The exemptions for the two largest U.S. trading partners, expire on April 2, when Trump has threatened to impose a global regime of reciprocal tariffs on all U.S. trading partners.

Why it matters: The Canadian agricultural sector depends heavily on exports to the U.S.

Trump, who imposed the levies on Tuesday, had mentioned an exemption only for Mexico earlier on Thursday, but the amendment he signed later that day covered Canada as well. The three countries are partners in a North American trade pact.

In response, Canada will delay a planned second wave of retaliatory tariffs on C$125 billion of U.S. products until April 2, Finance Minister Dominic LeBlanc said in a post on X.

What has been exempted?

For Canada, the amended White House order also excludes duties on potash, a critical fertilizer for U.S. farmers, but does not fully cover energy products, on which Trump has imposed a separate levy of 10 per cent.

A White House official said that was because not all energy products imported from Canada are covered by the U.S.-Mexico-Canada Agreement on trade that Trump negotiated in his first term as president.

Trump imposed the tariffs after declaring a national emergency on January 20, his first day in office, due to deaths from fentanyl overdoses, saying the deadly opioid and its precursor chemicals make their way from China to the United States via Canada and Mexico.

Trump has also imposed tariffs of 20 per cent on all imports from China as a result.

China said it would “resolutely counter” pressure from the United States on the fentanyl issue, urging the United States to resolve the abuse of the drug itself.

“No country can imagine that it can suppress China on one hand while developing good relations with China on the other hand,” Foreign Minister Wang Yi told a briefing in Beijing on Friday.

Trump first announced the levies at the beginning of February, but delayed them until Tuesday for Canada and Mexico. This week he declined further delay, and doubled a 10 per cent levy enforced on Chinese imports since February 4.

“On April 2, we’re going to move with the reciprocal tariffs, and hopefully Mexico and Canada will have done a good enough job on fentanyl that this part of the conversation will be off the table, and we’ll move just to the reciprocal tariff conversation,” Commerce Secretary Howard Lutnick told CNBC.

“But if they haven’t, this will stay on.”

Trump also said tariffs of 25 per cent on imports of steel and aluminum would take effect as scheduled on March 12. Canada and Mexico are both top exporters of the metals to U.S. markets, with Canada in particular accounting for most aluminum imports.

On Wednesday Trump exempted automotive goods from the 25 per cent tariffs he imposed on imports from Canada and Mexico as of Tuesday, levies that economists saw as threatening to stoke inflation and stall growth across all three economies.

Trump issued the exemptions after meeting executives from the top U.S. auto makers, Ford, General Motors and Stellantis.

No buy-in from markets

U.S. stock markets resumed their recent sell-off on Thursday, with investors citing the back-and-forth developments on tariffs as a concern. Economists have warned the levies may rekindle inflation and slow demand and growth in their wake.

The S&P 500 closed down 1.8 per cent and is now down nearly 7 per cent since mid-February.

“A continuation of this on-again, off-again with tariffs, particularly with Mexico and Canada,” is creating uncertainty in markets, said Bill Sterling, global strategist at GW&K Investment Management in Boston.

“How can you make decisions about where you locate an auto plant between the United States and Canada right now?”

Lutnick said that the White House was not looking to market reaction for guidance.

Trade war to continue?

Prime Minister Justin Trudeau, who is stepping down as Canada’s leader on Sunday, said he did not expect the trade war to abate soon.

“I can confirm that we will continue to be in a trade war that was launched by the United States for the foreseeable future,” he told reporters in Ottawa.

U.S. Treasury Secretary Scott Bessent called Trudeau a “numbskull.”

Mexican officials offered no immediate response to the tariff delay, though President Claudia Sheinbaum held a telephone call with Trump earlier on Thursday, during which he had agreed to a delay.

“We had an excellent and respectful call in which we agreed that our work and collaboration have yielded unprecedented results, within the framework of respect for our sovereignties,” Sheinbaum said in a post on X.

Mexican and Canadian officials have been frustrated by tariff negotiations with the Trump administration, with a lack of clarity over U.S. desires, sources from both countries told Reuters.

