New Zealand has triggered mandatory CPTPP negotiations with Canada after unresolved issues over dairy trade barriers. Canada’s failure to meet agreed quotas has cost New Zealand exporters hundreds of millions of dollars, prompting further diplomatic action.
New Zealand has escalated its dairy trade dispute with Canada by triggering mandatory negotiations on October 18, 2024. The conflict revolves around Canada’s failure to meet obligations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), specifically regarding tariff rate quotas (TRQs) for New Zealand’s dairy exports.
In September 2023, New Zealand won a trade dispute that confirmed Canada was breaching CPTPP terms by restricting dairy market access. Canada had until May 2024 to rectify its TRQ administration but failed to implement the necessary changes, forcing New Zealand to initiate the next phase of the CPTPP dispute process.
Trade and Agriculture Minister Todd McClay notified Canada and other CPTPP members of the development. Under the agreement, negotiations must begin within 15 days of the notification. If no resolution is reached, Canada will have 30 days to comply or face further actions, including the possibility of legal proceedings or trade sanctions.
McClay emphasized that trade agreements must be honored and that Canada’s actions have unfairly impacted New Zealand’s exporters. “New Zealand takes its trade obligations seriously,” McClay said. “Canada can either meet its commitments or compensate us for the significant losses our dairy sector has suffered.”
The trade restrictions have cost New Zealand dairy producers hundreds of millions of dollars. New Zealand’s dairy industry—led by companies like Fonterra and Open Country Dairy—relies heavily on international markets, particularly for products such as milk powder, butter, and cheese. Canada’s failure to adhere to agreed TRQs has affected their competitiveness and market share.
McClay has briefed stakeholders, including Labour’s trade spokesperson Damien O’Connor, on the latest developments. Both political and industry leaders stress that resolving the dispute is critical to maintaining the integrity of the CPTPP and preventing future violations by other member countries.
Next week, McClay will attend the G20 ministerial meeting in Brazil, where he intends to hold discussions with his Canadian counterpart. As New Zealand participates in the G20 as a guest, McClay also plans to use the platform to rally support from other CPTPP members, underscoring the importance of compliance within the agreement.
The outcome of these negotiations will be closely monitored by New Zealand’s dairy sector, which contributes around $8 billion annually to the economy and provides essential employment across rural communities. Ensuring stable market access is critical to sustaining growth and maintaining New Zealand’s competitive edge in the global dairy industry.
