New Zealand won’t back down in its fight to make Canada comply with its obligations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Trade Minister Todd McClay says.
McClay said Canada’s refusal to comply in full with a CPTPP trade dispute ruling in NZ’s favour over dairy trade is cynical.
He has asked for urgent legal advice in respect of his “next move” and said the Canadian government still has time to honour its obligations to NZ both in the spirit and substance of the agreement.
NZ initiated the dispute because Canada was not complying with CPTPP rules, blocking dairy exporters’ access to its market.
A CPTPP arbitration panel ruled decisively in NZ’s favour.
Canada had until May 1 to change how it administered its tariff rate quotas – to stop giving its own domestic industry priority access, and to allow exporters to benefit fully from the market access negotiated in good faith between Canada and NZ.
“The changes Canada has published today do not comply with the ruling,” McClay said.
“Canada’s ongoing failure to meet its legal commitments is disappointing, but we have no intention of giving in on this. We back our exporters and we will defend hard-won free trade agreement commitments.”
“New Zealand’s prosperity depends on international trade, making up 60% of the country’s total economic activity. It is only through a strong economy that we can reduce the cost of living and afford the public services Kiwis deserve.
The Dairy Companies Association of New Zealand (DCANZ) is backing the government’s move.
“DCANZ agrees with the New Zealand Government assessment that Canada has cynically moved to replicate the outcome that the dispute panel ruled against,” executive director Kimberly Crewther said.
“The costs of Canada’s flouting trade rules are mounting for the New Zealand dairy industry.”
It is estimated that Canada’s disregard for the CPTPP rules denied NZ dairy exporters over $120 million in trade opportunities in the first three years of the CPTPP agreement, and these costs continue to grow.
In addition, NZ dairy exporters are concerned that Canada is disregarding its World Trade Organisation trade commitments.
“Not only is Canada restricting access into its market, but we are also seeing a rising tide of subsidised Canadian dairy exports in other markets, contrary to previous WTO legal rulings. This is putting a billion dollars of New Zealand dairy protein exports to global markets at risk.”
Crewther said Canada is a recidivist in its disregard for trade rules and this should be a concern for all its trading partners.
“The value of trade agreements are diminished when commitments aren’t honoured. Where a country refuses to adhere to trade dispute rulings, the system as a whole is weakened.”
The approach that Canada takes to dairy trade not only harms NZ’s interests but also means their consumers have less choice and higher food prices.
DCANZ will be engaging with NZ officials as they evaluate next steps to bring Canada into compliance with both its CPTPP and WTO dairy trade commitments.
