New Zealand is preparing to take legal action against Canada over a trade dispute regarding dairy products. The country claims that Canada has been blocking its exporters and failing to uphold a ruling from an independent panel in September 2023. Under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Canada was supposed to allow free access to New Zealand’s dairy products. However, claims of quota manipulation by Canada were upheld by the panel, and they were given until May 1 to revise their tariff rate quotas and open up the market to New Zealand.
Despite the deadline passing, Canada has not implemented the required changes, leading New Zealand’s Trade Minister Todd McClay to seek legal advice. McClay called Canada’s actions a “cynical ploy” to limit market access and expressed his disappointment in their failure to meet their legal commitments. He emphasized New Zealand’s support for trade rules and its obligation to trade partners, stating that they expect the same courtesy in return.
The trade dispute has been criticized by Parmjeet Parmar, the ACT Party trade spokesperson, who called it a “betrayal of our friendship.” Parmar believes that if Canada does not comply with the tribunal’s ruling, they should be “booted out of the deal.” She highlighted the shared history and cultural similarities between the two countries and emphasized that free trade should benefit both parties.
The CPTPP, signed in January 2018, includes countries such as New Zealand, Australia, Canada, Japan, Mexico, and Vietnam. These countries represent approximately 14.6 percent of the world GDP in 2022. New Zealand has been expanding its trading partners in recent years, including Japan, Canada, Mexico, and Peru. Approximately 26 percent of New Zealand’s goods exports and 33 percent of its service exports originate from the CPTPP.
Canada has not yet responded directly to New Zealand’s threat of legal action. However, Canadian Trade Minister Mary Ng and Agriculture Minister Lawrence MacAulay have previously expressed their satisfaction with the panel’s report, which they consider a victory for Canada. Canada’s powerful dairy farmer lobby and supply management agreements ensure guaranteed prices and production quotas for farmers. The dairy industry contributes $19.9 billion annually to Canada’s GDP and generates $3.8 billion in tax revenues.
David Wiens, president of Dairy Farmers of Canada (DFC), expressed disappointment with the dispute panel’s ruling but argued that four of New Zealand’s claims were unfounded. Wiens called on the New Zealand government to review the measures it has put in place to support its dairy sector, questioning their consistency with international trade obligations.
New Zealand’s Trade Minister Todd McClay stated that he will seek legal advice on the next course of action. He emphasized the importance of international trade for New Zealand’s prosperity, as it contributes 60 percent of the country’s total economic activity. McClay assured that New Zealand will continue to engage in good faith throughout the process and will announce the next steps in due course.
The outcome of this trade dispute will have significant implications for both New Zealand and Canada. The resolution will determine whether Canada upholds its commitments under the CPTPP and whether New Zealand can access the Canadian market freely. As both countries rely on international trade for economic growth, finding a resolution that benefits both parties is crucial.
