Canada shores up New Zealand trade with dairy concessions in face of U.S. pressure
The changes, announced Thursday, mean Canadian importers of New Zealand dairy will be able to access tariff rate quota to sell into the Canadian market faster and more efficiently starting next year. The move is expected to result in up to $128-million in extra trade, according to the New Zealand ministry of trade and investment.
Dairy imports into Canada are controlled under the country's supply management system. Imported products face steep levies that can surpass 250 per cent unless they have a tariff rate quota.
The changes will move up the timeline by which importers need to return unused TRQ, which will then be reallocated to other companies.
Canada will also introduce penalties for importers who do not use the TRQ they receive.
The dairy industry's outsized political influence, explained in charts
The concession addresses New Zealand's long-standing allegations that Canada's TRQ allocation system has prevented the country from penetrating the market to the degree promised in the 2018 Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
Last year, New Zealand threatened retaliatory tariffs unless Canada made changes.
'This has been a long time coming and we believe it will make a positive difference,' said Kimberly Crewther, executive director of The Dairy Companies Association of New Zealand, in a press release.
The deal raises questions about whether the U.S. – which is also demanding Canada make changes to the rules around dairy import licenses – will receive similar concessions. Prime Minister Mark Carney and U.S. President Donald Trump are currently negotiating a trade deal with a deadline of Aug. 1.
At the same time, Canada is seeking to stabilize relations with other nations to diversify trade from the U.S. Mr. Carney said this week that a trade deal with the U.S. is unlikely to be tariff-free.
'Canada and New Zealand, like a lot of countries, are trying to put their trade relationships on solid ground in the face of Trump's actions,' said Matthew Kronby, a partner in the international trade and investment practice at Osler, Hoskin & Harcourt LLP. Mr. Kronby has represented the Canadian dairy industry in trade disputes.
We must protect supply management from the trade war
New Zealand's dairy exports to Canada have consistently fallen short of the volumes set out in the CPTPP. Some of this is a matter of market forces, said Mr. Kronby. A trade deal is not a guarantee of market demand.
However, the island nation has also blamed Canada's licensing import rules.
In its submissions to the CPTPP panel in a dispute initiated in 2022, New Zealand claimed Canada's TRQ allocation system was designed to direct quota away from those who would use it – retailers – and toward those who would not – processors.
The panel found that Canada's allocation system was in breach of its trade commitments. But until this week's announcement, Canada failed to fully comply with the changes required, according to New Zealand.
The changes bring an end to the dispute, despite falling short of New Zealand's hopes for an 'on demand' system that would give quota to the importers who want it.
'This outcome shows how Canada and New Zealand, key CPTPP partners, worked together to use the mechanisms established under the trade agreement to resolve differences,' said a statement from Maninder Sidhu, Minister of International Trade, and Heath MacDonald, Minister of Agriculture and Agri-Food.
The announcement could have implications for the U.S., which has also launched disputes under the USMCA on the topic of import licenses. Like New Zealand, the U.S. says the TRQ allocation mechanism is too restrictive. It wants retailers and food service companies to be able to import American dairy, and blames the TRQ allocation system for why exporters do not meet export volumes. But its demands go further than New Zealand's.
'Canada cheated us from our right to export the USMCA quantities under the quota and we want every single pound to be restored and we want the people who are going to use the product to be the ones importing it, not the processors,' said Jaime Castaneda, executive vice-president for policy and strategy at the U.S. Dairy Export Council.
The deal with New Zealand is a testament to the benefits of a rules-based trade approach, said Mr. Kronby. However, he added that because the U.S. has shifted away from that system, it is unlikely that Canada will give the country large concessions.
'It is hard for me to imagine Canadian negotiators making fundamental changes to supply management in order to get a temporary – at best – semi or quasi deal with the Trump administration … an administration that's demonstrated that even if you have a formal trade deal, they're not going to abide by it.'
