24 



The CHAIRMAN. I would like to have one you can be very se- 

 cure with. 



[Mr. O'Mara submitted the following material for the record:] 



Given its higher prices and uncompetitive dairy sector, Mexico is unlikely 

 to become a major exporter of dairy products to the United States. There 

 may be a niche market for certain Mexican products, such as cajeta, a 

 sweetened goat's milk product, in regional markets in the United States. In 

 general, we will remain a large and growing net exporter of dairy products 

 to Mexico. 



The Chairman. Let me ask you this: If we filled our milk powder 

 quota in Mexico — let's assume Mexico needed further milk powder. 

 They are now spending, as near as I figure it, about $1.70 per cap- 

 ita per year on U.S. dairy products in Mexico. Will we be treated 

 the same as European and New Zealand dairy exporters in making 

 further sales to Mexico? 



Mr. O'Mara. Well, of course, as you are well aware, Mr. Chair- 

 man, that market is the biggest in the world for milk powder, and 

 you know how important it is to us to supply that market. 



The Chairman. That is why I thought I would ask. 



Mr. O'Mara. I think that we will be very competitive for the 

 over-quota amount of milk powder. As you also are aware, the Ca- 

 nadians, because of their position in the dairy product sector, have 

 essentially eliminated themselves from a preferential arrangement 

 in that market. I think we will do very well within the quota, and 

 we will do very well outside the quota. 



The Chairman. Outside the quota, can we go on an equal MFN 

 basis? 



Mr. O'Mara. Yes. 



The Chairman. If they did need additional imports, we would 

 have to pay a higher NAFTA tariff? 



Mr. O'Mara. It is hard to explain precisely what will happen 

 over the quota situation — at this stage at least — because I am not 

 quite aware how the Mexican Government will handle the dairy 

 sectcr, dairy import sector. It is likely that they still will retain 

 government control over imports in a rather significant way be- 

 cause of the very sensitive nature of this product in that market 

 and because it is a critical part of their food supply. 



I think, though, that we can generalize at this stage and expect 

 to see the United States to do very well in that market, and I think 

 we will be very competitive in the over-the-quota market as well. 



Ambassador Kantor. The quotas in the first year are 40,000 

 tons for the United States and 433 tons from Mexico coming into 

 this country. We believe two things: First of all, import licensing 

 requirements, which don't apply to us, will apply to any other non- 

 NAFTA country; but, number two, they could waive the over-the- 

 quota tariff or tariff rate quota rate in order to import more of the 

 product, more of the powdered milk. 



So I think this is one in which we have not only a large advan- 

 tage but one in which our supply is in great need in Mexico, and 

 I agree with Mr. O'Mara. 



The Chairman. Thank you. I will put in the record the letter 

 from Luis Tellez K, the Under Secretary for Planning, that was 

 sent to Mr. O'Mara in this regard. 1 



iSee letter on page 151. 



