Photo source: FMT
New Zealand is intensifying a longstanding trade conflict with Canada regarding the accessibility of its dairy products in the Canadian market.
Trade Minister Todd McClay announced on Friday in Wellington that New Zealand has formally initiated compulsory negotiations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which both nations are part of. According to the CPTPP’s dispute resolution framework, negotiations are required to begin within 15 days following this notification.
“Canada can end this dispute by meeting its CPTPP obligations to us,” McClay stated. “If they continue to choose not to, they owe us compensation.”
The dispute began in 2022 when New Zealand claimed that Canada was not adhering to its commitments concerning dairy tariff rate quotas. In September 2023, an arbitration panel ruled in favour of New Zealand, determining that Canada was obstructing dairy access, yet Canada has not complied with this decision.
“We will be looking for them to make changes to their import regime so that Kiwi exporters can sell this quota into the Canadian market,” McClay remarked during an interview with Radio New Zealand. “I’m hopeful Canada will decide to make changes or pay compensation, but we reserve the right to take all action under the agreement.”
As per the CPTPP and World Trade Organization regulations, New Zealand could impose tariffs on Canadian imports equivalent to the losses incurred due to Canada’s actions, which McClay estimated at NZ$200 million (approximately US$121 million) over several years.
“We give full access to Canada for the things we agreed. We honor our agreement; they owe us the same courtesy,” he added. “If they won’t, the New Zealand government will take more action.”
The CPTPP, which became effective at the end of 2018, is a free-trade agreement involving 11 countries primarily in the Asia-Pacific region, accounting for about 13% of global GDP. Countries such as China, Taiwan, and the U.K. have expressed interest in joining.