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LETTERS 



Luis Tellez K., 

 January 21, 1993. 

 Mr. Charles J. O'Mara, 



Special Trade Negotiator, Office of the Under Secretary, International Affairs and 

 Commodity Programs. 



Dear Joe: In your letter of November 5, you addess concerns relating to the ad- 

 ministration of NAFTA tariff-rate quotas. Specifically, the concern is that "if the 

 duty-free quota is filled, and Mexico requires additional imports, U.S. products will 

 be assessed a large import tariff, while other countries will compete on a MFN 

 basis." 



My view on this matter is that if NAFTA quota is filled, and if Mexico would need 

 additional imports, SECOFI would issue import permits on a MFN basis, in compli- 

 ance with our obligations under GATT. In this case, Mexico will have to comply with 

 the historical rights on Mexican imports, then the United States would be able to 

 compete for these additional imports on an equal MFN basis with other non-NAFTA 

 suppliers. In the case that Mexico decides not to grant any import permits, the Unit- 

 ed States and Canada would still have access to the Mexican market subject to the 

 tariff equivalent negotiated in NAFTA. 



It is worth recalling that Mexico has not accepted yet Dunkel's latest proposal on 

 tariffication. One implication of such proposal is that Mexico would have to grant 

 quotas to other countries in order to secure them their current access, as it is speci- 

 fied in the Draft Text. Under this scenario, Mexico would have to channel import 

 quantities to third countries in fulfillment of these current access provisions. 



I learned from the letter you attached (sent to Secretary Madigan by the U.S. 

 Feed Grains Council) that the latter is also concerned with respect to the adminis- 

 tration of in-quota imports. You certainly recall our last discussions in Washington 

 in which we agreed upon the language in article 302, paragraph 4(a) of NAFTA. 

 Sincerely, 



(Signed) Luis Tellez K., 

 Under Secretary for Planning. 



National Association of Wheat Growers, 



Washington, DC, September 21, 1993. 

 Hon. Patrick Leahy, 



Chairman, Committee on Agriculture, Nutrition, and Forestry, U.S. Senate, Wash- 

 ington, DC 20510. 



Dear Mr. Chairman: Thank you for the opportunity to provide the view of the 

 National Association of Wheat Growers (NAWG) regarding the North American Free 

 Trade Agreement (NAFTA). 



In December 1993, at your request, we sent a detailed letter analyzing our posi- 

 tion, which I have attached. Since that time, we have made a serious independent 

 attempt to develop a constructive and enduring solution to our outstanding prob- 

 lems with regard to wheat trade in North America. As you know, we have one prob- 

 lem which overlaps two borders: namely, Canadian export activities. Increasing Ca- 

 nadian imports of all wheat (projected to total 2.0 million metric tons in 1993/94, 

 up from 1.2 million metric tons in 1991/92 — an increase of over 63 percent) have 

 added to our annual carryover and threaten to undermine the integrity of our do- 

 mestic support programs. Notably, Canadian wheat exports to the United States to- 

 taled a relatively nominal 418,000 metric tons in 1986/87, the crop year preceding 

 enactment of the U.S. -Canada Free Trade Agreement (CFTA). 



Moreover, with regard to the larger matter of North American wheat trade, the 

 U.S. share of the Mexican wheat market has been consumed by Canada since enact- 

 ment of the CFTA. In 1989/90, Canada sold no wheat into Mexico; in 1991/92 it con- 

 trolled over 50 percent of the market. This is particularly remarkable when you con- 

 sider that Canada's main wheat growing region is over 2,800 miles from Mexico 

 City. 



We believe that both these phenomena are a result of inequities contained in the 

 CFTA which are broadened in the NAFTA. In particular, the U.S. wheat farmer is 

 disadvantaged in the CFTA and in the NAFTA by the continuation of transportation 

 subsidies, eastbound to the United States and westbound and eastbound into Mex- 

 ico. In addition, neither the CFTA nor the NAFTA sufficiently address the pricing 

 practices of the Canadian Wheat Board into either the United States or Mexico. 



