31 



Senator Feingold. But it won't make any difference? Wouldn't 

 it be a different situation since the EC would subsidize exports of 

 dairy products? 



Mr. O'Mara. Well, we have not given up the opportunity to use 

 the Dairy Export Incentive Program to meet that competition, so 

 I don't think it will make any difference. 



Senator Feingold. Thank you. 



With regard to the Federal milk marketing orders, I am wonder- 

 ing if there is any impact of this agreement on that program. Has 

 the Department made a determination on the pricing and pooling 

 of milk sold either as raw or packaged products in Mexico under 

 the Federal order system under NAFTA? Does that have any im- 

 pact? 



Mr. O'Mara. As far as I know, Senator, there is no effect. 



Senator Feengold. So there couldn't be any determination under 

 NAFTA that we might have a violation of trie agreement through 

 our marketing order system? 



Mr. O'Mara. There is no effect, Senator. 



Senator FEINGOLD. Okay. With regard to the rules of origin, the 

 Secretary of Agriculture suggested that we ought to go on faith 

 with regard to our ability to enforce those provisions. But after 

 hearing the stories from North Dakota with regard to another 

 product and with regard to the Canadian-U.S. Free Trade Agree- 

 ment, I am wondering just what assurances you can give us about 

 our ability to enforce the agreement and avoid the dumping of 

 third-party product through Mexico into this country. Does the 

 Customs Service have the resources to effectively enforce these 

 rules? 



Mr. Moos. In that regard, Senator, the NAFTA rules of origin for 

 U.S. -Mexico trade are much stronger than those in the U.S. -Cana- 

 dian Free Trade Agreement. Additionally, we will take whatever 

 steps are necessary to assure that U.S. workers are not injured. 



Senator Feingold. But does the Customs Department have the 

 resources to do that? I don't question your intent, but do we have 

 the resources out there to enforce this provision? 



Mr. Moos. Let's hope so. That is our job. 



Ambassador Kantor. Let me add one thing, if I might. I am 

 sorry, Mr. Moos. One of the interesting things is the Customs Serv- 

 ice allows a U.S. company to challenge the origin of a particular 

 product in this discussion. As we have found under the private At- 

 torney General right in other areas, this probably will be quite ef- 

 fective, and the denial of a Customs Service visit to investigate and 

 so on may result in a Canadian or a Mexican company, depending 

 on the company, losing NAFTA tariff preferences on the goods they 

 ship. 



So I think that it is quite strong, and I believe that the Depart- 

 ment and the Customs Service have the tools to make it work and 

 make it work well. 



Mr. O'Mara. In fact, there is a provision in the NAFTA that 

 would provide for the opportunity for Customs inspectors to go to 

 the books and check them directly, which is an additional safe- 

 guard that does not exist now. 



Senator Feingold. Do you have any background material pre- 

 pared on how this process will work? 