—Reporting by Katharine Jackson in Washington, Kylie Madry and Brendan O’Boyle in Mexico City, David Ljunggren in Ottawa and Dan Burns in New York

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The U.S. Trade Representative’s office said the USMCA dispute settlement panel ruled in favor of all seven U.S. legal claims in the long-running case. It said the panel found Mexico’s restrictions are not based on science and violate the USMCA’s chapters on sanitary and phytosanitary measures and on market access and national treatment.

The three-member panel’s final report recommended that Mexico bring its corn-trade policies into compliance with the trade agreement. It has 45 days to do so under the 2020 trade deal’s rules and failure to comply could result in punitive duties on some exports to the U.S.

Mexico’s economy and agriculture ministries said in a joint statement they disagreed with the ruling but would respect it, providing no details on what steps they would take.

“The Government of Mexico does not agree with the Panel’s decision, as it considers that the measures in question are aligned with the principles of public health protection and the rights of Indigenous peoples,” the agencies said.

Nonetheless, they said that dispute resolution was a key component of the USMCA trade deal, noting that Mexico and Canada prevailed over the U.S. in an automotive rules of origin dispute case last year.

The corn dispute began six months after USMCA came into force in July 2020 when then-President Andres Manuel Lopez Obrador decreed that GM corn be banned by the end of 2024 — a move largely targeting U.S. corn exports. His successor, President Claudia Sheinbaum, has supported the policy.

After years of little movement in consultations, USTR requested arbitration to settle the dispute, challenging Mexico’s 2023 decree that immediately banned use of GM corn in tortillas and dough, and instructed government agencies to gradually eliminate its use in other foods and in animal feed.

The U.S. argued the Mexican government’s claims that GM corn is harmful to human health were not based on science.

“The panel’s ruling reaffirms the United States’ longstanding concerns about Mexico’s biotechnology policies and their detrimental impact on U.S. agricultural exports, U.S. Trade Representative Katherine Tai said in a statement.

U.S. Agriculture Secretary Tom Vilsack said the decision ensured that U.S. farmers and exporters “will continue to have full and fair access to the Mexican market.”

“It is also a victory for the countries around the world growing and using products of agricultural biotechnology to feed their growing populations and adapt to a changing planet,” Vilsack added.

In February, Mexico’s government softened its initial ban on GM corn, explicitly allowing its use for livestock feed and industrialized products for human consumption, but maintained the ban for use in tortillas.

Mexican officials have defended restrictions on GM corn in tortillas and argued it is up to Washington to demonstrate its exports do not harm human health.

U.S. President-elect Donald Trump has threatened to impose a 25 per cent blanket tariff on all imports from Canada and Mexico when he takes office on Jan. 20 unless they stem the flow of illegal migrants and fentanyl to the U.S.

If implemented, those duties would appear to violate the USMCA’s rules, possibly spawning another dispute case.

Top buyer

Mexico, birthplace of modern corn, prohibits planting of GM corn due to fears it would contaminate native strains of the grain. Yet the country is the top foreign buyer of U.S.-grown yellow corn, nearly all of which is genetically modified.

Mexico’s government expects local buyers will import a record 22.3 million metric tons during the 2023/24 agricultural season.

In 2024 through October, the U.S. exported $4.8 billion (C$6.9 billion) worth of corn to Mexico, according to U.S. Census Bureau data.

Mexico boasts over 60 native varieties of corn, known as landraces, many coming in a kaleidoscope of colors and featuring distinct flavor profiles.

This month, Deputy Economy Minister Luis Rosendo Gutierrez stressed that the government was doing everything it could to protect the free trade pact amid Trump’s tariff threats. He added Mexico would comply with the panel’s ruling.

U.S. and international agriculture and biotechnology groups applauded the ruling.

“This is the clearest of signals that upholding free-trade agreements delivers the stability needed for innovation to flourish and to anchor our food security,” said Emily Rees, president of CropLife International, which represents the plant science industry.

— Reporting by David Lawder and Adriana Barrera; additional reporting by Brendan O’Boyle, David Alire Garcia and Cassandra Garrison in Mexico City, Tom Polansek in Chicago and Leah Douglas in Washington.

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The United States had accused Canada of not meeting obligations under the 2020 Canada-U.S.-Mexico Agreement (CUSMA) to open its market to foreign producers.

The three-person independent panel ruled that Canada had not acted unreasonably. The panel’s report was released on Friday.

