'Decisive win' for Dairy Sector as NZ wins trade dispute with Canada

'Decisive win' for Dairy Sector as NZ wins trade dispute with Canada

New Zealand has secured a significant victory in its trade dispute with Canada, as revealed by a top trade official who described it as a "decisive win." The dispute stemmed from Canada's violation of dairy tariff rate quotas (TRQs) established under a major trade agreement.

In the ongoing dispute, New Zealand escalated matters by calling for a panel to hear the case last year. 

The three-person panel convened in June to hear arguments regarding Canada's implementation of dairy TRQs under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which determines the amount of a product that can be imported into a country without tariffs or with reduced tariff rates.

Trade Minister Damien O'Connor expressed his satisfaction with the panel's decision.

"Canada was not living up to its commitments under CPTPP, by effectively blocking access for our dairy industry to upscale its exports. 

"That will now have to change." 

He emphasized the significance of this outcome, pointing out that New Zealand's dairy industry had suffered an estimated loss of $120 million in revenue from the Canadian market over the past three years.

O'Connor also highlighted the newfound confidence among exporters that the established mechanisms would ensure the promised market access. 

As part of the CPTPP agreement, New Zealand secured access to 3.3% of Canada's dairy market, equating to tens of thousands of tonnes per year in key dairy products.

The panel's findings indicated that New Zealand exporters were unable to fully utilize Canada's 16 dairy tariff rate quotas, with Canada prioritizing its domestic dairy processors. 

Vangelis Vitalis, Deputy Secretary for Trade and Economics at the Ministry of Foreign Affairs, bluntly stated, "Canada’s approach to administering its dairy quotas is protectionist and undermines the market access agreed between CPTPP Parties," adding that all importers must have equal opportunities to utilize Canada's TRQs.

Vitalis stressed that Canada could not employ administrative complexity to hinder importers' access to quotas or favour certain importers over others. 

He highlighted the tangible costs incurred by New Zealand and other exporting CPTPP Parties due to these issues.

Describing the outcome as a "decisive win" for New Zealand, Vitalis emphasized that Canada must alter its quota administration. 

While Canada was found not to have breached its obligations in "two minor claims," the panel opted not to make findings on two other claims as they had been addressed through other conclusions.

This dispute marked the first to be brought under the CPTPP. Vitalis applauded the efficiency and effectiveness of the CPTPP's dispute settlement rules, hailing it as a success for the rules-based international trading system.

Despite the dispute, Vitalis emphasized the enduring friendship between New Zealand and Canada, noting that even close friends experience disagreements and the CPTPP provides a forum for their resolution.