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Canada’s Dairy Ingredient Policy Raises Global Dairy Concerns

Groups From US, New Zealand, Mexico, Australia Say Policy Favors Use Of Canadian Ingredients Over Imports

Washington—Dairy organizations from the US, New Zealand, Australia and Mexico this week expressed their “deep concern” with an agreement in principle on dairy ingredient pricing that was recently concluded between Canada’s dairy producers and processors.

The dairy organizations issuing a joint letter to their respective trade and agriculture officials included the International Dairy Foods Association (IDFA), National Milk Producers Federation (NMPF) and US Dairy Export Council (USDEC) in the US; the Dairy Companies Association of New Zealand (DCANZ); the Australian Dairy Industry Council (ADIC); the European Dairy Association (EDA), European Whey Products Association (EWPA), and the European Association of Dairy Trade (Eucolait) in the European Union (EU); and the Mexico National Chamber of Industrial Milk.

By adopting the agreement on dairy ingredient pricing, Canada is contravening both its World Trade Organization (WTO) and North American Free Trade Agreement (NAFTA) trade obligations and “undermining the intent” of the pending Trans-Pacific Partnership (TPP) and Comprehensive Economic and Trade Agreement (CETA), which is between the EU and Canada, the dairy groups said.

The Canadian producer-processor agreement “both favors the substitution of Canadian domestic origin dairy ingredients for dairy ingredients imported from our countries, and subsidizes the export of Canadian dairy products to unfairly compete with our products in third country markets,” the dairy organizations stated.

They asked the authorities in the US, EU, New Zealand, Australia and Mexico to initiate a WTO dispute settlement proceeding to challenge the Canadian agreement, once its details are announced, “given its intended erosion of trading conditions in place at the time Canada negotiated prior trade commitments.”

Numerous Canadian programs have imposed trade limitations over the past few years. The dairy organizations cited three examples of that “deeply problematic policy approach” by Canada:

• Canada’s compositional standards for cheese, implemented in 2008, which have intentionally limited imports of ingredients including casein, powdered milk protein concentrate (MPC), milk protein isolate (MPI) and whey protein concentrate (WPC) as inputs into cheesemaking.

• Targeting imported products, such as cheese used on foodservice pizza and chocolate milk, by allowing access to lower-priced Canadian milk for use in processing into such products.

• Ostensibly temporary special classes of milk pricing, such as class 6 in Ontario, which offers Canadian processors nonfat milk solids, at subsidized prices well below the domestic cost of production, for ingredient applications such as skim milk powder, MPC and

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