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Harmful New Regulations In Canada Penalize Canadian Dairy Processors For Using Imported American Milk – Many Farmers Throughout NY Depend On Dairy Exports, But New Canadian Limitations on Milk Imports Could Put Farmers, Coops and Companies at Risk

In March, Schumer Urged Agriculture Secretary and US Trade Representative to Protect Upstate NY Dairy Farmers – Now, Schumer Demands Investigation Into Whether New Policy May Run Afoul of US-Canadian Trade Agreements

Schumer: Feds Must Ensure Canadians Play By the Rules of Fair Trade

U.S. Senator Charles E. Schumer is calling on the Secretary of U.S. Department of Agriculture (USDA) Tom Vilsack and U.S. Trade Representative (USTR) Michael Froman to ramp up all available resources to investigate new Canadian dairy trade policies that could hurt dairy farmers in Upstate New York. Schumer explained that Canada recently announced it will impose limitations on the importation of milk products that can be sent to Canada, from producers like O-AT-KA Milk in Genesee County, Cayuga Milk Ingredients in Cayuga County and Ideal Dairy Farm in Washington County.

In March, Schumer visited these two facilities and Ideal Farm as he urged the USDA and USTR to protect Upstate New York’s dairy sector from the then-proposed barriers to trade. However, recently, Canada has begun imposing these limitations on American imports and considering even further restrictions. Schumer said this flies in the face of current U.S.-Canadian trade agreements, and therefore urged the two federal agencies to investigate whether U.S. exports are being unfairly displaced and ensure that our trading rights are upheld in the face these unfair policies. Schumer said Canada dairy trade policies cannot be allowed to continually impair the value of fair trade provisions the U.S. previously secured under our prior trade agreements.

“It clear that Canada’s new restrictive dairy trade and pricing polices is a blatant attempt to clamp down on American dairy products – and that flies directly in the face of fair trade agreements signed by the U.S. and Canada,” said Senator Schumer. “I’m calling on Secretary Vilsack and Ambassador Froman to ramp up their effort to immediately investigate these new, unfair policies already in place and those proposed for fall implementation. We must take every step possible to preserve fair trade and to protect New York’s dairy farmers, who could be put in grave jeopardy if these rules are fully imposed and implemented. Our NY dairy producers work hard every day to provide for their families and export quality products to the world – and they deserve to know that everyone’s competing on a level playing field.”

Schumer explained that Canada is looking at implementing this fall a‎ National Ingredients Strategy, which reportedly takes a similar approach to Ontario’s new Class VI pricing program by incentivizing Canadian processors to shift away from using dairy imports from the U.S.  Schumer said Ontario recently implemented a targeted pricing policy that is designed to crowd out New York’s dairy sales and discourage Canadian cheesemakers from using imported ultra-filtered milk from the U.S. in their products. To date, companies in the U.S. and Upstate NY have enjoyed duty-free access for this specific product, an agreement Canada complied with under the North American Free Trade Agreement.

However, Schumer said these recently approved Canadian trade barriers, as well as the proposed national policy, could hinder all of the development and growth of the Upstate NY dairy industry. Companies like O-AT-KA and Cayuga Milk Ingredients, along with Ideal Dairy Farm, rely on trade with Canada for a significant percentage – millions of dollars – of their revenue. As the country’s third largest milk producing state, a significant impact on New York’s ability to tap into key foreign markets could also impact farmers in surrounding states in the northeast and the entire Mid-Atlantic region. Therefore, Schumer said, any reductions in export sales could impact NY dairy manufacturers and their supplying farms, which are already struggling with depressed milk prices.

Schumer said it is unacceptable that Canada would change rules in order to purposefully harm the U.S. and Upstate NY dairy industries. Schumer said the federal government must prioritize protecting the existing U.S. dairy trade with Canada and companies across Upstate NY continue to thrive. As a result, Schumer is urging the USDA and USTR to investigate whether U.S. exports are being unfairly displaced and ensure that NY trading rights are upheld in the face of Ontario’s new, unfair pricing policy and the newly reported national strategy on the part of Canada that would limit American imports even more widely. Schumer said Canada cannot be allowed to continually impair the value of concessions the U.S. previously secured under our prior trade agreements. Schumer therefore wrote to Secretary Vilsack and Ambassador Froman, urging them to investigate Canada’s actions and ensure that US-Canada trade agreements are being respected.

A copy of Schumer’s letter – written jointly with Senator Tammy Baldwin [D-WI] to the USDA and USTR appears below:

Dear Ambassador Froman and Secretary Vilsack:

We write you today to urge you to investigate whether Canada’s recently announced National Ingredients Strategy and Ontario’s Class VI pricing program are in keeping with Canada’s trade commitments to the United States. It is troubling that these dairy pricing programs appear to be designed in ways to intentionally displace current U.S. imports. We are extremely concerned that the “Class VI” pricing policy that has recently been in place in Ontario violates Canada’s existing trade commitments to the United States and reports suggest that this new national strategy may follow a similar approach.

We are particularly concerned about reports that through these types of programs, Canada is moving to target New York and Wisconsin exports of ultrafiltered milk. Companies from our states inform us that they have already lost considerable export sales as a result of the Ontario dairy policy introduced this past spring. These reductions in export sales impact dairy manufacturers and their supplying farms in areas of our states that are unfortunately already struggling with depressed milk prices.

It is our concern that the Class VI pricing program appears to be designed directly to incentivize Canadian processors to shift to using more Canadian milk and dairy inputs, in essence penalizing them for the use of imported dairy inputs. Based on the information currently available on this program and the clear public track record that the “Class VI” pricing program is being implemented specifically to displace imports, we have serious doubts as to how the program would be compliant with Canada’s NAFTA and WTO obligations. We are concerned that Canada now intends to build upon this model by putting in place a similar policy at the national level to discourage U.S. dairy exports and we urge you to investigate the trade compliance of this action.

It has become evident that Canada has been looking for ways to restrict U.S. ultrafiltered milk exports through various policy or regulatory tools. Moreover the efforts to limit trade in this product appears to represent a continuation of persistent Canadian regulatory and policy shifts aimed directly at impeding dairy trade. We cannot tolerate Canada’s continued disregard of their trade commitments to us.

The dairy industry is extremely important to the rural economies in our states. Canadian barriers to U.S. dairy exports will worsen an already tough situation facing dairy farmers in the Northeast and Upper Midwest this year. In addition to its revised pricing policies, Canada has also reportedly been considering additional avenues that press reports indicate would be pursued strictly to curtail U.S. dairy exports. These include regulatory interpretation shifts that would impact Canada’s cheese standards and the new exclusion of dairy from Canada’s Duties Relief Program.

Again, we urge you to investigate whether U.S. exports are being unfairly displaced and ensure that our trading rights are upheld in the face of Ontario’s “Class VI” pricing policy and the reported National Ingredients Strategy. Canada cannot be allowed to continually impair the value of concessions the U.S. previously secured under our prior trade agreements.  We urge you to exhaust all potential avenues to bring Canada into compliance with its trade commitments. Thank you for your attention to this most important request.


Charles E. Schumer

United States Senator