NZ Escalates Dairy Dispute with Canada, Triggering Formal CPTPP Negotiations

The move comes after Canada failed to comply with a previous ruling under the CPTPP, Trade and Agriculture Minister Todd McClay announced today.

Trade and Agriculture Minister Todd McClay announces mandatory negotiations as Canada continues to block New Zealand dairy access, defying CPTPP ruling.

New Zealand has officially notified the Canadian Government and other members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that it is triggering mandatory negotiations in a long-standing dairy trade dispute with Canada. The move comes after Canada failed to comply with a previous ruling under the CPTPP, Trade and Agriculture Minister Todd McClay announced today.

In September 2023, an independent Panel of Arbitrators ruled in favour of New Zealand, concluding that Canada had breached its trade obligations by obstructing New Zealand’s access to the Canadian dairy market. Canada has since failed to take corrective action. Under CPTPP provisions, New Zealand’s next step is to request formal negotiations, a step the New Zealand Government has now initiated.

“New Zealand takes its obligations under trade agreements seriously. The CPTPP is one of the highest-quality agreements signed by a group of like-minded economies, and all parties understood the commitments they were making when the agreement was signed,” Minister McClay said in a statement.

New Zealand Seeks Fair Treatment for Exporters

The core of the dispute revolves around the dairy quotas that were negotiated as part of the CPTPP. Canada’s refusal to provide New Zealand dairy exporters with equitable access to its market is seen as a violation of the trade pact's terms.

“As a matter of principle, the New Zealand Government expects our trade partners to treat our exporters fairly and within the rules of our agreements. Canada is not doing that in respect to the dairy quotas that were negotiated and agreed upon,” McClay emphasized.

New Zealand Presses for Compensation

New Zealand has been increasingly vocal about Canada’s ongoing non-compliance and is now pushing harder for a resolution. According to McClay, the New Zealand Government intends to continue pursuing its case until Canada meets its obligations under the CPTPP, or compensates for the economic impact caused by the market access restrictions.

"Canada can end this dispute by simply meeting its CPTPP obligations. If they choose not to comply, they owe us compensation," McClay stated. He added that the case highlights the importance of honoring international trade commitments, especially for nations like New Zealand that heavily rely on access to overseas markets.

Formal Negotiations Expected Within Two Weeks

As per the CPTPP dispute resolution process, the formal negotiations between the two countries must commence within 15 days of New Zealand’s notification. These negotiations will provide an opportunity for both parties to discuss potential solutions and avoid further escalation of the trade conflict. Should the negotiations fail to resolve the matter, New Zealand could pursue additional remedies, potentially including retaliatory measures or further arbitration.

Global Implications of the Dispute

This dairy dispute underscores broader challenges within multilateral trade agreements and how member countries adhere to their obligations. The outcome could have significant ramifications for other CPTPP members, as well as for the future of global trade rules in an era of growing protectionism and bilateral tensions. New Zealand is committed to preserving the integrity of the CPTPP and ensuring that its exporters have the market access that was negotiated in good faith.