Canada backs down in dairy dispute
A long running trade dispute between New Zealand and Canada over dairy access has been resolved.
For years, the Canadian government has point blank refused to comply with rules under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) of which both countries are signatories. Under the rules of this trade agreement, member states are required to open their market to member countries, but despite NZ winning a legal battle that required Canada to comply, they refused.
The dispute has seen NZ politicians and dairy industry leaders engaged in regular and robust meetings with their Canadian counterparts.
At one stage, Trade Minister Todd McClay described the Canadian actions as 'cynical' and disappointing, while the executive director of the Dairy Companies Association, Kimberly Crewther said the Canadian government appeared to have "utter disdain for international trade rules".
At the heart of the dispute has been the Canadian government's unswerving support for their small but politically powerful dairy industry. In other words, it has acted in a protectionist manner to exclude exporters such as NZ from gaining a competitive foothold in the market; and at the same time subsidising their dairy farmers to the extent that they have been able to dump cheap dairy products on the international market.
McClay says the Government is pleased that the dispute has now been settled and says NZ exporters are guaranteed better access to the Canadian market.
He 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.
"This will now deliver up to $157m per year in export value for NZ dairy exporters. The CPTPP is a world leading agreement that unlocks significant opportunities for all parties, but its obligations must be held," he says.
McClay says the agreement reinforces support for the rules-based trading system.
Crewther says she looks forward to NZ exporters enjoying an easier time trading into the 16 CPTPP dairy tariff rate quotas from 1 January, 2026.
"It's been a long time coming and we believe it will make a positive difference," she says.
Crewther says the improved administrative provision that will result from this agreement will make the quotas commercially more usable and valuable for our exporters.
She says under the agreement, Canada will bring forward the dates for return and reallocation of quota licences that the initial recipients will not use, and introduce penalties for recipients who either do not use their allocation or transfer it on to importers who want to use it.
"But we will be watching implementation closely. Significantly, if those changes don't work, there is also provision that quota allocation could move to our first preference of an on-demand system," she says.
Crewther says DCANZ remains concerned that Canadian subsidised exports are continuing to harm NZ exporters' interests in global markets for dairy protein products.
"Canada needs to be held equally to account for this, via the World Trade Organisation," she says.
