After fiercely advocating for federal aid to New York’s dairy farmers in the beginning of the coronavirus (COVID-19) crisis, U.S. Senate Minority Leader Charles E. Schumer today urged United States Trade Representative Robert E. Lighthizer to quickly raise concerns about Canada evading its commitments under the United States-Mexico-Canada Agreement (USMCA).
Canada agree to eliminate harmful dairy trade practices, including its Class 7 pricing program (Class 6 in Ontario) and lack of transparency in milk-pricing regulations. Both were explicitly addressed in the agreement, which enters into force next week on July 1.
“New York’s dairy farmers are the lifeblood of the Upstate economy, but unfortunately
, they have been squeezed by the economic effects of the COVID-19 crisis,” Senator Schumer said. “That is why I am calling on Ambassador Lighthizer to do everything in his power to ensure that Canada abides by its dairy trade obligations and eliminates its unfair and harmful pricing programs and practices that unfairly impeded Upstate New York dairy farmers from freely selling their product – as agreed to in the new trade agreement with Canada, the USMCA.
As the trade deal enters into force next week, it is imperative that our New York dairy farmers are able to sell their products into Canada and churn up profits that mitigate the huge losses they have suffered this year.”
“USMCA requires Canada to provide new market access for American dairy products and to eliminate its destructive Classes 6 and 7 milk pricing schemes,” said Jaime Castaneda, senior vice president for Policy Strategy and International Trade with the National Milk Producers Federation and the U.S. Dairy Export Council. “While not unexpected, Canada’s efforts to manipulate its agreed upon trade obligations to protect its tightly controlled dairy market are unacceptable.
"Canada needs to live up to the commitments it made to the U.S. on dairy. America’s dairy industry appreciates Senator Schumer for his leadership on this issue and we support Ambassador Lighthizer and Secretary Purdue as the U.S. works to hold Canada accountable to its commitments under USMCA.”
“Cayuga Milk Ingredients applauds the efforts of New York’s Senator Schumer for raising concerns over Canada’s recent request for dairy pricing secrecy within the Ontario Provincial Tribunal and their most recent administration of TRQs," said Kevin J. Ellis, CEO Cayuga Milk Ingredients. "On both issues, Canada is showing they have no desire to act in good faith with respect to the trade commitments they made underneath USMCA.
"Cayuga Milk Ingredients suffered a loss of nearly $24 million of sales in 2016 when Canada implemented a National Class 7 pricing scheme that was specifically and intentionally designed to stop the importation of ultra-filtered milk. Based on these latest events, it appears Canada cannot be trusted to honor its trade commitments with the United States,”
Craig Alexander, senior director, Milk Planning and Regulatory Affairs at O-AT-KA Milk Products in Batavia, said, “A foundation principle of the new USMCA pertaining to Canada was transparency of pricing formulation and the elimination of its Class 7 pricing. We appreciate Senator Schumer’s push for Canada to live up to its commitments in this agreement.
"Canada should not obscure information on pricing now in order to artificially create a pricing environment that will keep us at a disadvantage once these USMCA provisions go into force. Furthermore, Canada’s implementation of TRQs negotiated as part of USMCA and reserving increased access almost entirely to existing Canadian dairy companies is evidence that Canada has not changed its past history of circumventing trade agreements.
"If Canada simply held up their end of the deal on eliminating Class 7 and fair implementation of TRQs, we could again get a fair shake at the opportunities to serve the Canadian market going forward.”
Schumer explained that under USMCA, Canada agreed to eliminate Class 6 & 7 pricing within six months. However, the Senator revealed, Dairy Farmers of Ontario (DFO), which represents approximately 4,000 Canadian dairy farmers, has recently requested that Ontario’s tribunal, which provides an avenue of appeal on agriculture issues, grant restricted access to DFO’s pricing regulations.
Schumer argued that with only a few days left until the USMCA is set to enter into force, the lack of transparency and timing of DFO’s request raises questions about whether or not Canada is seeking to circumvent its dairy commitments in USMCA.
Additionally, Schumer pointed out, under USMCA, Canada agreed to an expansion of tariff rate quotas (TRQs) for several categories of U.S. dairy products. However, the U.S. dairy industry has raised concerns that Canada’s recently released TRQ allocations weaken the intent of USMCA and will prevent New York dairy farmers from fully benefiting from the agreement’s expanded market access opportunities.