A U.S.-Mexico-Canada Agreement dispute panel has allowed Canada to continue restricting dairy access that the U.S. negotiated for under the agreement. The action came after an earlier panel ruled in January 2022 that Canada had improperly restricted access to its market for American dairy products.

American agriculture leaders and groups reacted negatively to the decision. “It’s profoundly disappointing that the dispute settlement panel chose obstruction rather than facilitation in trade,” said Jim Mulhern, president and CEO of the National Milk Producers Federation. “We urge USDA and the USTR to look at all available options to ensure that Canada stops playing games with trade agreements.”  

Krysta Harden, president and CEO of the U.S. Dairy Export Council, says this isn’t the only shortcoming in Canada’s international commitments. “We are committed to working with USTR and USDA to address Canada’s harmful actions that help evade USMCA dairy export disciplines,” said Harden.

U.S. Trade Representative Katherine Tai said two of the three USMCA dispute panel members found that Canada’s dairy import policies don’t breach its commitments under the U.S.-Mexico-Canada agreement. “I’m very disappointed by the findings in the USMCA panel report on Canada’s dairy TRQ allocation measures,” Tai said. “While the United States won a previous USMCA dispute on Canada’s dairy TRQ allocations, Canada’s revised policies still haven’t fixed the problem for U.S. dairy farmers.”

In the dispute panel’s report, it found that Canada’s measures are not inconsistent with the USMCA provisions cited by the U.S. The panel split on the U.S. claims that Canada’s exclusion of retailers, food service operators, and others from eligibility and its historical market share approach to allocating dairy TRQs breach its obligations.

“It’s critical we enforce USMCA as this decision allows Canada to continue with its protectionist practices,” said House Ag Committee Ranking Member David Scott (D-GA).