Release No. 0624.96

Backgrounder

                                
    on the NAFTA Panel Report on Canadian Agriculture Tariffs
                        December 2, 1996

     On July 14, 1995, following prolonged but unsuccessful efforts to
negotiate improved access to the Canadian market for certain agricultural
products, the United States requested formation of a dispute settlement
panel in accordance with Chapter 20 of the North American Free Trade
Agreement.  The panel was charged with examining whether Canada was applying
tariffs to certain agricultural goods in excess of those agreed to by Canada
under the NAFTA.

     All five panelists supported Canada's view that it could apply high
tariff rates (in excess of 100 percent) under its World Trade Organization
tariff rate schedule, to U.S. agricultural imports notwithstanding pre-existing obligations under the CFTA and NAFTA to eliminate all duties
between the United States and Canada.  The duties are currently being
applied to imports of dairy, poultry, eggs, barley and margarine, and
products thereof from the United States.

     With regard to USDA's review of Canadian dairy industry support
programs, the United States and other trading partners have recently
expressed concern about these programs at the WTO.  In particular, the
United States is concerned that Canada's new dairy support system creates
special classes of milk products which have different pricing depending on
whether they are used for domestic products or exported products.  Canada
changed its export system for dairy products on August 1, 1995, from a
system based on subsidies from producer financed levies to this system of
special milk classes.

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NOTE: USDA news releases and media advisories are available on the Internet.
Access the USDA Home Page on the World Wide Web at http://www.usda.gov


NOTE: USDA news releases and media advisories are available on the Internet.
Access the USDA Home Page on the World Wide Web at http://www.usda.gov