U.S. Trade Representative Katherine Tai said in a statement that she was “very disappointed” by the ruling.

“The United States continues to have serious concerns about how Canada is implementing the dairy market access commitments it made in the agreement … we will not hesitate to use all available tools to enforce our trade agreements,” she said.

Trading partners say that although Canada has over the years agreed in a number of deals to allow some dairy market access to foreign firms through a system of tariff-rate quotas, it was in fact improperly allocating most of them to domestic firms.

“Canada is very pleased with the dispute settlement panel’s findings, with all outcomes clearly in favour of Canada,” Trade Minister Mary Ng said in a statement.

Dairy Farmers of Canada president David Wiens, in a separate one-sentence statement Friday morning, said the organization “welcome(s) the decision of the panel.”

In January 2022, an earlier CUSMA panel said Ottawa had violated the accord by not opening up the domestic market enough. Canada then amended its policies.

The CUSMA agreement kept in place Canada’s decades-old supply management system, which restricts domestic production of dairy, eggs and poultry to stabilize incomes of dairy farmers and protect them from import competition with high tariffs.

Canada’s roughly 10,000 dairy farmers form one of the most influential political lobbies. Most farm in Quebec and Ontario, the provinces with the most parliamentary seats.

— Reporting for Reuters by David Ljunggren in Ottawa; includes files from Glacier FarmMedia Network staff.

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The request to send the dispute to arbitrators was announced after formal consultations failed to resolve deep divisions between the two close trading partners over use of genetically modified (GM) corn, widely produced by U.S. farmers.

Mexico’s economy ministry said it would defend its GM corn policies before the dispute panel, saying on the social media platform X that they “are consistent with trade obligations.”

Washington alleges that Mexico’s decree banning imports of GM corn used in dough and tortillas for human consumption is not based on science and violates its commitments under the Canada-U.S.-Mexico Agreement (CUSMA) on trade launched in 2020.

If the panel rules in favour of the U.S. and Mexico fails to comply with its directives, USTR could ultimately win the right to impose punitive tariffs on Mexican goods, which could spark a rare North American trade war.

U.S. Trade Representative Katherine Tai said in a statement that the move was aimed at enforcing Mexico’s CUSMA obligations to maintain science-based regulations on agricultural biotechnology.

“It is critical that Mexico eliminate its (CUSMA)-inconsistent biotechnology measures so that American farmers can continue to access the Mexican market and use innovative tools to respond to climate and food security challenges,” Tai said.

Mexico now buys about US$5 billion worth of U.S. GM corn annually, mostly for livestock feed. It says biotech corn harms native varieties and may have adverse health effects, an assertion that the U.S. side disputes.

Mexico also plans to ban the herbicide glyphosate, which it considers dangerous amid lawsuit settlements with cancer patients despite regulators worldwide determining its safety. Many GM corn varieties are modified to tolerate the herbicide.

Canada’s trade ministry, which has sided with U.S. concerns about Mexico’s corn policies, “is considering its next steps,” a spokesperson said, adding Trade Minister Mary Ng “has consistently been clear about the importance of maintaining science-based approaches to biotechnology approvals.”

Corn futures temporarily pared gains at the Chicago Board of Trade after USTR’s announcement as traders worried the spat could threaten U.S. exports to Mexico.

Fruitless consultations

The panel request follows 75 days of formal consultations requested by U.S. officials in June. Mexico has sought U.S. co-operation to jointly conduct scientific research on the health impacts of genetically modified corn, but Mexican officials told Reuters on Aug. 3 that their U.S. counterparts denied the request.

“Mexico’s approach to biotechnology is not based on science and runs counter to decades’ worth of evidence demonstrating its safety and the rigorous, science-based regulatory review system that ensures it poses no harm to human health and the environment,” U.S. Agriculture Secretary Tom Vilsack said in the statement.

He added that innovations in agricultural biotechnology to enhance yields also help ease challenges on global food and nutrition security, climate change and food price inflation.

USTR’s decision drew cheers from U.S. corn trade groups and U.S. lawmakers from both parties, who say Mexico’s policies were hurting U.S. farmers.

“U.S. officials have exhausted every avenue trying to resolve this conflict and are left with no other choice but to turn to a third-party panel in hopes of quickly rectifying this issue,” National Corn Growers Association president Tom Haag said in a statement. “We are deeply appreciative of USTR for standing up for America’s corn growers.”

