Cheese sticks are produced by coating cheddar and/or mozzarella cheeses with either batter or bread crumbs. The overall finished product contains less than 50% dairy product and is primarily used in the food service industry served as appetizers or finger foods. For over 20 years Canada and the U.S. have had bilateral trade in this product. After the 1995 implementation of the WTO agreement, Canada customs ruled that battered cheese sticks should be classified under the same tariff item as cheese and would therefore have been captured by the cheese tariff rate quota (TRQ). As these products had not previously been subject to the cheese quota, and as the U.S. continued to allow imports from Canada, Canada continued imports through the issuance of supplemental permits. Supplemental permits for imports of cheese sticks containing less than 50% cheese are issued on request. Without these permits a duty of 245% would apply. In October 1999, the U.S. customs service notified a Canadian exporter of breaded cheese sticks that the product was being reclassified and would be subject to the U.S. cheese quota. We have been pressing the United States to restore access for Canadian exports, given the longstanding reciprocal treatment for imports of this product. We have made it clear to the U.S. that its action has necessitated Canada reviewing its current policy of issuing supplemental permits for cheese sticks.
Waste cheese is used in animal feed, mink feed. Cheese waste is an important ingredient as it is high in protein, which is required to produce top quality mink pelt. The product is low valued and not regularly available from domestic sources. All customs documentation for this product is labelled “Cheese scrap and mink feed” and not fit for human consumption. Sources of Canadian waste cheese for use in mink feed have not been located.
The issuance of supplementary import permits for breaded cheese sticks and waste cheese does not undermine the control and enforcement of Canada's tariff rate quota for cheese imports. These supplementary imports represent approximately 0.5% of the cheese production in Canada.