Focus of Smith Congressional Delegation (CODEL) was agricultural trade issues. U.S. exports to Canada continue to grow, and reached nearly $6 billion in FY 96.

With regard to issues such as the legitimacy of state trading enterprises(STEs) and the reduction of tariff rate quotas, the Canadians are unwilling to engage in meaningful discussions until the next round of WTO negotiations on agriculture, which begins in 1999. However, they are willing to discuss sanitary and phytosanitary issues such as the implementation of the Northwest Pilot Project to facilitate the entry of U.S. feeder cattle into Canada.

Issues

Resolved issue.

Wheat embargo: An issue that was still very much in contention prior to the CODEL was Karnal bunt and Canada's restrictions prohibiting the transshipment of U.S. durum wheat through St. Lawrence Seaway facilities. Chairman Smith's trade mission directly contributed to Canada's decision to discontinue this restriction.

Outstanding Canada-U.S. agricultural trade issues.

U.S. imports of Canadian Wheat & Barley: The U.S. is closely monitoring imports of Canadian wheat and barley, and are extremely concerned that such imports to the U.S. have increased considerably in recent months. Canadians do not think there should be a cap on their wheat crossing into the U.S. They are currently exporting at or above the cap set by the 1994 U.S.-Canada Memorandum of Understanding on Grains, which expired in 1995.

U.S.-Canada Cattle Trade: Disease-free U.S. feeder cattle entry into Canada has been a problem while Canadian imports to the U.S. have escalated. The Delegation emphasized the importance to the U.S. of facilitating entry of cattle into Canadian feedlots. Northwest Pilot Project: Delegation Members stressed the symbolic importance of getting the Project underway quickly and urged Canadian Federal and Provincial officials to clear outstanding bureaucratic hurdles and pursue completion of this symbiotic program by October 1, 1997.

Canadian imports of U.S. live hogs: The issue of a 30-day quarantine on all live hogs from the U.S. was discussed. The Canadians stressed the problem of pseudorabies in some U.S. live hogs. The Delegation urged prompt implementation of NAFTA provisions requiring that sanitary-phytosanitary restrictions be evaluated on a regional basis.

Restrictions on U.S. potatoes: U.S. potato growers and processors are concerned about increased imports of fresh potatoes and processed potato products from Canada. U.S. growers and processors believe these imports may be benefiting from Canadian government polices and industry pricing practices. Accordingly, USTR requested an ITC investigation (section 332). During talks in Ottawa, Canadians urged they wait until the results of the investigation are reported (no later than July 15, 1997). In addition, concern over McCain Foods (Canadian potato processor) seizing of a bigger share of the American french-fry market at prices Americans could not match.

Excessive Tariff-rate quotas (TRQ): Canadians imposing excessively high tariff-rate quotas on American dairy, poultry and eggs was raised by the Delegation. Members stressed that the U.S. is seeking greater access to the Canadian market, consistent with the objectives of NAFTA, and looks forward to discussing tariff reductions for dairy , poultry, and eggs in the next round of agriculture talks.

U.S.-Canada Softwood Lumber Agreement: Members reviewed the implementation and effectiveness of the Agreement on the eve of its one year anniversary. Concerns on both sides of the border remain, however, the certainty the Agreement provides is preferable to no Agreement. Members asserted that a comprehensive competitive stumpage system in Canada would eliminate the need for the Agreement.