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I also wish to extend my deepest appreciation to Diane Garrett for her valued guidance and significant contributions to the Company over her seven years of committed service.' Mr. Erfan has extensive capital markets and industry experience as one of the key executives at Electrum, which he joined in 2007, and as a founding board member of Leor Energy, a privately held North American natural gas producer that went from a start-up in 2003 to being sold to Encana in 2007 for $2.6 billion. He later served on the board of Gatos Silver from IPO through to its merger with First Majestic and presently sits on the boards of Gabriel Resources Ltd. (TSX-V: GBU.V), and Electrum's two privately-held silver vehicles — Sunshine Silver Mining & Refining and Sinda. Prior to joining Electrum, Mr. Erfan was a senior partner at 3i Group plc's London headquarters, one of the world's most prominent listed private equity and venture capital investment companies. Earlier in his career, Mr. Erfan was invested in several early-stage technology companies that achieved IPOs and M&A exits internationally. These included, among others, HTE (acquired by BASF), Insensys (acquired by Moog Inc.), Smart Fuel Cells (IPO Frankfurt), and CSR (IPO London, then acquired by Qualcomm). Mr. Erfan graduated from the University of Oxford with a BA and an MA in Philosophy, Politics and Economics. He holds an MBA from the London Business School and is a member of Kauffman Fellows Class 10. About NOVAGOLD NOVAGOLD is a well-financed precious metals company focused on the development of the Donlin Gold project in Alaska, one of the safest mining jurisdictions in the world. With approximately 39 million ounces of gold in the Measured and Indicated Mineral Resource categories, inclusive of Proven and Probable Mineral Reserves (541 million tonnes at an average grade of approximately 2.24 grams per tonne, in the Measured and Indicated Mineral Resource categories on a 100% basis) 1, the Donlin Gold project is regarded to be one of the largest, highest-grade, and most prospective known open-pit gold deposits in the world. According to the 2021 Technical Report and the S-K 1300 Technical Report Summary, once in production, the Donlin Gold project is expected to produce an average of more than one million ounces per year over a 27-year mine life on a 100% basis. NOVAGOLD Contacts: Mélanie Hennessey Vice President, Corporate Communications Frank Gagnon Manager, Investor Relations 604-669-6227 or 1-866-669-6227 info@ Cautionary Note Regarding Forward-Looking Statements This media release includes certain 'forward-looking information' and 'forward-looking statements' (collectively 'forward-looking statements') within the meaning of applicable securities legislation, including the United States Private Securities Litigation Reform Act of 1995. Forward- looking statements are frequently, but not always, identified by words such as 'expects', 'continue', 'ongoing', 'anticipates', 'believes', 'intends', 'estimates', 'potential', 'possible', and similar expressions, or statements that events, conditions, or results 'will', 'may', 'could', 'would' or 'should' occur or be achieved. Forward-looking statements contained in this media release are based on a number of material assumptions, including but not limited to the following, which could prove to be significantly incorrect: our ability to achieve production at Donlin Gold; the cost estimates and assumptions contained in the 2021 Technical Report and the S-K 1300 Technical Report Summary; estimated metal pricing, metallurgy, mineability, marketability and operating and capital costs, together with other assumptions underlying our resource and reserve estimates; our expected ability to develop adequate infrastructure and that the cost of doing so will be reasonable; assumptions that all necessary permits and governmental approvals will be obtained and the timing of such approvals; assumptions made in the interpretation of drill results, the geology, grade and continuity of our mineral deposits; our expectations regarding demand for equipment, skilled labor and services needed for exploration and development of mineral properties; our ability to improve our ESG initiatives and goals; and that our activities will not be adversely disrupted or impeded by development, operating or regulatory risks. Forward-looking statements are necessarily based on several opinions, estimates and assumptions that management of NOVAGOLD considered appropriate and reasonable as of the date such statements are made, are subject to known and unknown risks, uncertainties, assumptions, and other factors that may cause the actual results, activity, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, included herein are forward-looking statements. These forward-looking statements include statements regarding perceived merit of properties; mineral reserve and mineral resource estimates; and the success of the strategic mine plan for the Donlin Gold project, including expected production and mine life. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements are not historical facts but instead represent the expectations of NOVAGOLD management's estimates and projections regarding future events or circumstances on the date the statements are made. Important factors that could cause actual results to differ materially from expectations include the need to obtain additional permits and governmental approvals; the timing and likelihood of obtaining and maintaining permits necessary to construct and operate; the need for additional financing to complete an updated feasibility study and to explore and develop properties; availability of financing in the debt and capital markets; disease pandemics; uncertainties involved in the interpretation of drill results and geological tests and the estimation of reserves and resources; changes in mineral production performance, exploitation and exploration successes; changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in the United States or Canada; the need for continued cooperation between the owners of Donlin Gold LLC to advance the project; the need for cooperation of government agencies and Native groups in the development and operation of properties; risks of construction and mining projects such as accidents, equipment breakdowns, bad weather, disease pandemics, non-compliance with environmental and permit requirements, unanticipated variation in geological structures, ore grades or recovery rates; unexpected cost increases, which could include significant increases in estimated capital and operating costs; fluctuations in metal prices and currency exchange rates; whether or when a positive construction decision will be made regarding the Donlin Gold project; and other risks and uncertainties disclosed in NOVAGOLD's most recent reports on Forms 10-K and 10-Q, particularly the 'Risk Factors' sections of those reports and other documents filed by NOVAGOLD with applicable securities regulatory authorities from time to time. Copies of these filings may be obtained by visiting NOVAGOLD's website at or the SEC's website at or on SEDAR+ at The forward-looking statements contained herein reflect the beliefs, opinions and projections of NOVAGOLD on the date the statements are made. NOVAGOLD assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law. __________________________________ 1 Donlin Gold data as per the report titled 'NI 43-101 Technical Report on the Donlin Gold project, Alaska, USA' with an effective date of June 1, 2021 (the '2021 Technical Report') and the report titled 'S-K 1300 Technical Report Summary on the Donlin Gold project, Alaska, USA' (the 'S-K 1300 Technical Report Summary'), dated November 30, 2021. 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Donlin Gold possesses Proven Reserves of approximately 8 Mt grading 2.32 g/t and Probable Reserves of approximately 497 Mt grading 2.08 g/t, each on a 100% basis, of which approximately 5 Mt of Proven Reserves and approximately 298 Mt of Probable Reserves is attributable to NOVAGOLD. Mineral Reserves and Resources have been estimated in accordance with NI 43-101 and S-K 1300.
