The Biden administration is seeking new dispute settlement consultations with Canada to expand the scope of its challenge to restrictions on U.S. dairy exports. 

The administration’s case is broadening to include Canada’s use of a methodology based on market share to determine allocations under its tariff-rate quotas on U.S. dairy, according to a statement by the Office of the U.S. Trade Representative. 

“Since initiating consultations with Canada in May 2022, the United States has identified additional aspects of Canada’s measures that appear to be inconsistent with Canada’s obligations under the USMCA, and U.S. concerns have only increased,” the statement said. 

The market-share methodology “differs depending on the type of applicant, which has the effect of ring-fencing large shares of the quota and limiting access to those shares exclusively to processors,” the statement said. 

Canada also requires applicants for allocations to have been active during all 12 months of a 12-month reference period, “potentially excluding otherwise eligible applicants, in particular new entrants,” according to USTR.

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A three-member U.S.-Mexico-Canada Agreement dispute panel agreed in December 2021 that Canada was manipulating the quotas. Canada then agreed to alter its quotas that were originally intended to increase U.S. access to Canada’s market for milk, cheese, cream, skim milk powder, butter, ice cream and whey.

The Biden administration has rejected successive Canadian proposals for addressing the dispute panel’s decision. 

Jim Mulhern, president and CEO of the National Milk Producers Federation, welcomed the USTR action.  “At the end of the day, if Canada continues to flagrantly flout its obligations, the U.S. government has to be ready with retaliatory measures that make the Canadian government reconsider its actions,” he said. 

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