155 



As it is, the current state of the North American wheat trade defies geography. 

 Canada's principal wheat producing region is centered around Regina, Saskatche- 

 wan — some 2,800 miles from Mexico City, yet Canada enjoys 76 percent of the Mexi- 

 can wheat market! The reason for this abnormality is that the United States has 

 been unwilling to match subsidized competition in the Mexican market. Technically, 

 the NAFTA would allow the United States to use its export subsidy program, the 

 export enhancement program (EEP), to compete against Canada and non-NAFTA 

 countries in the Mexican wheat market. While this provision provides the United 

 States with the opportunity to protect its interests in Mexico, there has been no in- 

 dication that our Government will go head-to-head against Canadian export sub- 

 sidies in the future if the NAFTA is implemented. 



Objective No. 4. — To introduce disciplines on Canadian rail freight subsidies to 

 westbound and eastbound destinations. 



The U.S. -Canada Free Trade Agreement already acknowledges that the 

 westbound Canadian rail freight subsidy is an export subsidy. We believe that the 

 NAFTA should expand this acknowledgment to include eastbound rail freight sub- 

 sidies. Furthermore, a NAFTA should provide that these subsidies cease for sales 

 made into either the United States or Mexico. 



Objective No. 5 — To prevent the application of Canadian rail freight subsidies on 

 cargos shipped through the United States to Mexican or other third country mar- 

 kets. 



The NAFTA provides no assurance that the transshipment of Canadian grain to 

 Mexico or other destinations will be disciplined or monitored. This is an oversight 

 which must be corrected. The U.S. Government must not allow the United States 

 to become a "land bridge" for Canadian sales to Mexico and other points in Central 

 and Latin America. 



Finally, we would like to discuss a related issue which we hope the Congress will 

 incorporate into trade legislation. It too results from the unsatisfactory outcome of 

 the U.S. -Canada Free Trade Agreement. 



The 1990 Farm Act explicitly forbids the practice of commingling foreign grain 

 with U.S. grain for export under U.S. taxpayer-assisted programs. More than 80 

 percent of U.S. wheat exports utilize these programs in one form or another; yet 

 there is no means of assuring that foreign grain is not mixed into these shipments. 



With the implementation of the U.S. -Canada Free Trade Agreement, all U.S. 

 wheat and oats exported to Canada must be accompanied by an "end-use" certificate 

 which details, among other things, where the grain is going. We believe it is impera- 

 tive that the same method be used to protect the integrity of U.S. grain. The adop- 

 tion of this procedure would not disturb the status quo, inasmuch as foreign grain 

 could still be blended with U.S. grain for domestic utilization or for export without 

 Government sponsorship. 



We see no alternative to end-use certificates which would promote compliance 

 with the 1990 Farm Act. Options such as transit billing or de minimis requirements 

 would actually permit and expand the volume of foreign grain to be exported under 

 these programs. 



We are pleased to know that you intend to give this agreement close scrutiny. Our 

 offices are available to help your staff in answering any questions you may have. 

 We look forward to working with you on implementing legislation that will address 

 our concerns. 



Sincerely, 



(Signed) Carl F. Schwensen, 

 Executive Vice President, National Association of Wheat Growers. 



(Signed) Winston Wilson, 

 President, U.S. Wheat Associates. 



Summary of Agriculture Private Sector Comments on NAFTA 



The Agribusiness Council, Inc. 



The NAFTA is a promising agreement that will result in increasing trade and eco- 

 nomic growth throughout North America. The trade associations that It polled sup- 

 port the NAFTA, but many have specific concerns that relate directly to how the 

 agreement will affect their business. Mexico's market potential is great because of 

 its limited amount of arable land, and it needs to import American technology and 

 equipment to maintain this land. 



