44 



have to have some grudging admiration for their willingness to go 

 after a market, but shame on us if we don't react and protect our 

 interests, our farmers, our businesses here at home. 



Senator Boren. Well, I appreciate your answer, and I am reas- 

 sured by it because I think that we just simply have to get their 

 attention. We cannot allow this to go on. I asked for and received, 

 several of us on this committee, a GAO study of the practice of the 

 Canadian Wheat Board. I think that study speaks for itself. And 

 to me it is absolutely essential, if we are not able to negotiate in 

 stronger language a change in this agreement before we vote on it 

 as it affects some of the practices now being carried out by the Ca- 

 nadians, that we be prepared to use every tool available to us as 

 leverage to try to end this kind of behavior. 



So I take your answer to mean that not only now are we consid- 

 ering these actions, but that we would continue to consider them 

 in the future if these kinds of inappropriate actions continue. 



Ambassador Kantor. By the way, that soft language was nego- 

 tiated, and the industry wanted it as well, because we were wor- 

 ried that we have the Uruguay Round going on and we had these 

 talks going on. And as you negotiate, if we had locked ourselves in 

 too strongly into a position, we could have been adversely affected 

 by what happened in the Uruguay Round. 



Senator Boren. I understand. 



Ambassador Kantor. That was part of the reason for that. 



Senator Boren. Well, I would just urge vou to continue to be 

 willing to use the mechanisms that are available to us as leverage 

 to try tc solve this problem as our relationship evolves. 



One other specific question, and I will ask it very quickly; that 

 is in the area of peanuts, which, of course, like cotton and others, 

 are affected under the potential Section 22 phase-out and change 

 in terms of our relationship with Mexico. Again, this is more of a 

 Canadian problem so far than it has been a Mexican problem. 



As I understand it, if peanuts are to be processed and shipped 

 back into this country duty free, we must assure that they are 

 Mexican-produced peanuts. In other words, if the Mexicans were to 

 produce peanut butter and send it into the U.S. market, it would 

 have to be peanuts grown in that country. 



My understanding is that now there is a very serious problem 

 with peanuts being imported into Canada that are not produced in 

 Canada, now processed into peanut butter and other products in 

 Canada, flooding into our market. Now, it seems to me, again, this 

 violates the whole spirit of transshipment and the other kinds of 

 basic principles that we have been operating on, and it is a very 

 serious problem. And I might say as an added irritant to us, pea- 

 nut producers are already going to lose partially the protection of 

 the quota in terms of the agreement with Mexico. I know that 

 there are offsetting tariff protections that can kick in if the former 

 quota is exceeded. 



But it does seem to me that it would help the situation greatly 

 if we could find a way to at least shut off this huge loophole with 

 the Canadians now to make sure that it doesn't carry over into 

 other parts of the agreement. I understand it wouldn't apply in 

 Mexico's case. 



Ambassador Kantor. It does not. 



