Canada in May published revisions of its TRQ allocation policies after a January ruling by a dispute settlement panel under the Canada-U.S.-Mexico free trade agreement (CUSMA) — the first such dispute to be heard since CUSMA took effect in 2020.

The January ruling had found Canada was violating CUSMA rules by reserving most of its TRQs for Canadian processors. The new policies Canada published in May were intended to “end the use of processor-specific TRQ pools,” Canada’s Trade Minister Mary Ng said at the time.

Canada’s supply management system for dairy farmers relies on a tariff wall that effectively limits imports from the U.S. and elsewhere. CUSMA, which was expected to improve U.S. dairy producers’ market access to Canada, maintains Canada’s right to 14 dairy-related TRQs on products including milk, cream, ice cream, milk powders, cheeses, condensed milk, yogurt and buttermilk, among others.

A TRQ is a trade mechanism that allows an agreed-upon amount of a specified product to be imported with low or no duties. Beyond that amount, a different and usually higher duty is applied.

Importers who want to use the U.S. product can seek an allocation that allows them to bring in up to a certain amount under the TRQ, after which their imports would be subject to the higher over-quota duty. Thus, if an importer is granted an allocation for, say, 100,000 kg of U.S. cheese under a TRQ, he or she can bring it all in at once or draw down on his or her allocation in portions over the course of a calendar year.

The week after Canada’s revised dairy TRQ rules were published in May, U.S. Trade Representative (USTR) Katherine Tai’s office said it would seek trade consultations a second time, arguing that the new TRQ rules still keep some eligible applicants, such as retailers and foodservice operators, from getting TRQ allocations.

Now, however, the USTR and U.S. Department of Agriculture said Tuesday, “since initiating those consultations, the United States has identified additional areas of deep concern, and this new request for consultations provides an avenue to formally address U.S. concerns” — after which the U.S. said it may seek another CUSMA dispute panel if its concerns aren’t addressed.

‘Ring-fencing’

Canada’s revised TRQ policy still denies access to allocations for “all types of importers except for processors, distributors, and, in some cases, further processors,” USTR and USDA said Tuesday.

But they said “additional aspects” of Canada’s TRQ allocation measures are also inconsistent with Canada’s CUSMA obligations.

Canada, they said, allocates its product-specific dairy TRQs based on a calculation of an applicant’s market share, and the math used to do so differs depending on the type of applicant, “which has the effect of ring-fencing large shares of the quota and limiting access to those shares exclusively to processors.”

Canada also requires that applicants “be active during all 12 months of a 12-month reference period, potentially excluding otherwise eligible applicants, in particular new entrants,” the agencies said.

Also, Canada’s “turnback” policy, for the return and reallocation of unused allocations, now allows for the return of allocations without potential penalty and late in the TRQ year, USTR and USDA said.

Specifically, USTR said in Tuesday’s request for consultations, Canada allows for allocation holders to return their unused allocations without penalty for the first eight months of a TRQ year.

Which means, the U.S. agencies alleged Tuesday, that there’s no mechanism for unused quota allocations to come back for reallocation in a “timely and transparent” way that allows the “greatest possible opportunity” for a TRQ to be filled.

“Rather than work toward meeting its obligations, Canada persists in implementing new dairy policies that are inconsistent with (CUSMA), and which continue to deny U.S. workers, farmers, producers, and exporters the full benefits of market access they were initially promised,” Tai said Tuesday.

“Canada remains in violation of its commitments under (CUSMA) by not removing its trade restrictions on American dairy producers,” U.S. Agriculture Secretary Tom Vilsack said in the same release.

Ng, in a statement Tuesday, replied that dispute settlement panels “have confirmed that our supply management system is in line with our international trade obligations. The terms that we negotiated under (CUSMA) are being respected and upheld.”

The Canadian government, Ng said, “look(s) forward to demonstrating how Canada is meeting its CUSMA obligations during the new consultations on allocations of dairy tariff rate quotas.” — Glacier FarmMedia Network

The post U.S. brings new Canadian dairy tariff rate quota complaint appeared first on Manitoba Co-operator.

At a Chicken Farmers of Canada meeting Tuesday, national allocation for quota period A-165 (Aug. 30 to Oct. 24, 2020) was set at minus two per cent from its adjusted base. That translates to a total allocated chicken volume of 188,169,106 kg (eviscerated), nationally, for the period.

