New Zealand has intensified its ongoing trade conflict with Canada regarding access to dairy products.
Todd McClay, New Zealand’s Trade and Agriculture Minister, announced that Wellington has initiated “mandatory negotiations” in accordance with the procedures outlined in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Both New Zealand and Canada are signatories to the CPTPP, a significant trade agreement encompassing 11 nations. The agreement mandates that negotiations commence within 15 days after a formal notification.
In May 2022, New Zealand lodged a complaint against Canada, claiming that Ottawa’s implementation of dairy tariff rate quotas (TRQs) contravened the provisions of the agreement. Following this, a CPTPP panel ruled in September of the previous year that Canada’s management of dairy quotas did not align with its CPTPP obligations. Consequently, New Zealand exporters were hindered from fully utilizing Canada’s 16 dairy tariff-rate quotas, as priority access was granted to domestic dairy processors.
Siding with New Zealand, the arbitration panel asserted that Canada had not fulfilled its commitments under the CPTPP. Despite this ruling, Canada has not complied, prompting New Zealand to seek negotiations.
Todd emphasized, “New Zealand takes its obligations under trade agreements seriously. The CPTPP is one of the highest-quality agreements signed by a group of like-minded economies.” He added that all parties involved understood their commitments at the time of signing, underscoring the necessity for them to honor these agreements. The New Zealand government demands fair treatment for its exporters in alignment with the established rules. However, Todd noted that Canada is failing to do so regarding the agreed-upon dairy quotas with New Zealand.
In response to the situation, Canadian ministers issued a joint statement expressing their disappointment over New Zealand’s continued challenge to Canada’s dairy TRQ system. Mary Ng, Canada’s Minister of Export Promotion, International Trade and Economic Development, and Lawrence MacAulay, the Agriculture and Agri-Food Minister, remarked that Canada has consistently defended its dairy sector and supply management against trade disputes under both CUSMA and the CPTPP.
The ministers reiterated, “The government of Canada will always defend our supply management, firmly standing up for Canada’s dairy industry, farmers, workers, and the communities they support.”
This trade dispute comes in the wake of a November ruling where the U.S. lost a case regarding access to Canada’s dairy market, after a dispute settlement panel affirmed that Ottawa had not violated any trading commitments. The U.S. previously accused Canada of breaching agreements within the United States-Mexico-Canada Agreement (USMCA) through its dairy TRQ allocation practices.
In conclusion, New Zealand’s recent actions highlight the ongoing complexities in the food and beverage industry trends, particularly surrounding trade agreements and consumer access within the food and drink business. This dispute exemplifies the significant impact of trade policies on food and drink consumer trends in the region.
