Canada has lost the first-ever dispute case under the new North American trade agreement, with a panel siding with the U.S. and saying Ottawa flouted part of its obligation to open the dairy market.
The three-member panel — made up of a Uruguayan diplomat who was once ambassador to Canada, a Canadian trade lawyer based in the U.S., and a U.S. trade lawyer named to the panel by Canada — agreed that Canada violated its promise to allow slightly more dairy imports by imposing unfairly complicated rules.
The U.S. says Canada now has a few weeks to comply with the ruling, or face the possibility of a trade penalty such as a tariff.
The finding comes amid a succession of trade disputes between the countries that risk souring the bilateral relationship.
“We prevailed — as we thought we would,” a senior official in the U.S. Trade Representative’s office told reporters in a briefing Tuesday.
“Now the goal is to work with Canada.… The end goal is not to put retaliatory tariffs in place.”
The report was released to the countries in a full confidential version just before the holidays, on Dec. 20; a 53-page public version was released Tuesday.
The Canadian government also claimed a partial victory: It noted that the panel otherwise upheld Canada’s system of supply management of its dairy sector.