Republican Senator Deb Fischer of Nebraska said the move would “hold Mexico accountable and prevent its blatant trade violation under (CUSMA).”

Under CUSMA’s dispute settlement rules, a five-person panel, chosen from a roster of pre-approved experts, must be convened within 30 days, with a chair jointly chosen and the U.S. side choosing two Mexican panelists and Mexico choosing two U.S. panelists. The panel will review testimony and written submissions and its initial report is due 150 days after the panel is convened.

Previous CUSMA dispute panels last year ruled in the U.S.’s favour in a dispute over Canadian dairy quotas, and against the U.S. on automotive rules of origin, siding with Mexico and Canada.

There have been other disagreements between the U.S. and Mexico, most notably over energy in which the U.S. has argued that Mexico’s nationalist policy prejudices foreign companies.

— Reporting for Reuters by David Lawder; additional reporting by Steve Scherer in Ottawa, Adriana Barrera and Valentine Hillaire in Mexico City and Caroline Stauffer in Chicago.

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The Dairy Direct Payment Program (DDPP), which issued $1.75 billion over four payments from 2019 to 2023 to compensate for the Canada-European Union (CETA) and Trans-Pacific Partnership (CPTPP) trade pacts, this year begins to roll out $1.2 billion over 2023 to 2029 to compensate for the Canada-U.S.-Mexico Agreement (CUSMA).

The plan for CUSMA compensation for supply-managed sectors was first laid out in broad strokes last November.

One significant difference announced Tuesday for this segment of the DDPP is that dairy producers must hold a valid dairy quota licence registered with a provincial milk marketing board or agency on Aug. 31 to be eligible for a payment in a given year.

Previous DDPP program years had used an Oct. 31 calculation date. The government noted Tuesday that this change has been made “in consultation with industry.”

Since the calculation date affects the opening of the program registration period, setting the date earlier in the year “will ensure producers have more time to sign up before the deadline and may receive their payment sooner.”

The registration period for the fifth payment is expected to open this fall of 2023. Eligible producers must register before March 31, 2024, the government said.

Those producers can expect letters from Agriculture and Agri-Food Canada in the fall with registration details. Payments would follow once a producer completes the registration, AAFC said Tuesday.

Setting the new quota reference date for the DDPP will ensure producers “have the necessary information further in advance to be able to plan and evaluate their farm situation,” federal Agriculture Minister Marie-Claude Bibeau said in Tuesday’s release.

Sustainability research

Bibeau on Tuesday also announced an unrelated funding envelope of over $7.5 million for Dairy Farmers of Canada (DFC) from the federal AgriScience Program – Clusters Component.

AgriScience — a federally funded program under the Sustainable Canadian Agricultural Partnership (S-CAP) — will back DFC for research into “solutions to improve the environmental and economic sustainability, and resilience of the Canadian dairy industry.”

To that end, the government said, DFC is to develop and implement plans to reduce greenhouse gas (GHG) emissions and sequester carbon, and to improve the health and welfare of cows and the quality of milk produced.

Outcomes in the former area are expected to help the industry hit DFC’s previously stated goal of reaching net-zero GHG emissions from dairy production by 2050. Research in the latter areas, meanwhile, will include antimicrobial use and antimicrobial resistance in dairy cattle, genetic improvements in cattle, and “eco-efficient” dairy processing.

DFC president Pierre Lampron said in a separate release that the funding is “essential to enable strong, robust and evidenced-based research material that ultimately helps dairy farmers increase the efficiency of their farms.” — Glacier FarmMedia Network

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Rob Stewart, Canada’s deputy minister for international trade, wrote Friday to U.S. and Mexican trade officials, formally announcing Canada’s intent to take part in the CUSMA dispute settlement consultations U.S. officials requested earlier this month.

“Canada shares the concerns of the U.S. that Mexico’s measures are not scientifically supported and have the potential to unnecessarily disrupt trade in the North American market,” federal Agriculture Minister Marie-Claude Bibeau and Trade Minister Mary Ng said in a joint statement Friday.

