After first raising concerns about Canada’s allocation of tariff-rate quotas for U.S. exports of dairy products in June and again in September, U.S. senators Charles E. Schumer and Kirsten Gillibrand applauded the U.S. Trade Representative’s decision to file a United States-Mexico-Canada Agreement enforcement action against Canada to protect New York’s dairy farmers and ensure fairer market access.

In a statement issued today (Dec. 11) Schumer and Gillibrand said, “Dairy is New York’s primary agricultural product and our dairy farmers are the lifeblood of the Upstate economy. They have been hit especially hard and squeezed by the economic effects of the pandemic, and poor implementation of USMCA provisions by Canada over the past five months will only further hinder their ability to recover from this crisis.

"Yesterday’s filing of the first-ever USMCA enforcement action by the United States to protect New York’s dairy farmers from Canada’s unfair allocation of tariff-rate quotas is a necessary step to ensuring that the Upstate New York dairy industry fully benefits from the agreement’s expanded market access opportunities, unimpeded by unreasonable trade barriers.

"New York’s dairy industry must have Canada fully abide by its USMCA dairy pricing and export policy commitments. We must continue to hold Canada and our other trading partners accountable and ensure equitable trading practices to help New York’s dairy farmers churn up profits that mitigate the huge losses they have suffered this year.”

Continuing their tireless advocacy for New York’s hard-hit dairy farmers in the midst of the COVID-19 crisis, U.S. Senator Charles E. Schumer and U.S. Senator Kirsten Gillibrand today urged U.S. Trade Representative Robert E. Lighthizer and U.S. Secretary of Agriculture Sonny Perdue to ensure both Canada and Mexico are held accountable to their trade commitments under the United States-Mexico-Canada Agreement (USMCA), which entered into force earlier this year on July 1^st.

Specifically, the senators pointed out three harmful dairy trade practices, including Canada’s recent allocation of tariff-rate quotas (TRQs) for U.S. exports of several categories of dairy products, Canada’s Class 7 pricing program (Class 6 in Ontario) and lack of transparency in milk-pricing regulations, and the need for Mexico to translate its USMCA commitment of safeguarding more than 30 common cheese names for American products, into regulations.

“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 and Secretary Perdue to do everything in their power to ensure that Canada and Mexico abide by their dairy trade obligations, allowing Upstate New York dairy farmers to freely sell their product – as agreed to in the new trade agreement with both countries, the USMCA.

"The trade deal entered into force two months ago, and there can be no further delays to ensuring our New York dairy farmers can sell their products, unimpeded by unfair trade barriers, into Canada and Mexico and churn up profits that mitigate the huge losses they have suffered this year.”

“Dairy is New York’s primary agricultural product and our rural economies depend on the survival of the industry, but poor implementation of USMCA provisions on dairy will harm our dairy farmers and make it even harder for them to recover from this crisis,” Senator Gillibrand said. "Secretary Perdue and USTR Ambassador Lighthizer must hold our trading partners accountable and ensure equitable trading practices for America’s dairy farmers.”

Schumer and Gillibrand explained that under USMCA, Canada agreed to an expansion of tariff-rate quotas (TRQs) for several categories of U.S. dairy products. However, recently, it has come to the senators’ attention that Canada’s recently-released TRQ allocations weaken the intent of the USMCA and will prevent New York dairy farmers from fully benefitting from the agreement’s expanded market access opportunities.

Additionally, the senators said that under the new trade deal, Canada agreed to eliminate Class 6 & 7 pricing within six months. However, as Schumer revealed in June, Dairy Farmers of Ontario (DFO), which represents approximately 4,000 Canadian dairy farmers, requested that Ontario’s tribunal which provides an avenue of appeal on agriculture issues grant restricted access to DFO’s pricing regulations.

The senators argued that with only a few months left until the USMCA six-month deadline to eliminate Class 6 & 7, the lack of transparency and timing of DFO’s request  in combination with the new TRQs, raises questions about whether or not Canada is seeking to circumvent its dairy commitments in USMCA.

