Senators Baldwin, Schumer and Gillibrand Call on Trump Administration to Act on Restrictive Canadian Trade Barriers Threatening American Dairy

WASHINGTON, D.C. – U.S. Senators Charles Schumer (D-NY), Tammy Baldwin (D-WI) and Kirsten Gillibrand (D-NY) have called on the Trump Administration to act on restrictive Canadian trade barriers that are hurting American dairy farmers and processors.

The Senators sent a letter to Acting U.S. Trade Representative Stephen Vaughn, Commerce Secretary Wilbur Ross and Acting Secretary of Agriculture Michael Young, detailing the negative impact these unfair trade practices are having on America’s dairy industry and urging the Administration officials to immediately address this issue with the Canadian government and launch an investigation into these trade actions.

“We urge you to exhaust all potential avenues to bring Canada into compliance with its trade commitments and establish dependable trading conditions for U.S. companies exporting to Canada,” the Senators wrote. “Dairy farmers should not have their businesses ruined and lives upended as a result of this unfair trade practice. Canada must be clearly and swiftly reminded in a concrete way that dependable trading conditions between our two countries is critically important to their country as well.”

As Canada has implemented these trade barriers on milk, Wisconsin’s dairy industry has already suffered losses of tens of millions of dollars. Recent reports in Wisconsin show that ripple effects of this trade barrier are being felt throughout the state. Senator Baldwin first called for a federal investigation into these Canadian trade barriers last year. Following meetings with dairy farmers in Wisconsin, Senator Baldwin raised the issue with Agriculture Secretary nominee Sonny Perdue and pressed President Trump to address this in trade discussions with Canada.

Current Canadian trade barriers have already started to hinder development and growth of the Upstate New York dairy industry. Companies like O-AT-KA and Cayuga Milk Ingredients, along with Ideal Dairy Farm, rely on trade with Canada for a significant percentage – millions of dollars – of their revenue. As the country’s third largest milk producing state, a significant impact on New York’s ability to tap into key foreign markets could also impact farmers in surrounding states. Therefore, any reductions in export sales could impact New York dairy manufacturers and their supplying farms, which are already struggling with depressed milk prices.

The letter text is available below and available online here.

We write to request your immediate attention to a trade matter with Canada that is causing severe harm to dairy farmers in the U.S. Following Canada’s action earlier this year to formalize a new milk pricing scheme, dairy processors in the U.S. have been abruptly informed by their Canadian customers that these Canadian companies are drastically reducing their purchases of and in some cases will no longer buy American milk. This action has left many farmers facing terribly difficult decisions about the future of their farms.  We urge you to immediately address this with your Canadian counterparts and to launch an investigation into whether Canada’s Class 7 National Ingredients Strategy and Ontario’s Class 6 pricing programs are in compliance with Canada’s long standing trade commitments to the United States.

Canadian dairy pricing policies are upending long-standing trade relationships with American dairy companies and have resulted in the sudden loss of major contracts for companies in both of our states.  Canada’s new Class 7 National Ingredients Strategy and the existing Ontario Class 6 pricing program appear to be designed in ways to intentionally displace current U.S. dairy imports and in the case of Class 7 to also negatively impact global milk powder markets. We are extremely concerned that these programs appear to violate Canada’s existing trade commitments to the United States. In addition, we have serious doubts as to how these programs are compliant with Canada’s North American Free Trade Agreement (NAFTA) and World Trade Organization (WTO) obligations.

The Ontario Class 6 program has already slashed U.S. exports of ultra-filtered milk starting in mid-2016 and companies are reporting further losses of contracts already this year. The loss of these, and likely other exports, as a result of the Class 6 and 7 programs will harm dairy manufacturers and their supplying farms in areas of our states that rely on the jobs the dairy industry provides. In addition to these revised pricing policies, Canada has also reportedly been considering additional avenues that press reports indicate would be pursued strictly to curtail U.S. dairy exports.

It has become abundantly clear that Canada has been pursuing ways to impede U.S. dairy exports through various policy and regulatory tools. Canada cannot be allowed to continually impair the value of concessions the U.S. previously secured under our prior trade agreements nor to disrupt global milk powder markets to the detriment of companies all across this country that rely on them to help provide returns to our dairy farmers.

We thank you for the U.S. Government’s work to date on this issue and urge you to fully investigate whether Canada’s Class 7 National Ingredients Strategy and Ontario’s Class 6 pricing program are in keeping with Canada’s commitments to the United States under NAFTA and the WTO. We urge you to exhaust all potential avenues to bring Canada into compliance with its trade commitments and establish dependable trading conditions for U.S. companies exporting to Canada.

Dairy farmers should not have their businesses ruined and lives upended as a result of this unfair trade practice. Canada must be clearly and swiftly reminded in a concrete way that dependable trading conditions between our two countries is critically important to their country as well.