The first dispute has been initiated under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). On 12 May 2022, New Zealand requested consultations concerning Canada’s implementation of its obligations regarding tariff rate quotas (TRQs).  Rather than the high tariffs otherwise applicable to dairy imports, the TRQs provide duty-free access for specified annual quantities of the following dairy products:

   TRQ-CA1: Milk

   TRQ-CA2: Cream

   TRQ-CA3: Skim Milk Powders

   TRQ-CA4: Milk Powders

   TRQ-CA5: Cream Powders

   TRQ-CA6: Concentrated Milk

   TRQ-CA7: Yogurt and Buttermilk

   TRQ-CA8: Powdered Buttermilk

   TRQ-CA9: Whey Powder

   TRQ-CA10: Products Consisting of Natural Milk Constituents

   TRQ-CA11: Butter

   TRQ-CA12: Industrial Cheese

   TRQ-CA13: Mozzarella and Prepared Cheese

   TRQ-CA14: Cheeses of All Types

   TRQ-CA15: Ice Cream and Mixes

   TRQ-CA16: Other Dairy

New Zealand is a large exporter of dairy products. It claims that Canada’s implementation of the diary TRQs:

is impacting New Zealand exporters who are not able to fully benefit from the market access that was negotiated under the agreement. Many of Canada’s dairy TRQs remain unfilled and this represents a tangible loss to New Zealand’s dairy exporters.  The value to New Zealand of this lost market access is estimated to be approximately $68 million over the first two years, with this expected to increase year on year as the size of these quotas increase under CPTPP”.

Under the CPTPP dispute settlement procedure, Canada has until 19 May 2022 to reply in writing to the request and then has until 11 June 2022 to enter into consultations with New Zealand. If consultations fail to resolve the dispute, New Zealand could request the establishment of a dispute settlement panel as early as 11 July 2022. Assuming the normal timeframes are followed, the panel process will take approximately eight months with a final report issued around March 2023.

Tereposky & DeRose LLP regularly provides advice and acts as counsel in international trade disputes. If you have any questions about the foregoing subject, please do not hesitate to contact us.