U.S. launches second USMCA dispute panel as dairy battle with Canada goes to Round 2

WASHINGTON -

The United States is filing another formal dispute over what it considers Canada's failure to live up to its trade obligations to American dairy farmers and producers.

It's the second time the U.S. has launched such a dairy-driven escalation, formally known as a dispute settlement panel, in less than two years.

U.S. Trade Representative Katherine Tai says the new panel has become necessary because Canada has so far refused to take the steps necessary to properly address the first one.

That panel ruled in December 2021 that Canada was indeed violating the terms of the U.S.-Mexico-Canada Agreement with the way it was allocating import quotas for U.S. dairy products.

U.S. trade officials and dairy industry advocates say a large share of those quotas were being allocated to processors rather than producers.

The U.S. says the federal government amended its policies, but that the new procedures remain "inconsistent" with the terms of the agreement, known as USMCA in the U.S. and CUSMA in Canada.

"The Canadian government's revised measures have not fixed the problem," Tai said in a statement announcing the decision. "Canada made commitments to the United States in the USMCA, and the Biden-Harris administration is ensuring that they honour those commitments."

This report by The Canadian Press was first published Jan. 31, 2023.