New Zealand has just filed the first ever CPTPP consultations request, relating to Canadian measures "concerning the allocation of dairy tariff rate quotas (TRQs) under CPTPP (dairy TRQ allocation measures)." The request states:
2. Canada’s dairy TRQ allocation measures encourage chronic underfill of its dairy TRQs, reduce their commercial value for exporting CPTPP Parties, and undermine the market access that was negotiated under CPTPP.
3. Canada maintains 16 dairy TRQs under CPTPP.1 Canada’s dairy TRQ allocation measures allocate the entire quota available under each TRQ into up to three ‘pools’. These ‘pools’ can only be accessed by specific importer groups, in accordance with rules set out in Canada’s dairy TRQ allocation measures. Each importer group is defined under Canada’s dairy TRQ allocation measures, and importers that do not fall within a relevant pool are not eligible to apply for, or be allocated, quota. In addition, under Canada’s dairy TRQ allocation measures, retailers are not eligible to apply for an allocation under Canada’s dairy TRQs.
The claims of violation are as follows:
5. Canada’s measures appear to be inconsistent with several provisions of CPTPP, including Canada’s obligation to:
a. ‘progressively eliminate its customs duties on originating goods in accordance with its schedule to Annex 2D’ under Article 2.4(2), and Appendix A of Canada’s Schedule to Annex 2-D;
b. ‘ensure that its procedures for administering its TRQs … are fair and equitable’ under Article 2.28(2);
c. ‘ensure that its procedures for administering its TRQs … are no more administratively burdensome than absolutely necessary’ under Article 2.28(2);
d. ‘administer its TRQs in a manner that allows importers the opportunity to utilise TRQ quantities fully’ under Article 2.29(1);
e. not ‘introduce a new or additional condition, limit or eligibility requirement on the utilisation of a TRQ for importation of a good, including in relation to specification or grade, permissible end-use of the imported product or package size, beyond those set out in its Schedule to Annex 2-D (Tariff Commitments)’ under Article 2.29(2)(a);
f. ‘ensure that … any person of a Party that fulfils [Canada’s] eligibility requirements is able to apply and be considered for a quota allocation under the TRQ’ under Article 2.30(1)(a) and paragraph 3(c) of Appendix A of Canada’s Schedule to Annex 2-D;
g. ‘ensure that … it does not allocate any portion of the quota to a producer group’ under Article 2.30(1)(b);
h. ‘ensure that … it does not ... condition access to an allocation on the purchase of domestic production’ under Article 2.30(1)(b);
i. ‘ensure that … it does not ... limit access to an allocation to processors’ under Article 2.30(1)(b);
j. ‘ensure that … each allocation is made in commercially viable shipping quantities and, to the maximum extent possible, in the amounts that importers request’ under Article 2.30(1)(c); and
k. ‘ensure that … if the aggregate TRQ quantity requested by applicants exceeds the quota size, allocation to eligible applicants shall be conducted by equitable and transparent methods’ under Article 2.30(1)(e).
The official CPTPP text, with all of the relevant provisions noted above, is here.
We are tracking FTA disputes on WorldTradeLaw.net (still a work in progress, but see here and here -- the New Zealand complaint is not up there yet). There's an obvious parallel between this New Zealand complaint and the U.S. dairy complaint against Canada under the USMCA (that consultations request is here). The U.S. complaint starts off this way:
Canada’s dairy TRQ allocation measures set limits on the quantity of certain dairy products1 that may be imported at a lower (within access) rate of duty. Furthermore, through the dairy TRQ allocation measures, Canada, sets aside and reserves a percentage of those within access quantities for particular importer groups. For all of its dairy TRQs, Canada sets aside and reserves a percentage of the quota for processors, and for ten of the TRQs2 an additional percentage is reserved for so-called “further processors.”3
And of course the USMCA panel found a violation. As I understand it, Canada and the U.S. are currently trying to work out a resolution, and I'm just going to speculate a bit here and note the possibility that New Zealand perhaps wants to put some pressure on Canada so as to make sure that the resolution does not hurt New Zealand exporters.
