Canada and New Zealand have finalized a landmark deal to resolve an ongoing trade dispute over the dairy industry. This resolution is a truly historic moment. It is the first time that a trade dispute has been settled under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The agreement will introduce technical changes to Canada’s Tariff Rate Quota (TRQ) administration, ultimately benefiting New Zealand’s dairy exporters.
The fight started over Canada’s choice of how to distribute its dairy quotas. Critics claim that this practice goes against the provisions laid out in the CPTPP. A trade panel ruled in September 2023 that Canada’s regulations unfairly limited New Zealand’s dairy quotas to protect domestic processors. In reaction to this ruling, New Zealand issued retaliatory tariffs, claiming that Canada was in violation of the panel’s ruling.
Agreement Details
The new land use rules Canada agreed to are limited policy changes to Canada’s TRQ administration. These amendments are intended to make the process easier for importers, so that they can get access to the quotas faster and in a more efficient manner. This will help meet the strong demand for US dairy products that CPTPP quotas will now make possible.
“Importers will be able to access quota faster and more efficiently, making it easier to trade more dairy under Canada’s CPTPP quotas,” – New Zealand’s trade department.
New Zealand’s Trade Minister Todd McClay seems pleased about the agreement. Achieving this, he said, could create $129 million CAD in new export value for New Zealand’s dairy exporters.
Implications of the Dispute
The dairy dispute serves as an important reminder about how complicated things can get in major international trade agreements, especially when it comes to agricultural sectors. Canada’s restrictive measures were deemed unfair by a trade panel, impacting New Zealand’s ability to compete in the Canadian market. In tackling these shared challenges, both countries have made it clear that finding a resolution requires holding true to their trade commitments as set forth in the CPTPP.
Trade Minister Maninder Sidhu and Agriculture Minister Heath MacDonald stated that the agreement “does not amend Canada’s market-access commitments,” highlighting that Canada remains committed to its obligations while making necessary adjustments.
Broader Context
The CPTPP, a multilateral trade agreement among 11 Asia-Pacific countries, is intended to expand economic integration between its member countries. Just last year, the United Kingdom acceded to the CPTPP. This decision led to a wave of applications from countries around the world that wanted to join the trade agreement. The European Union has been exploring collaborations with the CPTPP as a counterbalance to American and Chinese trade pressures.
Countries are confronted by tricky political trade-offs. Pact constituting a critical mechanism for establishing equitable partnerships and providing fair market access to all parties.
