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The maintenance of the United States as part of the world's largest 

 market unit is important to us in terms of our bargaining position 

 on other economic issues with other nations in the world. So not 

 only is it beneficial in terms of our relationship with our closest 

 neighbors, it is beneficial to all three of us in terms of our ability 

 to hold our own in terms of fairness with the rest of the world. 



So I think overall you and others in the administration have 

 made the case very well and very strongly and very persuasively. 



As always, even though we may find a cienefit to us in total from 

 an agreement, there are always individual problem areas. I want 

 to ask you just about a couple of them today that are of concern 

 to me and of particular concern to my constituents. 



The question of the freight subsidies, the Canadian freight sub- 

 sidies, has already been raised by Senator Daschle, and that is 

 something that concerns us. I know there is a great concern along 

 the northern tier States, but there is a concern in our part of the 

 world as well, because wheat exports to Mexico have been very sig- 

 nificant. We know that under this agreement the duties on our 

 wheat would be phased out during the period of 10 years, perhaps 

 hopefully sooner but at least by then. And just as in the case with 

 beef, I think these are areas where there is a great potential bene- 

 fit to the United States with growing exports to Mexico. 



But as I understand the current freight subsidy matter, since you 

 can use the subsidy on shipments going west, it would be available 

 to the Canadians to use this freight subsidy as a way of reducing 

 the cost of the wheat which they ship and sell to Mexico, therefore 

 depriving us of some of the benefit that will otherwise flow from 

 this agreement. 



Now, hearing the earlier conversation and noting that Senator 

 Daschle talked about the use of the word "inappropriate" and our 

 uncertainty as to whether or not we can have any enforcement 

 mechanism, I wonder if the administration would still be commit- 

 ted as a persuasive matter with the Canadians to discourage them 

 from using this inappropriate mechanism to make sure that we 

 still — we have used EEP in the past, that we have a strong Export 

 Enhancement Program that might potentially be used to stop — 

 what is the term? — inappropriate behavior in the agreement. 



Ambassador Kantor. We have already begun EEP into Mexico — 

 you can correct me if I am wrong — and into China, which is an- 

 other big Canadian market. As you know, we have supported Sen- 

 ator Conrad's legislation on end-use certificates. Unfortunately, it 

 was a victim of a Senate rule, and therefore was not part of rec- 

 onciliation. 



Secretary Espy made it quite clear he is considering at this time 

 a Section 22 action and will make a decision on that. 



Senator Boren. Right. 



Ambassador Kantor. I believe we need to take strong action. It 

 is up to the Secretary what he will recommend to the President. 

 We have already talked privately about this. I believe the Canadi- 

 ans not only have used the Western Grain Transportation Act, they 

 have also used the Canadian Wheat Board and other matters to 

 subside their wheat. I think the facts speak for themselves, from 

 percent in the Mexican market to 14 percent to 70 percent in just 

 3 years. It is really stunning what has happened. And I guess you 



