In 2021, the United States challenged Canadian dairy import tariff rate quotas (TRQs) before the first state-to-state arbitration panel under Chapter 31 of the Canada-United States-Mexico Agreement (CUSMA). The panel held that the method of allocation of TRQs limited the US dairy industry’s access to the Canadian market and therefore violated CUSMA provisions. However, the panel also acknowledged that the Canadian supply management system for dairy products is a unique regulatory framework for production control, pricing mechanisms, and import control. This article explores the case as a test of the functioning of the improved CUSMA dispute settlement process and of Canada’s ability to protect its supply management system for dairy products from renewed pressure coming from its most important trade partner.

Supply management is a long-standing agricultural policy in Canada that applies to dairy, poultry and eggs. To date, there exists no academic research on the correlates or dynamics of public support for supply management. We use data collected from the Digital Democracy Project's study of the 2019 Canadian election, including results from a between-subjects framing experiment, to show that support for supply management is most opposed by economic conservatives. However, we find support to be highly malleable by framing: it increases when respondents are primed to think of the policy as a way of protecting farmers and decreases when they are primed to think of its costs to consumers. Contrary to expectations, framing effects are not stronger when messages are ideologically congenial or among those with high levels of policy knowledge. If anything, effects are stronger among those with lower levels of knowledge.

For most economic goods market participants are ‘not forced to make a deal.’ They can walk away, perhaps permanently, or revisit a transaction later if the terms of trade are more to their liking. That is not the case for food. It is a biological necessity to participate in the food market. This coercive property of food demand and other unique market characteristics make the agricultural sector very unresponsive to changes in price and hence—in contrast to textbook expectations—its ability to quickly self-correct. In recent decades agricultural policy legislation has not taken into account the root causes of agriculture's chronic price and income problems. As a result, it has been largely ineffective and unnecessarily expensive. We argue in this paper that a well-designed supply management program can take agriculture's unique characteristics into account in a way that benefits farmers, consumers and the public as a whole.

This paper considers how the welfare of U.S. sugar producers can be affected by the use of production controls in the presence of rising sugar imports and falling sugar prices, taking into account the negative externalities associated with U.S. sugar production. Even if production controls are used, producer welfare can be affected negatively under rising imports.