Under Ottawa’s Tariff Rate Quotas (TRQ) system, a limited quantity of cheese can enter Canada at a lower or zero rate of customs duties, while imports over this quota are subject to a 245.5% border tax. For 40 years, Canada’s entire cheese TRQ was frozen at 20,411,866 kilograms (kgs) – 20,412 tonnes. These 20,412 tonnes are often referred to as the World Trade Organization (WTO) TRQ. After four decades of no growth with the WTO TRQ, three international trade treaties will create another seven cheese TRQs. These 7 new TRQs will more than triple Canada’s cheese TRQs from 20 million kgs to 69 million kgs.
First, the Canada and European Union (EU) Comprehensive Economic and Trade Agreement (CETA) is adding an additional 17,700 tonnes of new TRQ for cheese exported from EU countries:
- Fine Cheese: 16,000 tonnes
- Industrial Cheese: 1,700 tonnes
Second, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will create an additional 16,502,000 kgs of TRQ for cheese exported to Canada from the CPTPP’s other 10 member countries, including Australia and New Zealand:
• Cheeses of all types 4,126 tonnes
• Mozzarella & Prepared Cheese 3,300 tonnes
• Industrial Cheese 9,076 tonnes
Third, the Canada-United States-Mexico Agreement (CUSMA) creates another two Cheese TRQs. The CUSMA “Cheeses for Industrial Use” TRQ and the “Cheeses of All Types” TRQ will both eventually be 7,113 tonnes each, for a total of 14,226 tonnes. To put this CUSMA 14.2 million kgs. number in perspective, for 40 years Ottawa froze world cheese imports at 20.4 million kgs, notwithstanding the fact that the Canadian consumer population increased by over 50%.
In summary, the impact of the 7 new Cheese TRQs created by the CETA, the CPTPP, and the CUSMA is as follows:
- After 4 decades of frozen WTO cheese imports of 20.4 million kgs, the CETA is adding another 17.7 million kgs, for a total of 38.1.
- Second, the CPTPP will add another 16.5 million kgs of cheese imports, for a total of 54.6.
- Third, once it is implemented, the CUSMA will add another 14.2 million kgs of cheese imports, for a total of 68.8.
- In sum, after 4 decades of no growth, cheese imports will more than triple from 20 million kgs to 69 million kgs.
For Canada’s population of 37 million people, 69 million kgs amounts to less than 2 kgs of imported cheese per capita. In spite of more cheese imports, Canadian consumers are puzzled because most are not seeing more varieties of cheese in retail stores at lower prices. This is because Ottawa has allocated the new cheese TRQs to cheese exporters’ competitors (Canadian dairy farmers/processors) – and not their customers (Canadian cheese importers). Canadian dairy farmers/processors do not want to import anything that competes with the cheese they produce in Canada. In addition, instead of allocating cheese TRQs to the persons most likely to use them, Ottawa has allocated them to persons who transfer their TRQ to others, for a fee. In 2018, these Transfer “Fees” amounted to over $5 million, which significantly increased the costs of imported cheese.
The ICCC believes that Ottawa’s CETA and CPTPP Cheese TRQs must be reformed now to ensure they are allocated to the persons must likely to use them, and to ensure Canadian consumers have more choice and are not forced to pay inflated Transfer Fees.
If you agree, please let your Member of Parliament know. You can locate your MP with the following link: