Global Trade Alert

Dairy farmers and processors in Canada, as well as some policymakers, are seeking to block the use of a milk-derived protein in the manufacture of Canadian cheese. They contend that the product known as diafiltered milk, which is imported from the United States, is being used improperly in cheese products as actual milk. Federal law requires that all cheese sold in Canada be made with a minimum percentage of milk. Regulators hold differing opinions on the nature of diafiltered milk: The Canadian Border Services Agency considers this product to be a protein ingredient (and hence free from duty), but the Canadian Food Inspection Agency instead considers diafiltered milk to be milk (and hence eligible for use in the manufacture of cheese). Private producers have taken action on their own, with dairy farmers in Quebec protesting the imports by blocking access to Montréal's Parmalat milk plant. According to press reports, 'The farmers clogged the access roads to the plant with hay bales ... in an attempt to pressure the government into action.' The issue arose in Parliament, where on May 3, 2016 members of the New Democratic Party proposed, and legislators from the Conservatives and Bloc Quebecois supported, a motion demanding that the government enforce Canadian cheese standards by stopping imports of this milk protein. The motion was defeated when the majority Liberals opposed it. Agriculture Minister Lawrence MacAualy spoke out against the wording of the proposed restrictions, but also insisted that he is working on the problem. 'We are going to sit down with the industry and come up with a long-term solution,' he was reported as saying. The ruling Liberals announced that they will meet with the dairy sector within thirty days to negotiate a 'mitigation package' for concessions offered under the Canada-Europe trade deal, and that those discussions will cover the diafiltered milk controversy. There appears to be no formal statement available regarding an interim national program that is supposed to apply from May 1 through July 31, 2016, apart from a declaration on the part of the Agropur Cooperative on May 11, 2016 that it "is immediately discontinuing the use of imported diafiltered milk" and has done so in the context of such a national policy. While no official Canadian law, regulation, or policy seems to have been posted on this matter, there are formal complaints available from U.S. groups and policymakers. These include an October 5, 2016 letter from members of the New York congressional delegation to President Obama, and an April 5, 2017 complaint to the Trump administration from the National Milk Producers Federation, the U.S. Dairy Export Council, and the International Dairy Foods.