19 September 2023
Canadian Custom Brokerage

CPTPP panel issues report on Canada’s administration of dairy tariff rate quotas

A dispute settlement panel established at the request of New Zealand under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) published its report last week on Canada’s administration of its tariff rate quotas (TRQs) on imports of dairy products.

This was the CPTPP’s first formal trade dispute. New Zealand argued that Canada’s dairy tariff-rate quota allocation measures undermine the market access afforded to New Zealand under the CPTPP.

Both countries claimed victory as the panel agreed with two of New Zealand’s complaints but rejected the others.

In a statement the Dairy Processors Association of Canada said: “The panel found that Canada’s practice of creating TRQ pools exclusively for processors is inconsistent with Canada’s obligations under the agreement. This 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.

“Canada will still need to ensure that its TRQ allocation mechanism conforms to the CPTPP Panel’s decision by ensuring that 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.”

The Dairy Farmers of Canada also released a statement saying: “Dairy Farmers of Canada is disappointed with the dispute panel’s ruling (pools) which found that two of the six elements challenged by New Zealand were inconsistent with the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Nonetheless, the panel found that 4 of New Zealand’s claims were unfounded.

“We now call on the federal government 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.”

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