Trade Representative Katherine Tai announced the United States is establishing a dispute settlement panel under the terms of the United States-Mexico-Canada agreement. The move is the latest response to Canada’s dairy Tariff Rate Quota policies, which U.S. officials maintain unfairly undermine market access for American dairy producers.

This is the second time the U. S. has called for a panel over this issue. In Dec. 2021, the first dispute panel ruled in favor to the United States’ position, prompting Canada to revise is TRQ measures. Those changes were not enough to satisfy American officials, who requested additional consolations with their Canadian counterparts in May 2022.

The U.S. made a second request for additional consultations in Dec. 2022. However, after meeting on Jan. 17, the two sides still could not come to a resolution.

“With this panel request, we are utilizing our available tools to enforce our trade agreements and ensure that U.S. workers, farmers, processors, and exporters receive the full benefits of the USMCA,” Tai said. “Canada made commitments to the United States in the USMCA, and the Biden-Harris Administration is ensuring that they honor those commitments.”

The move to call for the dispute settlement panel was widely praised by representatives from the American dairy industry. Dairy Export Council President Krysta Harden and National Milk Producers Federation President Jim Mulhern issued a joint statement thanking the administration for its actions. They noted that if the panel ultimately decides Canada has been violating its USMCA obligations the U.S. may be granted the right to impose retaliatory duties.

“Unfortunately, Canada has shown a pattern of not living up to the dairy commitments it has made in trade agreements,” Harden said. “As long as they continue to drag their feet, we’ll continue to work with USTR and USDA to fight back and propose retaliatory action if necessary.”

Mulhern says that Canada’s TRQ allocation system not only violates the USMCA, but also directly harms American dairy farmers, processors, and other workers by unfairly restricting access to their market.

“USTR’s action is an important step in righting this wrong and sending a message that the U.S. will fight violations of trade deals in Canada and wherever else they may be committed,” said.

According to the USMCA guidelines, a dispute resolution panel is established upon the delivery of a formal request. The panel is expected to issue its report later this year.