DCANZ welcomes New Zealand action to fix Canada dairy import system

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The Dairy Companies Association of New Zealand (DCANZ) is welcoming the announcement today that New Zealand has invoked dispute settlement proceedings with Canada over the implementation of its dairy obligations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

“Canada has adopted an approach to administering CPTPP quotas which breaks the rules of the agreement and has severely restricted use of the limited market access,” says DCANZ Chairman Malcolm Bailey.

“Trade agreements are only as good as their implementation. We fully support the New Zealand Government in taking this step to ensure the rules are enforced and the agreed access is usable.”

Canada is a highly protected market for dairy products with tariffs as high as 300%. CPTPP outcomes for access to the Canadian dairy market were limited to a series of reduced tariff rate quotas, and the administration system Canada has put in place for these quotas has seen the right to import primarily given to domestic processors who are direct competitors to New Zealand exporters of those products. This has resulted in pitifully low quota fill rates averaging just 8% in the latest quota year.

“Canadian domestic processors sit on unused quota allocation because as competitors they have no interest in giving Canadian consumers or customers the option of accessing high quality, specialised, and more affordable dairy products from New Zealand,” says Bailey.

Bailey says that despite raising concerns about Canada’s administration of these quotas over several years, Canada has shown no willingness to address New Zealand’s concerns over poor quota usability.

“Launching dispute settlement with Canada is the next logical step to defend our right to fair treatment under the Agreement. The need to take these steps highlights the potential pitfalls of quota-only outcomes from free trade negotiations.”