NEW ZEALAND – New Zealand and Canada are currently embroiled in a dispute over dairy quotas, highlighting ongoing tensions regarding the allocation of dairy tariff-rate quotas (TRQs) under international trade agreements.
The crux of the issue lies in Canada’s management of TRQs, which New Zealand argues has been unfairly restrictive, limiting the access of its dairy products to the Canadian market.
These quotas were part of a negotiated deal between the two countries, but New Zealand claims that Canada is not honoring the terms as originally agreed.
New Zealand’s Trade Minister has expressed frustration over Canada’s stance, noting that the agreements were made with clear expectations that both parties would uphold their commitments.
“Parties to the agreement understood the commitments they were making when the agreement was signed, and it is important that they honour them,” the Minister said.
“As a matter of principle, the New Zealand government expects our trade partners to treat our exporters fairly and within the rules of our agreements. Canada is not doing that in respect to the dairy quotas that were negotiated and agreed with New Zealand.”
The issue has escalated to the point where New Zealand has opted to pursue legal channels to resolve the matter. Canada, however, remains firm in its defense of its dairy management system.
In response to New Zealand’s actions, two senior Canadian ministers issued a joint statement, expressing disappointment in New Zealand’s decision to continue the challenge.
Mary Ng, Canada’s Export Promotion, International Trade, and Economic Development Minister, along with Lawrence MacAulay, the Agriculture and Agri-Food Minister, said that Canada has consistently defended its supply management system against similar challenges in the past.
“Canada is very disappointed that New Zealand has decided to continue to challenge Canada’s dairy TRQ system,” they remarked.
“We have been through this before and have consistently and successfully defended our dairy sector and supply management from trade challenges under CUSMA and the CPTPP.”
The Canadian ministers reiterated their government’s commitment to protecting their domestic dairy industry, which is a cornerstone of the Canadian agricultural sector.
“The government of Canada will always defend our supply management, firmly standing up for Canada’s dairy industry, farmers and workers and the communities they support.”
This dispute is not an isolated incident, as Canada has faced similar accusations from other trade partners in the past.
In November 2023, the United States also challenged Canada over its dairy TRQ system, claiming that Canada had violated the terms of the United States-Mexico-Canada Agreement (USMCA).
However, a dispute settlement panel sided with Canada, ruling that Ottawa had not breached its trade commitments to the U.S.
The stakes are high in these trade disputes, particularly for countries like New Zealand, which rely heavily on dairy exports as a key part of their economy.
As one of the world’s largest dairy exporters, New Zealand depends on access to international markets like Canada to sustain its dairy sector.
However, defending Canada’s supply management system is equally important, as it protects domestic producers from international competition and ensures price stability for Canadian farmers.
Subscribe to our food and agriculture industry email newsletters that provide busy executives like you with the latest news insights and trends from Africa and the World. SUBSCRIBE HERE