Canada and New Zealand resolve dairy trade dispute, Canada says

Reuters — Canada and New Zealand have reached a “mutually satisfactory” resolution to a long-running dispute over access for dairy products, the Canadian government said in a statement on Thursday.

Why it matters: Canada’s supply management system remains a sticking point in trade negotiations with the U.S.

“This agreement, negotiated in close consultation with Canadian dairy stakeholders, will result in certain minor policy changes to Canada’s TRQ (tariff rate quotas) administration, and does not amend Canada’s market access commitments,” International Trade Minister Maninder Sidhu and Agriculture Minister Heath MacDonald said in a statement.

New Zealand Trade Minister Todd McClay added in a separate statement that the government was pleased the dispute has now been settled, and New Zealand exporters are guaranteed better access to the Canadian market.

“Today’s agreement reinforces support for the rules-based trading system,” McClay said.

New Zealand launched a claim against Canada in May 2022, arguing that Ottawa’s implementation of dairy tariff rate quotas under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade agreement were against the its rules.

Under the new agreement, Canada has committed to make commercially meaningful changes to the way it administers its dairy quotas under CPTPP, according to the New Zealand government. The Canadian government added that this means there are technical policy changes but these are limited to quotas administered under the terms of the CPTPP.

Canada’s supply management system, which since the 1970s has tightly controlled supplies of dairy, eggs and poultry by restricting production and limiting imports through onerous tariffs, has become a sticking pointing in its ongoing trade negotiations with the U.S.

President Donald Trump has repeatedly criticized what he calls tremendously high Canadian tariffs on dairy products.