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This week U.S. Trade Representative (USTR) Katherine Tai will meet with her counterparts from Canada and Mexico at the first U.S.-Mexico-Canada Agreement Free Trade Commission meeting, covering a range of issues from labor rights to softwood lumber to the very different ways our countries manage dairy supplies (or leave it to the whims of corporate-led markets).

The U.S.-Mexico-Canada Agreement (USMCA), despite its flaws, was a first step at redefining U.S.-led trade agreements. It weakened Investor-State-Dispute Settlement (ISDS), which empowers corporations to sue governments over rules that undermine their expected profits, and strengthened enforcement of labor rights. Last week, the U.S. government filed its first case under the new USMCA Rapid Response Mechanism, challenging labor rights violations at a General Motors plant in Mexico. That was followed by a separate complaint brought by the AFL-CIO, Service Employees International Union, SNITIS (Sindicato Nacional Independiente de Trabajadores de Industrias y de Servicios Movimiento 20/32, a Mexican auto-workers union) and Public Citizen over repression of efforts to improve wages and working conditions at Tridonex, a subsidiary of a Philadelphia-based auto-parts manufacturer that supplies the U.S. market.

While the complaint on the General Motors plant was the first labor rights case formally filed under USMCA, it is not the first dispute. That dubious distinction goes to a U.S. challenge to Canada’s opening of its dairy markets under the terms of the agreement, which was first filed in December 2020. During the USMCA negotiations, Trump called for measures to essentially dismantle Canada’s dairy supply management program, opening it more completely to exports from the U.S. In the end, Canada agreed to allow more U.S. dairy products in, amounting to about 3.6% of its market. This comes on top of similar small openings under the Comprehensive Progressive Trans-Pacific Partnership (CPTPP) and CETA (the EU-Canada trade deal).

Ironically, the push against supply management during the USMCA talks sparked a much bigger conversation in the U.S. about our need for similar programs to contain oversupply and ensure fair prices for farmers. In February, some 21 family farm, labor and related groups sent a letter to USTR Katherine Tai calling on her to abandon the challenge to Canada’s dairy supply management program and instead promote worker rights and dairy policy reforms in the U.S.

My colleague Ben Lilliston and I added to that conversation with this new factsheet on the climate benefits of the Canadian program. Canadian producers (like many in the U.S.) have taken actions to lower the carbon footprint of their production in recent years, but in the U.S., many of those reductions per unit of milk have been overtaken by the sharp increase in herd size and overall production. Darrin Qualman at the Canadian National Farmers Union noted that the smaller dairy herds can be grazed on grasslands, helping to sequester carbon and minimize emissions. Destroying or displacing smaller, dispersed grazing herds of dairy cattle and replacing them with production from huge, centralized, non-grazing herds is a net loss for soil health, carbon sequestration, sustainability and the climate.

We conclude with a choice. The U.S. can continue pressure to expand highly emitting U.S. dairy production into the Canadian market, thus reducing less emitting Canadian dairy production and undermining both countries’ climate goals. Or it could choose to abandon this challenge and instead open the possibility of learning from the Canadian experience to consider policies designed to promote more sustainable and resilient production.

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