U.S. dairy groups urge Trump to set his sights on Canadian dairy policies

U.S. dairy groups are calling on Donald Trump to set his sights on Canada's "protectionist" dairy practices as he seeks to safeguard American jobs.

The International Dairy Foods Association, National Milk Producers Federation and U.S. Dairy Export Council, along with the National Association of State Departments of Agriculture say a planned national Canadian ingredients strategy will block U.S. exports in violation of NAFTA and the World Trade Organization.

Ontario milk pricing policies adopted last April are hurting U.S. exports of ultra-filtered milk used to make dairy products, costing thousands of American jobs especially in border states like Wisconsin and New York, said a letter sent Wednesday to the incoming president and his trade nominees.

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The policy allows Canadian dairy processors to buy domestic milk at world market prices instead of higher prices controlled by the national supply management system. The U.S. dairy groups say that provides the processors with an incentive to cut milk imports.

"The entire U.S. dairy industry is being hurt, as milk prices are being driven down nationally by Canada's trade actions," they wrote.

The groups say an ongoing effort to implement a national policy puts further pressure on American communities that export milk and other dairy products to Canada.

The U.S. dairy sector says they are already restricted to the Canadian market by "exorbitant tariffs" and limited market access.

"It is clear that these policies were implemented to intentionally block imports from the United States and are therefore in direct violation of Canada's trade commitments."

Wisconsin Gov. Scott Walker also urged Trump earlier this month to focus on Canadian dairy trade policies.

"We believe the policy was designed to discourage U.S. exports of ultra-filtered milk and incentivizes Canadians to purchase Canadian milk, which is a possible violation of World Trade obligations," he wrote in a letter dated Jan. 4.

The Dairy Farmers of Canada say they are watching the situation closely but remain confident that the federal government supports the Canadian dairy sector.

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The national strategy had been expected to be in place Feb. 1, but discussions are ongoing to modernize Canada's milk supply management system, said Jacques Lefebvre, president and CEO of the Dairy Processors Association of Canada.

"We are aware of the concerns recently raised by corporations in the United States," he wrote in an email. "We are committed to respecting our trade commitments."

Chantal Gagnon, a spokeswoman for Foreign Affairs Minister Chrystia Freeland, declined to specifically comment on the letter to Trump, but said the government will continue to support farmers and producers and looks forward to working with the new U.S. administration and Congress on issues including trade and investment.

Canada faces a contentious trade dispute with the U.S. over softwood lumber but industry observers believe Trump could take steps that hurt Canada's auto, beef farming, dairy and liquor and beer import monopolies.