U.S. Ag Secretary Tom Vilsack and Trade Representative Katherine Tai on June 2 announced that Washington would seek dispute settlement consultations, following a round of technical consultations with Mexico in March under the sanitary and phytosanitary measures (SPS) chapter of the CUSMA pact.

Those technical consultations “did not resolve the matter,” Tai said in a statement June 2.

Bibeau and Ng said the dispute settlement consultations cover measures laid out in a presidential decree published by Mexico in February — “namely the ban on use of biotechnology corn in tortillas and dough, the intention to gradually substitute the use of biotechnology corn in all products for human consumption and animal feed.”

The consultations are also meant to address Mexico’s plans for “rejection of applications for authorizations covering the importation and sale of certain biotechnology products,” the ministers said.

Mexico has been discussing such a ban since 2020, citing sustainability, self-sufficiency and the protection of native corn varieties, with the stated aim of ultimately replacing its imports of U.S. yellow corn with domestic non-GMO production and halting the use of glyphosate herbicide.

“We have always been clear that Canada expects our partners to uphold their commitments under CUSMA — including sanitary and phytosanitary measures,” the Canadian ministers said in Friday’s statement.

The federal government, they said, is “committed to science-based decision-making and keeping food, feed and the environment safe, while supporting the ability of our farmers, workers and exporters to succeed in an innovative and sustainable agricultural sector.”

In these consultations, they said, Canada will work toward “an outcome that preserves trade predictability and market access for our farmers and exporters.”

“When a key trading partner such as Mexico does not authorize biotechnology applications for Canadian agricultural exports, this creates an asymmetry in North American regulatory conditions that can lead to trade disruptions,” Stewart said in Friday’s letter to U.S. and Mexican officials.

Mexico’s approach in its decisions “may have a significant economic impact on Canadian producers, developers of innovative agricultural technologies, as well as consequences for trade flows into and out of Canada,” he wrote.

Canada, he added, has “an important systemic interest in ensuring the correct interpretation of the sanitary and phytosanitary (SPS) obligations of CUSMA, namely that SPS measures are based on scientific principles, relevant international standards, guidelines and recommendations, or appropriate risk assessments.”

Also, he wrote, Canada maintains that “SPS measures shall not be more trade-restrictive than required to achieve a party’s appropriate level of protection and shall be applied only to the extent necessary to protect human, animal, or plant life or health.”

The Canada Grains Council, in a separate release Friday, hailed Ottawa’s decision, saying “Mexico’s decision to ban products with a proven record of safety has far-reaching consequences.”

The introduction of Mexico’s decree has “injected uncertainty into North American markets,” CGC vice-president Krista Thomas said, and if the measure is not withdrawn, “it has the potential to trigger food price inflation and undermine food security within the intricate supply chains of North America.”

There have been “some positive signals from Mexico recently” on the matter, the Canola Council of Canada said Friday in a separate statement, but “more formal and substantive assurance is required to provide clarity and certainty about the regulatory approach moving forward.

“Without that, there is concern that similar issues could arise in the future and precedence established for approaches not based on science.”

For its part, the U.S. government “has been clear that it would consider all options, including further steps to enforce U.S. rights under (CUSMA), if Mexico did not return to science- and risk-based biotechnology policies that are in compliance with (CUSMA) commitments,” the USTR said June 2. — Glacier FarmMedia Network

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The North American neighbours are inching closer to a full-blown trade dispute under the Canada-U.S.-Mexico Agreement (CUSMA) on trade over Mexico’s policies to limit the use of GM corn, which it imports from the U.S.

If the consultations announced on Friday fail to resolve disagreements within 75 days, Washington can request a dispute settlement panel to decide the case.

Asked if Canada would take similar action to the U.S., a spokesperson for the trade ministry said Canada is “considering its next steps” and would be “guided by what is in the best interest of our farmers and the Canadian agriculture sector.”

The U.S. requested formal trade consultations in March over objections to Mexico’s plans to limit imports of GM corn and other agricultural biotechnology products. Those consultations took place, but failed to resolve the matter, the senior USTR officials said.

A spokesperson for Mexico’s economy ministry did not immediately comment on the move. The agriculture ministry declined to comment.

Earlier this week, Mexico’s agriculture minister expressed confidence in an interview that the dispute with the U.S. would not escalate to a dispute settlement panel.

