QUESTIONS FROM CHAIRMAN DE LA GARZA AND USTR'S ANSWERS 

 Treatment of Peanuts in the NAFTA 



Q. Learning from their experience whereby the Canadian Free 

 Trade Agreement has resulted in a flood of peanut products made 

 from Argentina and Chinese peanuts coming into this country, do 

 you agree that the proposed Mexican Free Trade Agreement would 

 limit any imports of peanuts or peanut products to those of 

 Mexican origin? It is my understanding from earlier hearing 

 before this committee that the then Administration was willing to 

 agree to this provision. 



A. To be eligible for the preferential duty, paragraph 10 of 

 Annex 703.2 of the NAFTA reguires that all peanuts imported into 

 the United States from Mexico be harvested in Mexico. Likewise, 

 peanut products imported into the United States from Mexico must 

 be made from peanuts harvested in Mexico to be eligible for the 

 lower duty. Peanuts and peanut products imported into the United 

 States from Mexico which do not qualify for the NAFTA preference 

 will continue to be subject to existing tariffs and other 

 restrictions that presently apply. 



Q. It is my understanding that under current law and the 

 proposed NAFTA treaty, that the re-imports of exported U.S. 

 additional peanuts is prohibited. To insure this understanding 

 with the NAFTA, would you object to our adding this prohibition 

 to the implementing legislation? It is my understanding from 

 earlier hearing before this committee that the last 

 administration had no objection. 



A. The NAFTA does not prohibit re-imports of exported U.S. 

 additional peanuts from Mexico. Legislation which would 

 establish such an import prohibition would be unnecessary and 

 inconsistent with the NAFTA. As stated above, the Agreement 

 requires that peanuts imported into the United States from Mexico 

 be harvested in Mexico to receive the NAFTA tariff preference. 

 Peanuts imported into the United States from Mexico which were 

 not harvested in Mexico, including the re-import of additional 

 peanuts or products made from such peanuts, will continue to be 

 subject to existing restrictions. In that connection, the United 

 States retains its authority to assess substantial penalties on 

 handlers for importing peanut products made from U.S. additional 

 peanuts. 



Q. Under U.S. law, U. S. -produced peanuts must meet strict 

 quality and grade standards. Would you object to our adding to 

 the implementing legislation requirements that imported peanuts 

 meet the same standards? It is my understanding from earlier 

 hearing before this committee that the last administration had no 

 objection. 



