SCHUMER, GILLIBRAND ANNOUNCE U.S. WINS USMCA DISPUTE WITH CANADA; RULING WILL ENSURE FAIR MARKET ACCESS, HELPING NY DAIRY INDUSTRY & LOCAL ECONOMIES REBUILD FROM PANDEMIC
Reps Fought For Years To Show That Upstate Dairy Farmers Are Victims Of Unfair Trade Policies That Prevented Locals From Selling Dairy Product Just Mere Miles North
Senators Say Decision Ensures Upstate NY Dairy Producers Are Given Fair Access To The Canadian Market & Will Provide Crucial Support As They Continue To Recover From The Pandemic
Schumer, Gillibrand: Ruling Will Level The Field And Help NY Dairy Farmers Churn Up Milk Profits
After concerns about Canada’s allocation of tariff-rate quotas for U.S. exports of dairy products in June 2020 and again in September 2020 led to the Office of the U.S. Trade Representative taking its first-ever United States-Mexico-Canada Agreement (USMCA) enforcement action in December 2020, U.S. Senate Majority Leader Charles E. Schumer and U.S. Senator Kirsten Gillibrand announced that the USMCA panel has ruled in favor of the United States that Canada is breaching its USMCA dairy commitments. The senators said this ruling will allow Upstate New York dairy farmers, many who are still struggling from the economic impacts of the pandemic, to fully benefit from the expanded market access opportunities and will eliminate unfair practices that hurt their bottom lines.
“Dairy farmers are the lifeblood of the Upstate economy, and today’s ruling is a massive win for them,” said Senator Schumer. “Dairy farmers in New York and across the country are still being squeezed by the economic impacts of the pandemic, and now more than ever depend on stable and fair rules to compete equitably in the nearby Canadian market. This decision will ensure the Upstate New York dairy industry fully benefits from the USMCA agreement’s expanded market access opportunities, unimpeded by unreasonable trade barriers, and will help our dairy farmers churn up profits and mitigate the huge losses they have suffered this year.”
“Today is a huge win for New York’s dairy farmers. Canada’s violation of USMCA dairy provisions was putting New York’s regional economies at risk, and this decision will hold our trading partners accountable and ensure equitable trading practices are upheld moving forward,” said Senator Gillibrand. “Dairy is New York’s primary agricultural product and this win is needed now more than ever as economic disruptions from the pandemic continue hurting industry. I will always work to ensure our dairy farmers have access to fair trade opportunities.”
The senators explained that under USMCA, Canada agreed to an expansion of tariff-rate quotas (TRQs) for several categories of U.S. dairy products. TRQs are a system of tariffs negotiated between countries that allow a predetermined quantity of imports at a specified and often very low tariff rate. Imports above the predetermined quantity are subject to a higher tariff rate that typically prices U.S. dairy products out of the Canadian market. Because of this, securing fair access to Canadian dairy TRQs is vital to ensuring New York’s farmers have equitable access to that market.
Schumer, supported by New York milk producers including Cayuga Milk Ingredients and O-AT-KA Milk Products, raised concerns in June 2020 that the unfair way Canada was allocating its TRQs weakened the intent of the USMCA and as a result, New York dairy farmers and exporters were unable to make full use of USMCA’s benefits. The landmark decision found Canada is improperly restricting access to its market for U.S. dairy products in violation of its commitments.
A copy of Schumer and Gillibrand’s original September 2020 letter to Ambassador Lighthizer and Secretary Perdue appears below:
Dear Ambassador Lighthizer and Secretary Perdue:
With the U.S.-Mexico-Canada Agreement (USMCA) now in effect as of July 1, we write urging you to ensure that both Canada and Mexico are held accountable to their dairy trade obligations in the agreement. It is of particular importance that dairy farmers in New York and across the country – many of whom are struggling as a result of this unprecedented economic crisis – fully benefit from the expanded market access opportunities and the elimination of unfair practices under USMCA.
We have heard concerns from the New York dairy industry regarding Canada’s recent allocation of tariff-rate quotas (TRQs) for U.S. exports of several categories of dairy products, including milk, cheese, and yogurt. While the new tariff-rate quota commitments were intended to provide U.S. dairy producers with greater access to Canada’s dairy market, it is our understanding that Canada’s announced TRQs place U.S. producers at a disadvantage and are inconsistent with the market access provisions secured in agreement. Canada cannot be allowed to evade its trade obligations in order to protect its tightly-controlled dairy market and must fairly administer its TRQs as agreed to under USMCA.
Another key issue is ensuring the full elimination of Canada’s Class 6 and 7 milk price classification programs, which was a top priority of ours during the USMCA negotiations. As you are aware, Class 6 and 7 are market-distorting supply management programs that allow for the dumping of Canadian milk products onto the global market at artificially low prices, causing significant harm to New York dairy producers. While it was encouraging to see the elimination of these programs included in the final agreement, there are outstanding concerns from the U.S. dairy industry about Canada providing sufficient transparency on dairy pricing, which is critical for establishing a baseline against which the U.S. can evaluate Canada’s new post-Class 6 and 7 pricing policies, as well as with how Canada implements its USMCA dairy export surcharge commitments. There must be vigilant monitoring to ensure Canada complies with its commitment to eliminate these programs with full transparency, and in a manner that does not reproduce the programs’ harmful effects through different means.
Additionally, in a side letter accompanying USMCA, Mexico affirmed a list of more than 30 terms for cheese that would remain available as common names for U.S. cheese producers when exporting to Mexico. It is critical that our domestic producers continue to have the opportunity to sell products to consumers in Mexico using common cheese names and that New York dairy exporters do not lose the valuable market share they have spent years fighting for. As such, Mexico must translate its USMCA commitments into regulations in a way that ensures commonly-used cheese names specified in the agreement are respected.
Our hardworking dairy producers in New York and across the U.S. deserve to fully benefit from the provisions secured in USMCA. We therefore ask for your commitment to raise these concerns with your government counterparts in Canada and Mexico as soon as practicable and to take the appropriate enforcement measures going forward to ensure both countries’ dairy trade obligations are upheld.