New Zealand has won a trade dispute with Canada centred around Kiwi dairy products being denied access to the North American country.

Both countries are members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade pact between a group of nations which also includes Australia and Mexico and which the UK has committed to join.

The dispute, effectively accusing Canada of protectionism, was first raised as an issue by New Zealand in May last year. It was was arbitrated by a CPTPP panel and it upheld New Zealand’s complaint.

It found that Canada’s dairy quota administration is inconsistent with its obligations under the terms of the CPTPP and that, as a result, New Zealand exporters were not able to fully utilise Canada’s 16 dairy tariff rate quotas because Canada was granting priority access to its own domestic dairy processors.

New Zealand claimed Canada set up a complex system that meant the allocations were channelled away from Canadian importers who were likely to use the quota to buy New Zealand goods. Instead, the quota was acquired by domestic dairy processors.

New Zealand’s Minister for Trade and Export Growth Damien O’Connor welcomed the ruling.

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He said: “Canada was not living up to its commitments under CPTPP, by effectively blocking access for our dairy industry to upscale its exports. That will now have to change.

“This is a significant win for New Zealand and our exporters. Our dairy industry lost out on an estimated NZ$120m ($70.7m) in revenue from the Canadian market in the past three years.

He added: “Today’s ruling will give exporters confidence and certainty that the mechanisms in place will ensure they receive the market access that all members agreed to.”

In response, David Wiens, president of The Dairy Farmers of Canada organisation, said: “Dairy Farmers of Canada is disappointed with the dispute panel’s ruling.”

He has called on the Canadian government, in its turn, to do a “thorough review” of the measures New Zealand has put in place to support its dairy sector to “ensure that they are consistent with its international trade obligations”.

This is the first dispute New Zealand has been involved in with a CPTPP partner and its stance was supported by most of the other pact member countries.

The CPTPP came into force in 2018. Its dispute panel in this case was co-chaired by Jennifer Hillman, a former commissioner at the US International Trade Commission, Colleen Swords, a former Canadian diplomat, and Petros Mavroidis, an international trade specialist.