The conflict comes amid other disagreements between the U.S. and Mexico, most notably over energy in which the U.S. has argued that Mexico’s nationalist policy prejudices foreign companies.

Despite changes to Mexico’s decree on GM corn, which it modified in February, the U.S. said the Latin American country’s policies are not based on science and appear inconsistent with its commitment under CUSMA.

The new decree eliminated the deadline to ban GM corn for animal feed and industrial use, by far the bulk of its US$5 billion worth of U.S. corn imports, but maintained a ban on GM corn used in dough or tortillas.

Mexican President Andres Manuel Lopez Obrador has said GM seeds can contaminate Mexico’s age-old native varieties and has questioned their impact on human health.

“They did make some modifications such as removing the specific timeline for banning biotech products, but the decree does call for a gradual substitution and eventual banning of biotech corn, and this part of the measure itself is not science-based,” said a senior USTR official.

The consultations will also address Mexico’s rejection of new biotech seeds for products like soybeans, cotton and canola, U.S. officials said.

U.S. Agriculture Secretary Tom Vilsack said in a statement, “We fundamentally disagree with the position Mexico has taken on the issue of biotechnology, which has been proven to be safe for decades.”

The National Corn Growers Association (NCGA), which represents U.S. farmers, praised the U.S. move.

“Mexico’s actions, which are not based on sound science, have threatened the financial wellbeing of corn growers and our nation’s rural communities,” said NCGA President Tom Haag in a statement

— Reporting for Reuters by Cassandra Garrison; additonal reporting by Adriana Barrera in Mexico City and Ismail Shakil in Ottawa.

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“We’ll have a summit to discuss terms of the trade agreement treaty… in Mexico,” Lopez Obrador said in a regular news conference.

Mexican Economy Minister Tatiana Clouthier said in an interview published Monday in national newspaper El Universal that the U.S. is “distorting” CUSMA by filing labour complaints against Mexico, which is in the process of updating its labour laws.

Lopez Obrador said “there’s no problem” with the United States when asked about the economy minister’s words Monday.

The three countries’ foreign ministries in June announced a trilateral summit between the leaders in Mexico, scheduled for December.

Lopez Obrador said Monday the meeting was scheduled for November, but a spokesman for the U.S. Embassy in Mexico told Reuters the president was likely referring to the December summit and that it had “nothing… on the radar” for November.

The office of Canada’s Trade Minister Mary Ng, in a separate notice Sunday, said Ng and Clouthier are also scheduled to meet with U.S. Trade Representative Katherine Tai for “trialteral discussions” on Thursday and Friday this week in Vancouver.

Those discussions are to be held at the three countries’ Free Trade Commission meeting, Ng’s office said, and the officials will also “recognize the collaboration and successes” of CUSMA at a media event “on the occasion of (the agreement’s) second anniversary.”

— Reporting for Reuters by Raul Cortes and Kylie Madry. Includes files from Glacier FarmMedia Network staff.

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The U.S. Trade Representative’s office claimed victory for Washington in the first dispute settlement panel ever brought under the Canada-U.S.-Mexico Trade Agreement (CUSMA) that took effect in 2020. Canada said the report found “overwhelmingly” in its favour.

At issue in this case is Canada’s practice of reserving 80-85 per cent of the volume of its dairy tariff rate quotas (TRQs) — specified quantities of products from ice cream to cheese that can cross the border at lower or zero tariffs — for import by Canadian processors.

The United States requested creation of the dispute panel on May 25 after failing to resolve the issue in bilateral consultations with Canada. The panel issued its confidential findings to the parties on Dec. 20 and released them publicly on Tuesday.

In its 50-page report, the panel concluded, “Canada’s practice of reserving TRQ pools exclusively for the use of processors is inconsistent with Canada’s commitment in Article 3.A.2.11(b) of the Treaty not to ‘limit access to an allocation to processors.'”

U.S. Trade Representative Katherine Tai said the “historic win will eliminate unjustified trade restrictions on American dairy products, and will ensure that the U.S. dairy industry and its workers get the full benefit of (CUSMA) to market and sell U.S. products to Canadian consumers.”

Canada’s Trade Minister Mary Ng and Agriculture Minister Marie-Claude Bibeau, in a statement Tuesday, said they’ve “taken note of the panel’s finding regarding Canada’s practice of reserving TRQ pools for the use of dairy processors” and will work “closely” with the dairy industry on next steps.