Since the onset of the COVID-19 pandemic, CFC and its provincial counterparts have been grappling with reduced processing capacity and volatile consumer demand, including spikes due to retail panic buying and drop-offs from the near-closure of Canada’s restaurant and foodservice sectors.

The relatively small cut announced Tuesday follows adjustments in April of minus 13 per cent nationally for periods A-163 (May 10 to July 4) and A-164 (July 5 to Aug. 29) from the base for those periods, so as to “reduce production and address the concerns of our value chain partners,” CFC said.

The cut for A-164 was then revised upward slightly in May, to minus 12 per cent, based on what CFC described as “a slight increase of demand by foodservice, as some companies begin the reopening process.”

After an “initial surge” in the wake of the COVID-related isolation measures set up across Canada in March, demand for chicken weakened, Chicken Farmers of Ontario said Tuesday in a separate release.

Now, however, consumer demand “appears to have rebounded to a great extent, albeit at different rates for different product types and consumer channels,” CFO said.

CFO said its latest recommendation “was framed on a public policy of ‘balanced best interest’ upon weighing the various factors, perspectives and dynamics resulting from the pandemic.”

Volume allocation for quota period A-166 (Oct. 25 to Dec. 19) is expected to be set at CFC’s board meeting next month, CFO said. — Glacier FarmMedia Network

The post Fall quota level based on ‘rebound’ in chicken demand appeared first on Manitoba Co-operator.

New quotas created by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are similar to those meant to give U.S. dairy and poultry farmers new access to Canada under the new North American trade agreement known as USMCA.

The rules, which lay out who can receive quotas to import some agricultural products duty-free from countries that ratify the deal, vary between products, but in some categories nearly all the quotas are earmarked for Canadian processors. One quota covering “cheeses of all types” reserves 85 per cent for processors, leaving 15 per cent for distributors.

Saputo, one of Canada’s biggest processors, welcomed the move and said in a statement on Tuesday that processors will get a “significant portion” of the quotas.

“I am delighted with the allocation. I think that the government is allowing the dairy industry to control our own destiny,” Saputo CEO Lino Saputo Jr. told Reuters. “This is what we were hoping for.”

It is not the first time Canada has taken the unusual step of giving local producers special rights to import, easing the pain of new competition.

Karl Littler, spokesman for the Retail Council of Canada, said the allocation looks like a subsidy.

“We find that, obviously, to be less than ideal, given that people buy their cheese from us, not from the producers,” he said.

Saputo Jr. said the quota is not a subsidy, but dairy farmers, and not processors, should be compensated over recent trade deals.

In 2017, a last-minute dispute over how Canada would allocate cheese import quotas sent the country back into negotiations with the European Union over the Comprehensive Economic and Trade Agreement (CETA).

European cheesemakers were unhappy with a plan to give Canadian processors 60 per cent of the new quota. In a compromise, they received 50 per cent.

In the first full year with the new quotas in force, Canadian imports have been sluggish.

Saputo Jr., who said his company has used all of its CETA quota, noted that 60 per cent of the quota was set aside for small companies, something that was eliminated for CPTPP.

The way the CETA quota was fragmented between many companies has made it difficult to import profitably, Reuters reported in September.

In the notice, federal officials promised a “broad-based stakeholder engagement exercise” in the new year to review all of Canada’s import quotas, as new trade deals expand their use.

— Allison Martell is a reporter in Reuters’ Toronto bureau.

The post Canadian dairies get significant control over imports under TPP appeared first on Manitoba Co-operator.

The House of Commons’ standing committee on industry, science and technology, chaired by Vancouver area Liberal MP Dan Ruimy, on Tuesday released its report and recommendations for meeting federal targets on rural broadband connectivity.

The Canadian Radio-television and Telecommunications Commission (CRTC) in 2016 declared broadband internet to be an “essential service” in Canada and set minimal performance standards of 50-megabit per second download and 10 Mbps upload, working with Innovation, Science and Economic Development Canada (ISED) to fund broadband deployment in rural and remote areas.

However, the committee wrote, evidence it received from various stakeholders shows the digital divide to still be “prominent” in Canada and the CRTC targets “may not be appropriate to all rural and remote areas.”

