The First Challenge to Canada’s Supply Management System under CUSMA: Tweaking the Supply Management System One Dispute at a Time

Abstract

Abstract In 2021, the United States challenged Canadian dairy import tariff rate quotas (TRQs) before the first state-to-state arbitration panel under Chapter 31 of the Canada-United States-Mexico Agreement (CUSMA). The panel held that the method of allocation of TRQs limited the US dairy industry’s access to the Canadian market and therefore violated CUSMA provisions. However, the panel also acknowledged that the Canadian supply management system for dairy products is a unique regulatory framework for production control, pricing mechanisms, and import control. This article explores the case as a test of the functioning of the improved CUSMA dispute settlement process and of Canada’s ability to protect its supply management system for dairy products from renewed pressure coming from its most important trade partner.