Push Continues on Canada Dairy in NAFTA 2.0 Talks

A desire to see advances made and announced on issues related to U.S.-Canada dairy trade – of which, Canada's dairy supply management scheme remains a key topic – has been voiced by President Donald Trump as talks to update the North American Free Trade Agreement (NAFTA) approach their conclusion.Early on in his presidency, Trump told Wisconsin dairy farmers he would protect their interests in the face of Canada’s "unfair" dairy industry. Now the U.S. dairy industry, members of Congress, President Trump and U.S. Trade Representative (USTR) Robert Lighthizer favor a key change related to NAFTA dairy provisions, aimed at reining in Canadian dairy support policies.A recent letter to USTR Lighthizer spearheaded by Reps. Ron Kind, D-Wis., and Lloyd Smucker, R-Pa., and signed by an additional 66 lawmakers across both parties, urged that he apply pressure on Canada over dairy issues. A good NAFTA outcome on dairy will “remain an essential element of a positive result," the lawmakers observed. The key issue raised in the letter was Canada's Class 7 dairy pricing program, which they contend is impeding US dairy exports to Canada. They argued Lighthizer should press for Canada to eliminate the Class 7 program.Besides Class 7, Canada already levies stiff tariffs on most dairy imports, with the milk duty sitting at 270 percent. After a previously robust market for imports of U.S. ultrafltered milk and other protein-rich dairy ingredients suffered with the implementation of the Class 7 program, one of the few bright spots for U.S. dairy exports to Canada vanished.Given the political, economic and trade dynamics a late breaking NAFTA 2.0 development on dairy remains a possibility, especially with rising calls for action from industry, lawmakers and the president.