US Queries Canada on Wine, Dairy at WTO

The U.S. asked Canada Feb. 12 to explain several regulatory changes regarding wine and dairy ahead of next week's World Trade Organization (WTO) agriculture review.The questions may be relevant to the ongoing renegotiation of the North American Free Trade Agreement, where the U.S. and Canada remain at odds over various agricultural trade policies.Regarding Canada's dairy policies, the U.S., Australia, and New Zealand asked Canada to explain its application of new milk classes that America previously criticized as import substitution policies that may violate WTO rules. Last year the Canadian dairy industry established a new “class 7” milk category to price ingredients like protein concentrates, skim milk, and whole milk powder used to make cheese and yogurt. The move followed Ontario's decision in 2016 to set up a “class 6” milk category that U.S. ranchers blame for reduced market prices for ultra-filtered milk and depressed demand for U.S. milk exports. U.S. trade officials in 2017 complained that Canada's national ingredient strategy harmed U.S. ranchers by incentivizing Canadian dairy producers to manufacture protein substances using Canadian milk.