April 18, 2017

Governor Andrew Cuomo
NYS State Capitol

Governor of New York State
Albany, NY 12224

Governor Scott Walker
115 East State Capitol
Madison, WI 53702-0001

Dear Governor Cuomo and Governor Walker,

The Government of Canada is aware of your letter asking that President Trump address
Ca nada?s dairy policies.

Canada does not accept the contention that Canada?s dairy policies are the cause of financial
loss for dairy farmers in the United States. The facts do not bear this out.

The attached United States Department of Agriculture dairy outlook report clearly indicates that
poor results in the U.S. sector are due to U.S. and global overproduction. As made clear in the
report, Canada is not a contributor to the overproduction problem.

Dairy trade between Canada and the U.S. is important and the sectoral trade balance massively
favours the U.S., at around 5 to 1. U.S. exports of milk protein substances, including diafiltered
milk to Canada, were million in 2016, up from million in 2011. Dairy imports
into Canada from the U.S. were up compared to 2015, a significant year-over-year
increase of around 12%. Dairy imports into Canada from the U.S. were up compared to
2015, a significant year-over-year increase of around 12%.

Dairy farmers globally, and notjust in the U.S., are facing many challenges. In particular, both
Canadian and American farmers have been dealing with international pressures of low world
prices. and a surplus of skim milk solids. Like their U.S. counterparts, Canadian farmers are trying
to adapt. This is why the Canadian industry has taken steps to reform - including the negotiation
of the National Ingredient Strategy. The national ingredient strategy is industry-driven and was
developed between dairy producers and processors.

Canada upholds our international trade obligations. Under the North American Free Trade
Agreement, the U.S. has duty?free and quota-free access for milk protein substances, including
diafiltered milk. This duty-free and quota?free access has not changed.

Canada has not taken any broader actions to limit imports from the United States. As a matter
of fact, Canada's dairy industry is less protectionist than that of the U.S, which has employed
technical barriers to keep Canadian dairy out of the U.S. market. Canada imports 6.3 percent of
its cheese, 10 per cent of its butter and 10 per cent of its milk powders, while the U.S. imports 3
per cent of its cheese, 3 per cent of its butter and 8 per cent of milk powders notably less than
Canadian imports.

Canada is not to blame for the global situation that both Canadian and American farmers face.
Our government supports Canada?s supply management system, dairy farmers, and the entire
Canadian dairy industry.

We understand that the U.S. wishes to do the same for its industry. But it is important that we
work together to grow middle class jobs, and not lay blame where it does not belong, for
economic changes that are the result of global market trends.

The Canada-U5. partnership is a model to the world. Let?s keep it that way by working together,
as we have so often in our history, to make it even better.

Sincerely,

 

David MacNaughton
Ambassador