It is time for United States to take steps to fix its dairy oversupply problems and "stop blaming Canada for a situation that has little to do with us."
That is how Robert Godfrey reacted to news the Joe Biden administration has asked for the establishment of a dispute settlement panel under the United States-Mexico-Canada Agreement to look into Canada’s allocation of dairy tariff-rate quotas (TRQs), specifically the set-aside of a percentage of each dairy TRQ exclusively for Canadian processors.
The Americans maintain the measures "deny the ability of U.S. dairy farmers, workers, and exporters to utilize the TRQs and realize the full benefit of the trade deal."
A tariff-rate quota applies a preferential rate of duty to an “in-quota” quantity of imports and a different rate to imports above that in-quota quantity. Under the new free trade deal negotiated while Donald Trump was president, Canada has the right to maintain 14 TRQs on dairy products: milk, cream, skim milk powder, butter and cream powder, industrial cheeses, cheeses of all types, milk powders, concentrated or condensed milk, yogurt and buttermilk, powdered buttermilk, whey powder, products consisting of natural milk constituents, ice cream and ice cream mixes, and other dairy.
American Trade Ambassador Kathleen Tai maintains Canada sets aside and reserves a percentage of the quota for processors and for so-called “further processors”, contrary to Canada’s USMCA commitments.
"Every country has facets of their agriculture industry they seek to protect when it comes to trade," said Godfrey, who is the executive director of the PEI Federation of Agriculture. "Most often, the Americans use direct subsidies to producers and that is part of how the oversupply problem has happened."
Godfrey noted if U.S. production were to take over the entire Canadian market, it would still not solve their oversupply situation. He is concerned the Biden administration is following on the same path of making Canadian dairy producers "scapegoats" and said Canada must aggressively defend against the action.
Meanwhile the CEO of Amalgamated Dairies Limited (ADL) is confident Canada is well positioned to mount such a defence. Chad Mann noted the bulk of the agreement is being phased in over a five year period and argued "It will take minimum 7-10 years to evaluate the effectiveness of the TRQ allocation policy adopted by Canada. CUSMA was phased in on July 1st 2020 in the middle of a global pandemic."
The CEO went on to say well established supply chains, traditional distribution channels and global trade have been impacted have been impacted by COVID. He explained the Americans must put forward a business case for the importation of US dairy products.
"Canadian markets are well serviced by domestic players with consumers increasingly demanding local products marked with the blue cow logo," he concluded. "Canadian Dairy producers and processors have serviced Canadian consumers well during COVID-19.”
The chair of Dairy Farmers of PEI agrees Canada's position is solid. Gordon MacBeath said Dairy Farmers of Canada is prepared to work with the federal government in defending against the action,
Like Godfrey, MacBeath is sick and tired of having to defend the industry and supply management at every turn. He noted "it has been going on forever now and it is time to stop. The dairy chair said it is his understanding the settlement panel will hand down a decision within six to nine months.