The senators also noted that U.S. dairy farmers secured a major victory in the USMCA when Mexico affirmed a list of more than 30 terms for cheese that would remain available as common names for U.S. cheese producers when exporting to Mexico, but with uncertainty remaining over how Mexico will translate its commitment to protect these common cheese names into regulations, U.S. dairy farmers are in danger of losing out on the market share they spent years developing.

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.

“Today is a good day for American agriculture," Perdue said. "Throughout this process, there were many detractors who said it couldn’t be done. But this is further proof that President Trump’s trade negotiation strategy is working. This agreement shows the rest of the world the United States is open for business.

"USMCA is critical for America’s farmers and ranchers, who will now have even more market access to our neighbors to the north and the south. I am excited to see the economic benefits of this agreement increase the prosperity of all Americans, especially those living in rural America."

Background about the USMCA

It will advance United States agricultural interests in two of the most important markets for American farmers, ranchers, and agribusinesses. This high-standard agreement builds upon our existing markets to expand United States food and agricultural exports and support food processing and rural jobs.

Canada and Mexico are our first and second largest export markets for United States food and agricultural products, totaling more than $39.7 billion food and agricultural exports in 2018. These exports support more than 325,000 American jobs.

All food and agricultural products that have zero tariffs under the North American Free Trade Agreement (NAFTA) will remain at zero tariffs. Since the original NAFTA did not eliminate all tariffs on agricultural trade between the United States and Canada, the USMCA will create new market access opportunities for United States exports to Canada of dairy, poultry, and eggs, and in exchange the United States will provide new access to Canada for some dairy, peanut, and a limited amount of sugar and sugar-containing products

Earlier this year, nearly 1,000 American food and agriculure associations and companies announced their support for USMCA and the National Association of State Departments of Agriculture signed a letter to Congressional leadership urging them to ratify USMCA.*

In September, all former U.S. secretaries of Agriculture since President Reagan’s Administration announced support for USMCA. In a letter to Congessional leaders, former Secretaries John Block (Reagan), Mike Espy (Clinton), Dan Glickman (Clinton), Ann Veneman (W. Bush), Mike Johanns (W. Bush), Ed Shafer (W. Bush), and Tom Vilsack (Obama) underscored the importance of passing USMCA saying:

“We need a strong and reliable trade deal with our top two customers for U.S. agriculture products. USMCA will provide certainty in the North American market for the U.S. farm sector and rural economy. We strongly support ratification of USMCA.”

Key Provision: Increasing Dairy Market Access

• America’s dairy farmers will have expanded market opportunities in Canada for a wide variety of dairy products. Canada agreed to eliminate the unfair Class 6 and Class 7 milk pricing programs that allowed their farmers to undersell U.S. producers.

Key Provision: Biotechnology

• For the first time, the agreement specifically addresses agricultural biotechnology – including new technologies such as gene editing – to support innovation and reduce trade-distorting policies.

Key Provision: Geographical Indications

• The agreement institutes a more rigorous process for establishing geographical indicators and lays out additional factors to be considered in determining whether a term is a common name.

Key Provision: Sanitary/Phytosanitary Measures

• The three countries agree to strengthen disciplines for science-based measures that protect human, animal, and plant health while improving the flow of trade.

Key Provision: Poultry and Eggs

• U.S. poultry producers will have expanded access to Canada for chicken, turkey, and eggs.

Key Provision: Wheat

• Canada agrees to terminate its discriminatory wheat grading system, enabling U.S. growers to be more competitive.

Key Provision: Wine and Spirits

• The three countries agree to avoid technical barriers to trade through non-discrimination and transparency regarding sale, distribution, labeling, and certification of wine and distilled spirits.

* Signatories included: Batavia-based O-AT-KA Milk Products Cooperative; Upstate Niagara Cooperative; New York Corn and Soybean Growers Association; New York Farm Bureau; New York Pork Producers Co-Op; and the New York Apple Association.