Source: Dairy Companies Association of New Zealand (DCANZ)
Dairy exporters will benefit from the settlement of New Zealand’s CPTPP quota dispute with Canada, as announced by the Government today.
The Dairy Companies Association of New Zealand (DCANZ) welcomes the news and congratulates the Government for settling the long-running issue that has been costing New Zealand because of quotas that couldn’t be fully used. DCANZ also acknowledges the work of the previous Government in initiating the dispute process.
The heart of the issue has been Canada limiting the use of the 16 small quotas that facilitate CPTPP dairy access by allocating the majority of import licenses to its own processors, which mostly don’t use them. This practice, along with quota licence hand-back-and-reallocation happening late in the quota year and no penalties for under-use, has limited other importers with a stronger interest in New Zealand products from using the agreed access. Other administrative processes have also added cost and slowed trade when it does occur.
In 2023, a panel of trade law experts ruled that Canada’s approach did not comply with the CPTPP agreement requirements to administer the quotas in a manner that provides importers the opportunity to utilise the volumes fully.New Zealand was forced to trigger the mandatory negotiations allowed for under the CPTPP’s rules when Canada didn’t comply with this ruling. While not achieving the preferred immediate move to a simpler on-demand system so that quota licences only go to importers who want to use them, DCANZ agrees that adequate improvements have been made to settle the dispute.
DCANZ Executive Director Kimberly Crewther says she looks forward to New Zealand exporters enjoying an easier time trading into the 16 CPTPP dairy tariff rate quotas from 1 January 2026.
“The improved administrative provision that will result from this agreement will make the quotas commercially more usable and valuable for our exporters.
“Under the agreement, Canada will bring forward the dates for return and reallocation of quota licences that the initial recipients will not use and introduce penalties for recipients who either do not use their allocation or transfer it on to importers who want to use it.
“This has been a long time coming and we believe it will make a positive difference.
“We will be watching implementation closely. Significantly, if those changes don’t work, there is also provision that quota allocation could move to our first preference of an on-demand system.”
In the meantime, Crewther says DCANZ remains concerned that Canadian subsidised exports are continuing to harm New Zealand exporters’ interests in global markets for dairy protein products.
“Canada needs to be held equally to account for this, via the World Trade Organisation (WTO).
“Earlier this year, DCANZ joined United States and Australian dairy industry representatives in calling for government action to stop Canada from dumping artificially low-priced dairy protein exports on world markets.
“Its milk pricing mechanisms are enabling their dairy processors to access milk proteins at below the cost of production and so distort its export of a range of products.
“This practice is at odds with Canada’s international trade obligations and must be addressed as a matter of urgency under the WTO’s rules.”
