Agriculture and Agri-Food Canada, the Canadian ministry of agriculture, is defending its government-run dairy price system and its compliance with the U.S.-Mexico-Canada Agreement as criticism rises from the U.S. dairy industry that Canada is doing an end-run around the trade pact to continue bolstering exports.

Agriculture and Agri-Food Canada reached out to Agri-Pulse to stress that the country is complying with its legal obligations under the trade pact, a one-year-old overhaul of the North American Free Trade Agreement.

“Canada takes all of its international trade obligations very seriously, including its dairy obligations in the USMCA,” an AAFC spokesperson tells Agri-Pulse

The statement comes after Allan Huttema, chairman of the board of directors for the Northwest Dairy Association and Darigold, blasted Canada for circumventing a USMCA provision that sought to limit Canadian milk protein exports with new thresholds and the elimination of the country’s class 6 and 7 milk pricing schemes.

“The federal government, provincial governments and the Canadian dairy industry have worked to ensure that milk classes 6 and 7 were eliminated and that products required to be priced based on U.S. reference prices are priced as such,” the AAFC said in a statement given to Agri-Pulse. “Canada understands that this issue is important to stakeholders in the U.S. dairy industry and we are confident that our practices align with our international trade obligations.”

The AAFC statement comes in the wake of claims by the U.S. dairy industry that the relatively new Canadian class 4a is now being used to help boost exports of a class of milk proteins that are similar, but different, from the products under classes 6 and 7.

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“There’s a whole host of products globally that are produced using milk protein as an input and the exports of these products are now putting more Canadian protein on global markets to compete against our milk protein,” says Shawna Morris, vice president of trade policy for the U.S. Dairy Export Council and National Milk Producers Federation.

Canada is complying with the letter, but not the spirit, of its milk-pricing promises under USMCA, said Becky Rasdall, vice president of trade policy and international affairs for the International Dairy Foods Association.

Rasdall stressed that while “class 4a is the new class 7,” it technically does not breach any agreement under USMCA.

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