Canada backs down in dairy dispute

After holding out for many years, Canada has agreed to meet its obligations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), potentially delivering up to $157 million per year in export value for New Zealand dairy exporters.

Trade Minister Todd McClay says Canada had failed to meet its obligation to New Zealand in respect of dairy access, but the agreement means they will now do so.

New Zealand initiated formal dispute settlement proceedings in respect of restrictive access to the Canadian market for dairy exports under the CPTPP in 2022. A dispute panel found in New Zealand’s favour however Canada failed to fully comply with the panel’s ruling. New Zealand threatened further action last year including the imposition of retaliatory tariffs against Canadian exporters.

“We notified Canada of retaliatory action last year unless they met their obligations to us, McClay says.

“The Government is pleased that this dispute has now been settled, and New Zealand exporters are guaranteed better access to the Canadian market,” McClay says

Under the agreement, Canada has committed to making commercially meaningful changes to the way it administers its dairy quotas under CPTPP, including faster and more efficient access to quotas for New Zealand exporters, reallocation of underused quotas, and penalties for importers who misuse quotas.

“The CPTPP is a world leading agreement that unlocks significant opportunities for all parties, but its obligations must be upheld. Today’s agreement reinforces support for the rules-based trading system,” McClay says.

“Canada is a close and long-standing friend and trading partner of New Zealand, and I want to thank them for their constructive engagement in reaching this resolution.”