Global Affairs Canada ("GAC") recently announced the opening of the tariff-rate quota ("TRQ") application period for the 2025-2026 dairy year, which is open from May 1 to June 15, 2025. There are no changes to the existing ministerial allocation policies from the previous year, though this will be the second year Canada applies its new CPTPP dairy TRQ policies we have previously written about here.
What is a TRQ?
Canada has a number of supply-managed goods – largely agricultural products such as milk, butter, cheese, poultry, eggs, etc. Imports of these products into Canada are practically prohibited with punitively high tariff rates (i.e., generally over 200%). However, when negotiating free trade agreements such as the Canada-United States-Mexico Agreement ("CUSMA") and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership ("CPTPP"), Canada generally makes market access commitments to its trading partners – agreeing to allow a defined quantity of supply-managed goods to be imported at a lower level of duty. Canada then establishes TRQs to track and enforce those import limits.
Under the TRQ system, GAC establishes a specific quantity of an importable product (the "Available Quantity"), and then allocates that Available Quantity through a TRQ, which is granted to eligible applicants annually using a prescribed allocation method. (For more information, see our prior blog here).
Dairy Product TRQs Open for Application
Importers may submit an application for the following diary products until June 15, 2025:
- Butter;
- Cream and Cream Powders;
- Milk and Milk Powders; and
- Whey Powders.
What to Expect from the TRQ Application Process
The TRQ application process may appear deceptively simple as it involves completing an application form and submitting it to a designated government email address. However, the finer details of a TRQ application reveal potential pitfalls for applicants (in particular new market entrants). For instance, each type of product is subject to unique requirements and limitations, and the applications for an allocation of a product must be made with reference to a particular trade regime (i.e., CPTPP, CETA, CUSMA, etc.).
CBSA Audit Priorities
The Canada Border Services Agency ("CBSA") coordinates monitoring and verification activities with GAC to ensure that TRQ goods receive the proper tariff classification. The CBSA also recently announced a compliance priority for "tariff classification of frozen desserts containing 5% of dairy products". Essentially, the CBSA will be looking for importers classifying those types of goods under a different adjacent (and incorrect) tariff item to avoid the TRQ.
TRQ applications have a
number of complex rules and requirements.
Experienced customs lawyers can help businesses with their
TRQ applications.
Takeaways
Importers of the dairy products listed above should ensure they submit their application for a TRQ allocation prior to the June 15 deadline. As the TRQ application process can be quite complex, legal assistance from experienced customs counsel can help importers secure allocation. It is also recommended that businesses seeking allocations for the first time (new entrants) consult legal counsel, as the TRQ regime typically favours established Canadian businesses.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