U.S. producers exported US$478 million of dairy products to Canada from January through October, according to U.S. data. It was not immediately clear how much the volume could increase as a result of the panel’s finding.

The senior U.S. official said the United States expected Canada to resolve the issue by a deadline of Feb. 3 and its goal was not to impose retaliatory measures but it had the right to do so if Ottawa did not remove the restrictions.

“We will ensure compliance with the ruling which is overwhelmingly in Canada’s favour … Canada is seeing this (report) as a win in a lot of ways,” Alice Hansen, a spokeswoman for Ng, said Tuesday.

Hansen, speaking by phone, said it would be premature to discuss how Canada would ensure compliance.

U.S. farmers have complained that Canada’s supply management system hurts their ability to export to their northern neighbour.

Ng said in Tuesday’s statement the panel had “expressly” recognized the legitimacy of Canada’s supply management system, which sets production quotas and high tariffs to support prices of dairy, poultry and eggs.

— Reporting for Reuters by Andrea Shalal and David Ljunggren; additional reporting by Rod Nickel.

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With the Canada-United States-Mexico Agreement (CUSMA), the successor trade deal to NAFTA, taking effect, new regulations addressing long-standing complaints from U.S. grain growers will kick in starting Wednesday (July 1).

Amendments to the Canada Grain Act and related regulations — which were covered in Bill C-100, CUSMA’s implementing legislation — will, on that date, allow grain grown in the U.S. to receive an official Canadian grade, if it’s of a variety registered in Canada.

C-100 also removes the requirement for a country-of-origin statement on inspection certificates for grain grown in the U.S., also starting July 1.

Statements of origin for phytosanitary or customs requirements “will not be affected,” according to the Canadian Grain Commission (CGC).

Toward those ends, the CGC will soon also require anyone — and that includes growers in both Western and Eastern Canada, growers in the U.S., and licensed grain companies — to complete a declaration of eligibility when selling grain to a CGC licensee.

That requirement will take effect with the start of the 2020-21 crop year on Aug. 1.

U.S. producers who deliver grain to Canada will have the same obligations as Canadian producers, the CGC said, and the declarations requirement “will help accommodate U.S. grain by ensuring reliable information on seed registration is provided.”

The declarations will also ensure producers “receive the appropriate grain grade and payment for deliveries,” the CGC said Tuesday in a release.

The declaration rules will “build” on the process already used across much of the grain sector in Western Canada, the CGC said.

In Eastern Canada, where delivery declarations haven’t previously been in use, the CGC said producers and licensees will have until July 1, 2021 to comply with the rule — and the commission will “work with grain sector stakeholders” to phase it in during the coming crop year.

“Delivery declarations will protect Canada’s quality assurance system while allowing American grain producers to receive an official grade,” CGC chief commissioner Patti Miller said in Tuesday’s release.

‘Small volumes’

U.S. growers and grower groups have, over the years, voiced concerns about “discriminatory treatment” of U.S.-grown wheat, the CGC said, “particularly as it relates to statutory grading.”

Until now, any type of imported grain has been prevented from receiving statutory Canadian grades based on origin, so U.S.-grown grain delivered to a primary elevator in Canada couldn’t get an official Canadian grade, even if the grain was of a variety registered in Canada.

The U.S. has “perceived this as a barrier to trade with Canada and a trade irritant,” the CGC said.

Agriculture and Agri-Food Canada, in a May 31 statement, said past levels of U.S. producer deliveries into Canada’s grain handling system have had more to do with market conditions — such as delivery distances or currency exchange rates — than any regulation or policy on the Canadian side.

The regulations being changed for CUSMA “will not change how Canadian grain is delivered in the primary elevator system in Canada, and will have minimal impact on the Canadian grain sector,” AAFC said last month.

“Small volumes of U.S. grain regularly move through the Canadian licensed elevator system, and this agreement is not expected to significantly influence this trend.”

As for grain quality and end uses, the changes coming up “will not impact Canadian consumers,” the CGC said.

U.S.-grown grain delivered into Canada “will need to meet the same rigorous quality standards as Canadian grain” and consumers “can continue to expect grain and milled products that are dependable and safe.” — Glacier FarmMedia Network

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