(Bloomberg) -- New Zealand is escalating a long-running trade dispute with Canada over access for its dairy exporters to the Canadian market.
New Zealand has notified Canada that it has triggered compulsory negotiations under the free-trade agreement both countries are members of, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Trade Minister Todd McClay said Friday in Wellington. Under the CPTPP’s dispute settlement process, negotiations must commence within 15 days of notification, he said.
“Canada can end this dispute by meeting its CPTPP obligations to us,” McClay said. “If they continue to choose not to, they owe us compensation.”
New Zealand initiated proceedings against Canada in 2022, saying the manner in which it was implementing dairy tariff rate quotas was inconsistent with its obligations under the pact. In September last year, a panel of arbitrators ruled in New Zealand’s favor, finding that Canada was blocking dairy access, McClay said, but Canada has failed to comply with that ruling.
“We will be looking for them to make changes to their import regime so that Kiwi exporters can sell this quota into the Canadian market,” he told Radio New Zealand. “I’m hopeful Canada will decide to make changes or pay compensation, but we reserve the right to take all action under the agreement.”
Under the rules of the CPTPP and the World Trade Organization, New Zealand could impose tariffs on Canada “to an equal amount of the loss that we face,” McClay said.
New Zealand exporters have lost as much as NZ$200 million ($121 million) over several years due to Canada’s stance, he said.
“We give full access to Canada for the things we agreed. We honor our agreement, they owe us the same courtesy,” McClay said. “If they won’t, the New Zealand government will take more action.”
The 11-member CPTPP, which came into effect at the end of 2018, is a free-trade agreement predominantly between countries in the Asia-Pacific region that together account for about 13% of global gross domestic product. China, Taiwan and the UK have applied to join.
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