Milk War: Canada Vows to ‘Vigorously Defend’ Itself Against Biden Dairy Compaint

Canadian officials say they are disappointed with the Biden administration’s decision to press on with complaints alleging Canada manipulates tariff rate quotas to discourage imports of U.S. dairy products.

“Canada is disappointed that the United States has requested a dispute settlement panel,” said Canada’s trade minister Mary Ng, according to the Wall Street Journal.  “We will vigorously defend our position during the dispute settlement process.”

The U.S. on Tuesday moved to launch a dispute-settlement panel to review Canada’s dairy quotas. The panel will be the first under the U.S. Mexico Canada Agreement that replaced Nafta during the Trump administration.

The Biden administration alleges Canada’s quota hurt the ability of American dairy farmers to sell a wide range of products to Canadian consumers. The complaint was initiated under the Trump administration and reflects longstanding complaints by U.S. farmers that Canada’s trade rules unfairly discriminate.

Specifically, the U.S. is challenging Canada’s allocation of dairy tariff-rate quotas (TRQs), which set aside a share exclusively for Canadian processors.  The U.S. says these measures deny the ability of U.S. dairy farmers, workers, and exporters to utilize the TRQs and realize the full benefit of the USMCA.

“Launching the first panel request under the agreement will ensure our dairy industry and its workers can seize new opportunities under the USMCA to market and sell U.S. products to Canadian consumers,” said Katherine Tai, the U.S. trade representative and President Biden’s top trade adviser.

Dairy is a highly sensitive political issue in Canada. French-speaking Quebec is dairy country. Shielding farmers from competition is one way to placate the province’s separatist movement. Canada has also angered American farmers by flooding export markets with cheap skim-milk powder.

Still, Canadian trade policies have had only a “tiny impact” on America’s struggling dairy farmers, says Daniel Sumner, an agricultural economist at the University of California, Davis.

When President Donald Trump complained about Canadian trade barriers hurting U.S. dairy farmers, National Public Radio’s “Morning Edition” declared that “Trump Hates Canadian Dairy.”