New Zealand Escalates Dairy Dispute With Canada

New Zealand has escalated a long-running trade dispute with Canada over access for its dairy exporters to the Canadian market. The dispute, which has been ongoing since 2022, centers around Canada's implementation of dairy tariff rate quotas (TRQs) under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

New Zealand argues that Canada has violated specific CPTPP provisions by blocking dairy access and not allowing importers the opportunity to utilize TRQs fully. The CPTPP's dispute settlement process has influenced New Zealand's decision to escalate the dispute, as it allows for compulsory negotiations and potential compensation if Canada fails to comply with its obligations.

If the dispute is not resolved, potential economic impacts on New Zealand and Canada could be significant. New Zealand exporters have already lost as much as NZ$200 million ($121 million) over several years due to Canada's stance. Under CPTPP rules, New Zealand could impose retaliatory tariffs on Canada to an equal amount of the loss it faces.

The outcome of this dispute could have broader implications for the CPTPP agreement and the relationship between New Zealand and Canada. The success of the CPTPP relies on its members' adherence to its rules and commitments. If Canada fails to comply with the CPTPP's provisions, it could undermine the credibility of the agreement and deter other members from joining or adhering to its rules.

The ongoing dispute between New Zealand and Canada highlights the importance of adherence to international trade agreements and the potential economic consequences of non-compliance. As the CPTPP continues to grow and attract new members, it is crucial for all parties to uphold their commitments and work towards a mutually beneficial resolution.