"Our priority is to ensure that New Zealand exporters have meaningful access to the benefits negotiated under CPTPP, and that all parties fulfil the commitments they have made to each other under the agreement," he said.
O'Connor said the way that Canada was implementing the TRQs was "inconsistent" with CPTPP obligations.
"Many of Canada's dairy TRQs remain unfilled and this represents a tangible loss to New Zealand's dairy exporters," O'Connor said.
"The value to New Zealand of this lost market access is estimated to be approximately $68 million over the first two years, with this expected to increase year on year as the size of these quotas increase under CPTPP," he said.
O'Connor said New Zealand would continue to have "excellent" relations with Canada.
"New Zealand has an excellent relationship with Canada, who are one of our closest partners in the world. We have appreciated Canada's engagement on this issue at different levels over a number of years and these proceedings will not come as any surprise to them," O'Connor said.
"Occasionally even good friends disagree, and it's for that reason dispute settlement mechanisms in free trade agreements such as CPTPP exist to provide a neutral forum for settling such disputes when they arise," he said.
New Zealand submitted its request for "consultations" to Canada earlier today. Canada has seven days to respond to New Zealand's request, after which time the two parties will then enter into formal consultations to try and resolve the dispute.
If the dispute remains unresolved after consultations, New Zealand can request a panel to adjudicate the dispute.
This is New Zealand's first dispute under the CPTPP, although New Zealand has initiated disputes under the World Trade Organisation.
