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ARTICLE · 20 JANUARY 2022

CUSMA Panel Issues Decision On Canada's Interpretation Of Dairy Tariff Rate Quotas Under Agreement

Osler, Hoskin & Harcourt LLP
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The regulation of Canada's dairy industry has long been a source of tension between Canada and the U.S., its largest trading partner.

CanadaInternational Law
Alan Kenigsberg
Alan Kenigsberg
Brad Wall
Brad Wall
Malcolm Aboud
Malcolm Aboud
Chelsea Rubin
Chelsea Rubin
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The regulation of Canada's dairy industry has long been a source of tension between Canada and the U.S., its largest trading partner. On January 4, 2022, the first dispute resolution panel (the Panel) convened under the Canada-United States-Mexico Agreement (CUSMA) made public its decision, which will shape trading relations between the two countries moving forward. In its report, the Panel concluded that certain practices of the Canadian government relating to the dairy industry violate the government's commitments under CUSMA.

Background

The dispute arose as a result of the "supply management"1 system used to regulate Canada's dairy industry. Supply management allows specific commodity sectors — including dairy — to limit the supply of products to amounts Canadians are expected to consume in order to ensure predictable, stable prices. The system is comprised of three pillars:

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