep the system?

All major political parties say they support supply control to stabilize farm incomes.

Producers in other countries suffer from volatile price fluctuations.

Canada’s 9,739 dairy farmers form one of the country’s most influential lobbies. Quebec and Ontario are Canada’s provinces with the most agriculture and the most seats in parliament.

what are others saying?

Other dairy producers, such as New Zealand, say Canadian regulations are an unfair way of protecting Canadian industries.

Within Canada, as with grains and meat, some groups say supply controls are preventing the country from becoming a dairy exporting powerhouse. claims.

($1 = 1.3343 Canadian dollars)

Reporting by Rod Nickel of Winnipeg, Editing by Deepa Babington

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