Explainer: Spilt milk? Why are the US and Canada preventing over dairy?

WINNIPEG, Manitoba, Feb 1 (Reuters) – The USA on Tuesday mentioned it was looking for a second commerce dispute settlement panel over Canada’s dairy import quotas, accusing Canada of not assembly obligations to open its market to American producers. The transfer is the newest salvo in longstanding tensions between the commerce companions over Canada’s protected dairy trade.

HOW DOES CANADA’S DAIRY SYSTEM WORK?

Canada has tightly managed provides of dairy, eggs and poultry for the reason that Nineteen Seventies, proscribing how a lot farmers can produce and limiting imports via onerous tariffs.

Quotas prohibit how a lot farmers produce in keeping with home demand.

Import quotas restrict the amount of product that may enter Canada from different international locations at a low charge of obligation.

The Canadian Dairy Fee, a authorities company, units a milk worth yearly that dairy processors pay to farmers.

A WTO panel dominated in 2002 that Canada breached its commerce obligations via its dairy help, siding with america. The results of the WTO ruling is that Canada is just not allowed to export a lot dairy.

WHY IS THE UNITED STATES UPSET?

U.S. dairy processors wish to improve gross sales to Canada however excessive tariffs stand in the best way.

The U.S. Commerce Consultant’s Workplace alleges that Canada makes use of an unfair method to figuring out quota allocations beneath the U.S.-Mexico-Canada Settlement on commerce, successfully prohibiting some market contributors like Canadian retailers and meals service operators from utilizing the allocations.

Canada’s commerce minister, Mary Ng, mentioned she was upset within the U.S. transfer and would oppose its makes an attempt to “re-negotiate” throughout the settlement course of.

WHAT IS THE VALUE OF CANADA’S DAIRY SECTOR?

Farm dairy gross sales quantity to C$7.39 billion ($5.54 billion)yearly in Canada. Processed dairy shipments are value C$16.2 billion, in keeping with 2021 authorities figures.

WHY DOES CANADA WANT TO KEEP THE SYSTEM?

All main political events say they help provide administration as a result of it stabilizes incomes for dairy farmers.

Producers in different international locations have suffered from unstable worth swings.

Canada’s 9,739 dairy farmers type one of the influential lobbies within the nation. Most farm in Quebec and Ontario, the Canadian provinces with probably the most parliamentary seats.

WHAT DO OTHERS SAY?

Different dairy-producing international locations similar to New Zealand say Canada’s controls are an unfair option to shelter the Canadian trade.

Inside Canada, some teams say provide administration prevents the nation from turning into a dairy-exporting energy, as it’s in grain and meat. They argue that severely proscribing imports ends in increased Canadian meals costs.

($1 = 1.3343 Canadian {dollars})

Reporting by Rod Nickel in Winnipeg, modifying by Deepa Babington

Our Requirements: The Thomson Reuters Belief Ideas.