RTA DISPUTES - ASIA AND OCEANIA

CPTPP (Comprehensive and Progressive Trans-Pacific Partnership)

Links: CPTPP Chapter 28 on Dispute Settlement; Rules of Procedure for Disputes under Chapter 28

(1) Canada - Dairy Tariff Rate Quota Measures (dispute by New Zealand)

  • May 12, 2022: New Zealand brings the first CPTPP dispute, requesting consultations concerning Canada’s implementation of dairy tariff rate quotas under the CPTPP. NZ Minister’s press release argues that many Canada dairy TRQs are unfilled, costing NZ dairy importers NZ$68m in first two years and escalating as TRQ sizes increase. Consultation request here.

  • November 7, 2022: New Zealand requests a panel in this dispute. Links: Press release with statement by Min. Damien O’Connor; panel request. Dairy Companies Association of New Zealand (DCANZ) press release.

  • CPTPP Parties participating as third parties in this dispute: Australia, Japan, Mexico, Peru, Singapore.

  • March 9: Panel composed and panel timetable announced.

    Panel timetable:

    • March 20: NZ initial written submission. April 21: Canada initial written submission.

    • May 2: deadline for third-party submissions (received from Australia and Japan)

    • May 5: Deadline for non-governmental entities in Canada or NZ to request to submit written views. Entities that submitted requests: Dairy Companies Association of New Zealand (DCANZ); D. Tyers Food International Inc. and FoodTec Canada Inc.; International Cheese Council of Canada; Retail Council of Canada.

    • May 11: NZ Rebuttal submission. Panel granted leave to all 4 non-governmental entities to submit views.

    • May 19: The 4 non-governmental entities submitted views (Parties commented on these views on June 2).

    • May 31: Canada rebuttal submission

    • June 2: Panel delivered questions to parties for response at the hearing.

    • June 14 - 15: Hearing with presentations by parties and Q&A. Representatives of NZ, Canada, Australia and Japan participated in person, and Mexico and Singapore spoke remotely; all could participate in the Q&A. US also attended. Australia oral statement supported NZ and other statements focused on systemic issues including treaty interpretation, relevance of CPTPP drafting history, relevance of panel decision in USMCA dispute on Canada’s USMCA dairy TRQs, and importance of CPTPP dispute settlement. Hearing was open to public in adjacent room and by webcast, except for discussion of business confidential information in Canada’s submission. (source: panel report and Watson Farley & Williams)

    • June 19: Panel delivered post-hearing written questions to the disputing parties.

    • June 26: Canada and NZ submitted responses to post-hearing questions and NZ submitted responses to matters arising at the hearing.

    • July 4: Disputing Parties submitted comments on each other’s June 26 submissions

    • August 8: Panel submitted initial report to the disputing Parties

    • August 23: Disputing parties submitted comments on initial report to the Panel

    Panel report:

  • September 5: Panel released its final panel report to the public, finding in paras. 201-205 that:

    • The pools created in Canada’s Notices to Importers, by reserving priority access to its 16 dairy TRQs to processors, are inconsistent with Canada’s obligation under [CPTPP] Article 2.30(1)(b) to ensure that, unless otherwise agreed by the Parties, Canada does not limit access to an allocation to processors.

    • Canada’s Notices to Importers are inconsistent with Article 2.29(1) as they result in the administration of the TRQs under an allocation mechanism which includes a pooling system that operates to limit the opportunity for otherwise eligible applicants to use the TRQs fully.

    • Canada’s inclusion of additional criteria for eligible applicants for a quota allocation within its Notice to Importers falls within the discretion provided to Parties employing an allocation mechanism and is not inconsistent with Canada’s obligations under Article 2.30(1)(a). (majority opinion with dissent)

    • Canada’s Notices to Importers are not inconsistent with Article 2.29(2)(a) because they do not introduce new limits or eligibility requirements on the utilisation of Canada’s dairy TRQs for the importation of a good that fall within the scope of this provision. (majority opinion with dissent)

    • In light of its conclusions that Canada has acted inconsistently with its obligations under Articles 2.29(1) and 2.30(1)(b), it is not necessary for the resolution of this dispute for the Panel to address NZ’s claims under Article 2.28(2) or Article 2.30(1)(c).

    • A separate minority opinion argues that (contrary to paras. 203-204) Canada has introduced new TRQ eligibility requirements which are inconsistent with CPTPP Articles 2.29(2)(a) and 2.30(a)(1).

    • Links: Panel report; NZ Minister for Trade press release; NZ High Commission Ottawa press release; Canadian government press release. Dairy Companies Assn of NZ press release. Dairy Farmers of Canada press release expressing disappointment. Institute for Agriculture & Trade Policy blogpost arguing that US should return to a supply management regime for US dairy production, and implement a Canada-style restrictive TRQ allocation scheme for imported dairy.

    • Press reports: RNZ; NZ Herald; Newsroom (NZ); NZ Post; Toronto Star.

    2024

    Under CPTPP rules, Canada has a reasonable period of time to implement the Panel’s findings.  New Zealand and Canada have agreed that the reasonable period of time will expire on 1 May 2024.

  • February 6, 2024: Global Affairs Canada launched consultation on compliance with CPTPP panel report on dairy TRQs, supplying background information on TRQ regime including utilization and availability data. Due date for comments is March 7, 2024.

  • February 13: Dairy Companies Association of NZ (DCANZ) rejects Canadian compliance proposal; estimates lost sales due to Canadian non-compliance at NZ$120 million/3 years.

  • February 15 + 19: NZ Trade Minister Tood McClay stated NZ expects Canada to coply with CPTPP panel report on dairy TRQs, Canada’s proposed changes do not comply, and ministry is seeking legal advice on next steps; lost sales due to non-compliance estimated at NZ$120 million over 3 years. NZ will also raise price depressing effect of Canada’s Milk Class 4a subsidized dairy exports with Canadian government at WTO Ministerial Meeting.

Korea-US FTA (KORUS FTA)

(1) Fisheries enforcement:

  • September 19, 2019: US requests consultations with Korea under the Environment chapter of the Korea-US (KORUS) Free Trade Agreement, concerning failure to apply sufficient sanctions to deter Korean vessels from engaging in fishing activities that violate conservation and management measures adopted by the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR). Link: USTR press release; US National Marine Fisheries Service report. October 17: environment consultations between US and Korea in Seoul.

  • November 1, 2019: USTR press release welcomes passage by Korea’s National Assembly of amendments to Korea’s Distant Water Fisheries Development Act, strengthening Korea’s regime to deter and penalize illegal, unreported, and unregulated (IUU) fishing.

(2) Procedure in KFTA competition hearings:

  • March 15, 2019: US requests consultations with Korea under the chapter on Competition-Related Matters of the Korea-US (KORUS) Free Trade Agreement, concerning procedures in competition hearings held by the Korea Fair Trade Commission (KFTC). US argues that recently drafted amendments to Korea’s “Monopoly Regulations and Fair Trade Act” fail to address U.S. concerns that KFTC hearings deny U.S. firms due process rights under the KORUS agreement (opportunity to review and rebut evidence) that are necessary to secure a fair competition hearing in Korea. Links: USTR press release; coverage from Business Korea.

  • July 9, 2019: US holds consultations with Korea under Korea-US FTA chapter on Competition-Related Matters. Link: US press release, coverage from Business Korea (linking this dispute to December 2016 Korea Fair Trade Commission action imposing fine and corrective order on Qualcomm).


Last edited: February 20, 2024