On December 9, 2020, the US Trade Representative (USTR) announced that it had filed the first dispute under the US-Mexico-Canada Agreement (USMCA) by requesting consultations with the Government of Canada (pursuant to Articles 31.2 and 31.4 of the USMCA) in connection with Canada’s administration of its dairy tariff rate quotas.
USTR’s request for consultations states:
Canada’s dairy TRQ allocation measures appear to be inconsistent with several provisions of the USMCA. First, the measures appear to be inconsistent with Article 3.A.2.11(b) because Canada is setting aside and reserving a portion of the quota to processors. Second, the measures appear to be inconsistent with Articles 3.A.2.4(b) and 3.A.2.11(e) because Canada is not providing “fair” and “equitable” procedures and methods for administering its TRQs. Third, the measures appear to be inconsistent with Article 3.A.2.11(c) because Canada fails to ensure that, “to the maximum extent possible”, the allocation is made “in the quantities that the TRQ applicant requests” as a result of reserving access of large shares of the quota to processors and so-called “further processors”. Finally, the measures appear to be inconsistent with Article 3.A.2.6(a) because they “introduce a new or additional condition, limit, or eligibility requirement on the utilization of a TRQ” that are “beyond those set out in [Canada’s] Schedule to Annex 2- B.”
If the US and the Canadian governments are not able to resolve the dispute through consultations, the US could ask to convene a panel that will adjudicate Canada’s TRQ administration.
