56 



I know you are referring to a study that has been done by the 

 industry. We have looked at that study and will get back to you 

 on it. We are not as convinced that that is correct. We hope it is 

 not. Obviously, the last thing we want to do — especially where it 

 appears to me that you represent about 38 percent in your district 

 of the peanuts in this country — is to do something that would have 

 a substantial impact upon you and your constituents. 



But it is a serious problem. It is one that was intended to be ad- 

 dressed both in rules of origin and in the tariffication process. We 

 will continue to take a look at that and work with you on it. 



Mr. Bishop. Although NAFTA purports to be a trilateral agree- 

 ment, it is my understanding that Canada declined to include large 

 segments of its supply managed commodities in order to protect 

 their own domestic commodities. 



The U.S. peanut industry believes that the U.S. Government 

 should have insisted on the same provisions for all U.S. section 22 

 commodities. The rules of origin don't go far enough in protecting 

 the American peanut industry, and non-NAFTA peanuts will be 

 particularly difficult to catch at the border if they are processed 

 into such products as peanut paste, peanut butter, peanut oil, and 

 confectionery products. There is a lack of confidence that there are 

 sufficient safeguards to prohibit transshipment from other coun- 

 tries. At the present time, it seems that neither our Customs Serv- 

 ice nor the USDA have the resources to enforce the rules of origin 

 provisions to which you referred. 



Is it possible in the rules of origin to make a technical amend- 

 ment to refer to the use of Mexican-grown peanuts rather than 

 NAFTA peanuts? 



Also, to what degree will your agency be able to pursue third 

 party counties bringing peanuts through Mexico as a conduit? 



Ambassador Kantor. We have taken care of your first concern. 

 That is in the agreement. No. 2, the rules of origin, which are very 

 good and very strict, should take care of your second concern. 



The Canadians insisted on a separate agreement between Can- 

 ada and Mexico on agriculture. They did not join in a three-party 

 agreement. I think it is unfortunate, frankly. Let me say that I 

 know this is not your concern, but in dairy products and poultry 

 and those areas, they probably hurt themselves very badly because 

 they have left open an open field for the U.S. producers in that 

 area. 



Mr. Bishop. It seems like we are so willing to give away the 

 store in terms of our own commodities where we are allowing other 

 countries who want to participate in NAFTA to protect their own 

 domestic products. But we're not doing the same thing for ours. 



Ambassador Kantor. Let me say that we are not willing to give 

 away the store. 



Mr. English. Mr. Peterson. 



Mr. Peterson. Thank you, Mr. Chairman. 



Mr. Ambassador, we appreciate your being with us today. I am 

 not even going to ask you about sugar. I am going to talk about 

 wheat and barley. 



To follow up a Httle bit, one of the problems that you have with 

 this agreement, in my opinion, is because of the experience we 

 have had with Canada. Every week that goes by, the experience 



