New Zealand succeeds over Canada in first CPTPP dispute

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The first dispute resolution panel set up under CPTPP has found Canada's trade rules discriminated against imports of dairy products from New Zealand.

An independent resolution panel has found in favor of New Zealand in a trade dispute with Canada that marked the first case heard under the terms of the CPTPP agreement.

The issue related to quotas imposed by Canada on imports of dairy products, which the New Zealand government had argued were incompatible with the rules set out by CPTPP. Officials in Wellington claimed the way in which these quotas were imposed had cost exporters about NZ$120 million in lost revenue over the past three years.

The New Zealand Herald reports that these protectionist measures violated both the text and spirit of the CPTPP agreement and would set a dangerous precedent that would enable members to avoid their international trade obligations unless challenged.

Wellington's position was supported by most other CPTPP members and backed up by a binding decision in its favor from the independent dispute panel. This determined Ottawa was granting priority access to its own domestic producers through a complex system of administrative rules, such as not allowing retailers to acquire any quota allocations.

This meant exporters to the country were not able to fully utilize Canada’s tariff rate quotas on 16 categories of dairy products. 

New Zealand trade minister Damien O’Connor said the ruling was a "significant win" for the country. He added: “Canada was not living up to its commitments under CPTPP, by effectively blocking access for our dairy industry to upscale its exports. That will now have to change." 

He also noted that under the CPTPP agreement, New Zealand was able to secure new dairy quota access accounting for 3.3 percent of Canada’s market, which equates to tens of thousands of tonnes per year in key products.

The ruling was also welcomed by industry groups, with executive director of the Dairy Companies Association of New Zealand Kimberly Crewther saying it highlighted the importance of having robust dispute provisions in trade agreements.

She added: “Defending our access rights under all New Zealand trade agreements is important, and taking on a G7 country with a history of bending the rules has been no easy task.”