A new CUSMA ruling seems to have put an end to the long-running dispute between the U.S. and Canada over tariffs on dairy imports.

The CUSMA dispute panel determined that Canada had not acted unreasonably, and under the Canada-United States-Mexico-Agreement, Canada has the right to maintain tariff rate quotas (TRQs) on the following 14 types of dairy products: milk, cream, skim milk powder, butter and cream powder, industrial cheeses, cheeses of all types, milk powders, concentrated or condensed milk, yogurt and buttermilk, powdered buttermilk, whey powder, products consisting of natural milk constituents, ice cream and ice cream mixes, and other dairy.

Furthermore, this closes the door on the U.S. issuing retaliatory tariffs on Canada, which is something that had been discussed as a possibility in prior discussions about the issue.

The Government of Canada released a statement saying “Canada is very pleased with the dispute settlement panel’s findings, with all outcomes clearly in favour of Canada. This is good news for Canada’s dairy industry and our system of supply management.”

“The Government of Canada will continue to preserve and defend Canada’s supply management system, which supports producers by providing the opportunity to receive fair returns for their labour and investments, brings stability for processors and benefits consumers by providing them with a steady supply of high-quality products.

“Canada looks forward to working with the United States and Mexico to ensure that our industries and workers continue to enjoy the benefits of CUSMA.”

The announcement follows the United States’ request for a dispute settlement panel on January 31, 2023.

There is no appeal process for dispute settlements under CUSMA.

Canada’s dairy sector is a key driver of the economy, with more than 9,700 farms and 500 dairy processing plants generating $8.2 billion in farm cash receipts and $17.4 billion in sales in 2022. Together, dairy production and processing activities account for more than 70,000 jobs in Canada.  

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