New Zealand Preparing to Take Legal Action Against Canada for Dairy Trade Access
NZ is accusing Canada of obstructing exporters and failing to comply with an independent panel ruling from September 2023.
The trade dispute between New Zealand and Canada regarding dairy products has intensified, prompting Trade Minister Todd McClay to seek legal guidance due to what he deems a “cynical” maneuver by Canada to restrict market access.
As a signatory to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) free trade agreement, Canada was expected to allow unrestricted access for New Zealand’s dairy products into its market.
An independent panel ruling in September 2023 confirmed allegations that Canada was using quotas to block exporters. Canada was given until May 1 to adjust its tariff rate quotas, eliminate priority access to its dairy industry, and open the market for New Zealand and other CPTPP signatories, but recent policy changes by Canada have not fulfilled these requirements.
This failure to adhere to legal obligations has led Mr. McClay to rebuke Canadian authorities publicly, stating, “New Zealand supports trade rules and expects mutual respect from its trade partners.”
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ACT Party trade spokesperson Parmjeet Parmar condemned Canada’s actions, labeling it a “betrayal of our friendship” and suggesting that Canada should be removed from the agreement if they fail to comply with the tribunal’s decision.
Discussing the implications of the CPTPP on New Zealand, the agreement involving 11 countries accounts for about 14.6 percent of the world’s GDP in 2022. New Zealand’s trade portfolio has also expanded beyond traditional partners, such as the UK, China, and the US, to include Japan, Canada, Mexico, and Peru.
About 26 percent of New Zealand’s goods exports ($19.2 billion) and 33 percent of its service exports ($8 billion) come through the CPTPP. The agreement, a replacement for the Trans-Pacific Partnership that excluded the US after President Trump’s withdrawal in 2016, has been crucial for New Zealand’s trade relationships.
Negotiations concluded with the agreement excluding 22 of the original conditions, setting the stage for ongoing trade partnerships among the signatories.
While Canada has not directly responded to New Zealand’s legal threat, Canadian officials, including Trade Minister Mary Ng and Agriculture Minister Lawrence MacAulay, have publicly expressed satisfaction with the panel’s ruling, highlighting Canada’s discretion in setting quota allocation policies.
The dairy industry, a major contributor to Canada’s GDP, has been a focal point of the dispute with New Zealand. Dairy Farmers of Canada have contested New Zealand’s support for its dairy sector, prompting calls for a thorough review of New Zealand’s compliance with trade obligations.
Concerning the next steps, Mr. McClay mentioned plans to seek legal counsel and evaluate the potential courses of action. He emphasized the importance of international trade for New Zealand’s prosperity, signaling a commitment to defending the country’s interests.
