The federal government is cheering a big win in its ongoing dispute with the U.S. over access to Canada鈥檚 dairy market.

A settlement panel has rejected complaints from the U.S. Trade Representative鈥檚 office over how Canada is allocating its dairy import quotas.

It鈥檚 the second dispute resolution panel in three years to explore U.S. complaints that Canada is unfairly favouring processors over producers.

The findings of the first one, released in December 2021, were largely in favour of the U.S., although Ottawa still tried to frame it as a victory.

U.S. Trade Representative Katherine Tai and Agriculture Secretary Tom Vilsack say they鈥檙e disappointed in the result but intend to keep pressing Canada on its trade obligations.

International Trade Minister Mary Ng, meanwhile, is framing the latest findings as vindication for Canada鈥檚 approach to dairy import quotas.

鈥淐anada is very pleased with the dispute settlement panel鈥檚 findings, with all outcomes clearly in favour of Canada,鈥� Ng said in a statement.

鈥淭his is good news for Canada鈥檚 dairy industry and our system of supply management.鈥�

Supply management, she said, provides stability to the market and supports producers with 鈥渇air returns鈥� for their investments. 鈥淭he government of Canada will also continue to work with processors and retailers to stabilize food prices,鈥� she added.

Ottawa says Canada鈥檚 dairy sector generated $8.2 billion in farm cash receipts and $17.4 billion in sales last year, supporting more than 70,000 production and processing jobs across the country.

The clash revolves around how Canada allocates its dairy tariff rate quotas, or TRQs 鈥� the quantities of certain dairy products that can enter Canada at lower duty levels under the terms of the U.S.-Mexico-Canada Agreement.

鈥淒espite the conclusions of this report, the United States continues to have serious concerns about how Canada is implementing the dairy market access commitments,鈥� Tai said.

鈥淐anada鈥檚 revised policies have still not fixed the problem for U.S dairy farmers.鈥�

Added Vilsack: 鈥淲e will continue to voice deep concerns about Canada鈥檚 system. We remain focused on securing the market access we believe Canada committed to under the USMCA and we will continue exploring all avenues available to achieve that goal.鈥�

The first dispute settlement panel, launched in May 2021, largely agreed with the U.S. complaint that Canada鈥檚 strategy was a violation of the terms of the agreement, known north of the border as CUSMA.

Tai鈥檚 office felt compelled to seek a second panel after the first one changed little.

鈥淐anada made commitments to the United States in the USMCA,鈥� Tai said at the time, 鈥渁nd the Biden-Harris administration is ensuring that they honour those commitments.鈥�

Disputes and disagreements have become a recurring feature of the USMCA since it became the law of the land in the summer of 2020.

Canada and the U.S. are together taking Mexico to task for energy policies they say unfairly favour domestic suppliers and threaten to undermine American efforts to jump-start the green energy industry and combat climate change.

And Canada and Mexico together claimed a significant victory in January, when a separate panel ruled against the U.S. interpretation of the rules that determine whether core automotive parts are considered to be of domestic or foreign origin.

The U.S. has been silent on whether it intends to comply with that decision.

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