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U.S. dairy industry rallies against Canadian dairy scheme

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Dairy organization and state departments of agriculture are urging President Trump to discuss a change in Canada’s milk pricing policy with Prime Minister Trudeau.

U.S. dairy organizations, companies and state departments of agriculture have been intensifying efforts to thwart the imminent implementation of a national ingredient strategy in Canada, which they say is expressly intended to slash imports from the U.S.

Already implemented in Ontario, the policy establishes a new ingredient milk class priced to undercut imports. It provides both an incentive to substitute domestic ingredients for foreign products and a subsidy on the production of end products containing those ingredients.

The policy will also enable Canada to sell dairy ingredients below cost of production in international markets, effectively dumping product in competition with U.S. dairy exports.

The U.S. Dairy Export Council, National Milk Producers Federation and International Dairy Foods Association have raised concern over the policy for the past year.

Those groups — along with the National Association of Departments of Agriculture — urged President Trump to discuss the issue during Monday’s meeting with Canadian Prime Minister Trudeau.

They called it “one of the most sensitive and urgent topics complicating the relationship between to two countries,” saying the pricing policy would further antagonize industry relationships between the U.S. and Canada.

Implementation of the pricing measure comes at a time when compliance with the letter and spirit of trade agreements is of paramount importance, Jim Mulhern, NMPF president and CEO said in a press release on Monday.

“Despite this, Canada still wants to move ahead with a policy that clearly violates its trade agreements with our country. We hope President Trump will remind Prime Minister Trudeau how important it is that Canada honor its commitments,” he said.

The groups had raised the issue of Canada’s “protectionist milk pricing policy” with Trump last month before he assumed office, saying the policy violates the country’s trade obligations under NAFTA and the World Trade Organization.

“Canada’s intentional and continued flouting of its trade obligations effectively blocks imports of U.S. ultra-filtered milk,” said Michael Dykes, president and CEO of IDFA.

“What’s more, existing Canadian tariffs that range from 200 percent to more than 300 percent on other U.S. dairy products are unacceptable,” he said.

The organizations contend implementation of the pricing policy in Ontario last year has already cost U.S. companies $150 million in exports, harming dairy farmers, dairy plant employees and rural communities.

Two weeks ago, a group of 17 U.S. companies representing processors and dairy farmers sent a letter to 25 governors urging them to take action at the state level to underscore to Canada that damaging U.S. exports with the new pricing policy will not be tolerated.

The issue has garnered international attention as well. Dairy organizations in the EU, Australia, New Zealand, Mexico and the U.S. have called on their respective trade officials to initiate WTO dispute settlement proceedings to challenge the new policy.

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