October 17, 2018

Is Class 7 Really Dead?

 |  By: Mike Opperman

A big part of the U.S. Mexico Canada Agreement (USMCA) centers on the repeal of the Canadian Class 7 pricing system. The pricing program provides Canadian processors with a price advantage when it comes to selling certain classes of powdered milk to Canadian cheese makers. The program was vilified by U.S. processors and industry experts, claiming unfair trade practices that shut out U.S. processors and provided Canada with an opportunity to sell low-price powder on global markets. 

Now it seems the Class 7 pricing mechanism might not be going away, at least not completely.

According to a report in Politico, there is a clause in the USMCA agreement that allows parts of the Class 7 program to survive in a lesser form. According to the report, "The proposed replacement of Class 7 allows Canada to continue to roughly match U.S. protein prices" which is only a slight change from the current policy which states that Canada can lower prices to three key areas: the U.S., the EU and New Zealand. The Politico report states that "The fine print will be crucial to understanding the fate of Canada's controversial Class 7 dairy policy," 

Vote in 2019

Senate Majority Leader Mitch McConnell (R-Ky.) told Bloomberg that a vote on the U.S. Mexico Canada Agreement won't happen until 2019, given the steps required to ratify the agreement under Congressional rules. You can see the full Bloomberg interview below: