The U.S. has been in consultations with Canada since Dec. 9 over allegations that Canada has twisted its promises on dairy quotas created under the U.S.-Mexico-Canada Agreement and now U.S. industry groups are pushing for quicker action.

“Canada needs to stop manipulating its dairy (tariff rate quotas),” Krysta Harden, president and CEO of the U.S. Dairy Export Council said in a statement Monday. “Its actions have not only negatively impacted U.S. dairy farmers and manufacturers, but also constrained many Canadian companies from being able to make use of these new TRQs to expand their supply options. USMCA lays out clear requirements on TRQ procedures and we urge the U.S. government to ensure full compliance by Canada with those commitments.”

Statements by Harden and others were released Monday in concert with a new submission by USDEC, National Milk Producers Federation and the International Dairy Foods Association to Global Affairs Canada, the country’s trade agency.

Canada agreed under USMCA – to Canadians the acronym is CUSMA — to increase U.S. access to Canada’s market for milk, cheese, cream, skim milk powder, butter, ice cream and whey by establishing new quotas. But Canada, U.S. industry groups say, has been manipulating those quotas for months to block the entry of products like cheese that the U.S. wants to sell to Canadian buyers.

U.S. industry officials say Canada is operating the TRQs to give 85% of them to processors so they can buy products from the U.S. that don’t compete with Canadian products. This effectively limits U.S. suppliers that want to export more high-priority products, one official said.

The U.S. and Canada are technically still in the consulting phase over the U.S. complaint, but that could rapidly escalate if the U.S. demands a dispute panel, according to industry and government officials.

“It’s time for Canada to stop playing games and address concerns related to the administration of its TRQs,” Jim Mulhern, NMPF president and CEO, said. “Canada is failing to meet its trade obligations by manipulating import license procedures and minimizing the ability of U.S. dairy farmers to have full access to the benefits of USMCA. That needs to stop, and we look forward to working with the Biden administration to ensure it does.”

One Biden administration official well aware of the U.S. dairy industry concerns over how Canada is operating its TRQs is Ag Secretary Tom Vilsack, who preceded Harden as USDEC’s president and CEO.

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In fact, Vilsack said the dairy TRQs were one of the topics he brought up last week in a conversation with Canadian Agriculture Minister Marie-Claude Bibeau.

“Secretary Vilsack confirmed his interest in fully implementing the USMCA trade agreement, including Canadian commitments on dairy and wheat,” a USDA spokesman told Agri-Pulse after the conversation with Bibeau. 

Canada agreed under USMCA, the rewrite of the North American Free Trade Agreement, to stop automatically giving U.S. wheat the lowest feed grade possible when it comes across the border.

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