Licensed incumbents in the broadband sector “tend to only invest in high-density areas that are more economically profitable,” the committee wrote, but if Ottawa were to “adapt” its regulatory framework, particularly on spectrum and network management, “small providers, non-profit providers or non-incumbent providers” could deploy rural broadband in “an economically profitable manner.”

The government also needs to “consider ways to increase the accessibility of funding programs for small providers, non-profit providers and non-incumbent providers, and consider the spectrum allocation process for the purpose of broadband deployment.”

Ottawa also needs to take steps, possibly through legislation in tandem with the provinces, for such providers to be able to accessing “existing infrastructures for the purpose of deploying broadband access,” such as granting easements or servitudes, “especially in regards to utility poles.”

The government also needs to consider the spectrum allocation process, focusing on the “scope of licences, pricing and effective use of allocated spectrum, including ensuring that small providers, non-profit providers, and non-incumbent providers have reasonable access to spectrum for broadband deployment.”

The committee also urged the government to “consider new ways of collecting service and performance data in addition to the speed of internet services, including, but not limited to, adding new indicators, using local knowledge.”

The CRTC, the committee said, should also consider not only broadband speed, but other indicators in its targets, such as “standards of parity between urban and rural centers, network performance, purchased consumer packages, latency and redundancy.”

(“Latency” refers to the time it takes for a given signal to get from a transmitter to a receiver, usually measured in milliseconds.)

The CRTC should also consider “regularly reviewing” its target broadband speeds to make sure they “remain relevant with technological development and international standards.”

Some witnesses during the committee’s hearings on the matter cautioned that the CRTC will have to “regularly update” its broadband speed targets “to keep up with technological change.”

Corroborating those witnesses, the committee said, is “the fact that actual broadband speeds in Canada substantially lag behind many countries that invest more in digital infrastructure.”

A monitoring report, the committee said, shows 99 per cent of Canadians living in rural areas have some form of internet access, including wireless, but to speeds between 1.5 and 4.9 Mbps — and only 42 per cent have access to speeds between 30 and 49.9 Mbps.

“Thus, while most Canadian communities do have Internet coverage, in many rural communities, the available speeds are so low that they only allow for a limited number of uses.” — AGCanada.com Network

The post Regulatory change urged to help expand rural broadband appeared first on Manitoba Co-operator.

Chicken Farmers of Canada announced Thursday it has a new federal-provincial agreement (FPA) in hand, including a new quota allocation methodology.

The new deal was concluded Tuesday, CFC said, when the Farm Products Council of Canada ruled the new FPA can proceed without first getting Governor-in-Council approval — that is, approval from the federal cabinet via the Governor General.

The national Farm Products Council had said in its 2015-16 annual report that it would be required to review any amendments to the operating agreement of a new FPA, to see whether they would have to have Governor-in-Council approval.

Thursday’s announcement, CFC said, “brings to close more than eight years of discussions and negotiations” toward a new allocation system.

Alberta Chicken Producers had pulled out of the FPA in 2013, but continued to work with the national producer body on updating allocation, CFC said.

“We’re excited to have all our provinces back on board,” CFC chair Benoit Fontaine said in a release Thursday.

Alberta had stepped out of the CFC system in 2013 “because our population was growing at such a greater rate than the rest of the country and our piece of the pie was getting smaller and smaller and smaller — and we didn’t think that was fair,” Alberta Chicken Producers chair Erna Ference told Alberta Farmer in 2014.

The Alberta body had estimated its producers were only getting 80 per cent of what their allocation should have been.

Alberta and the other nine provincial chicken-marketing boards in 2014 signed a memorandum of understanding which would see allocations for each of the eight-week rolling production periods partially based on factors reflecting provinces’ comparative advantage.

Officials at that time said the national chicken farmer body was working under threat from the Farm Products Council that CFC’s allocation requests would not get council approval unless a new national deal could be reached.

“The fact that we were standing on the edge of the precipice had us saying, how much is supply management worth to us?” Jake Wiebe, chair of Manitoba Chicken Producers, said in Alberta Farmer in 2014.

Alberta, according to the national Farm Products Council, had “signaled its intent” in 2014 to rejoin the FPA once the memorandum of understanding got unanimous support from the CFC board. — AGCanada.com Network

The post Alberta back in national chicken quota arrangement appeared first on Manitoba Co-operator.