Photo: Silvia Méndez
It seems that the ‘three friends’ cannot reach an agreement and initiates the first panel of dispute resolution. The United States and Mexico will sue Canada for its dairy-related business practices.
Following the departure of former US President Donald Trump, Canada hoped that relations with its neighbor to the South would improve. Trump imposed tariffs on Canadian steel and aluminum and threatened levies on the auto sector, explained Brenda Romo, an international relations expert on North American affairs.
But in recent weeks, Canadian officials have faced mounting tensions with the United States. This week, Katherine Ta, the United States trade representative, announced plans to sue Canada for its controversial dairy practices, accusing the country of violating the updated free trade agreement between the United States, Mexico and Canada.
Romo said that for years, “Canada has controlled the production of milk, butter and cheese through supply management, a complex system of production controls and tariffs aimed at keeping domestic prices stable,” adding that imported products, like American cheese, they are subject to a 300% tax.
The United States is challenging special tariff treatment for Canadian dairy products because it allegedly limits the capacity of dairy producers, workers and exporters.
While Canada has announced plans to allow more imports without high tariffs, Tai argued that Canada still uses a complex system of licenses and tariffs to favour Canadian producers.
Mary Ng, Canada’s trade minister, said in a statement that she was “disappointed” by the decision and that her government would “protect and defend” the practice of supply management. Many of the farmers benefiting from the program are in the province of Quebec, a key battlefield heading into the elections.
Mexican dairymen complain about unfair practices in Canada and the United States
Mexican Dairy Federation will ask the Mexican government to apply the competition policy that is authorized by the trade agreement between the three countries, to prevent foreign milk, particularly from the United States, from continuing to displace Mexican milk.
A document from the Mexican Dairy Federation states that the Covid-19 pandemic, the shortage of water due to the lack of rain in practically the entire country since last year, as well as inflation have caused the Mexican dairy sector to have losses due to about 4 million Canadian dollars a day, as it is more expensive to produce than what we have from income from the sale of milk.
José Luis Mercado Plaza, leader of Dairy Producers and Ranchers of Jaral de Berrio, in the Guanajuato municipality of San Felipe, one of the most productive areas in terms of milk along with Valle de Santiago and Celaya, said that is why they will ask the government of President Manuel López Obrador that the competition policy contained in Chapter 21 is applied, which aims to promote and increase competition for the benefit of consumers, “otherwise we will have a monopoly on Canadian and American milk and that it does not benefit us”.
By Silvia Méndez
