EXCHANGE OF LETTERS between the European Community and Canada on the conclusion of negotiations under Article XXIV:6

A. Letter from the European Community

Brussels, 22 December 1995

Sir

I have the honour to confirm the following understanding reached between the delegations of Canada and the European Community.

1. Taking into account the exceptional market situation which is expected to prevail for the remainder of the 1995/96 marketing year for wheats (common and durum), the European Community agrees to make the following adjustments to its import rules for common and durum wheat, in order to alleviate the current difficult market situation:

(a) From 1 January to 30 June 1996 the abatement for high quality wheat will be increased from ECU 8/tonne to ECU 14 /tonne;

(b) For the same period the requirement for durum wheat of 73 % of vitreous kernels will be reduced to the standard level of 60 %.

Subject to the foregoing changes being implemented, Canada will terminate its present request for a WTO panel on EC cereals regulations.

Subject to the terms of the preceding paragraphs, each party retains all of its WTO rights. This Agreement is without prejudice to the legal position of either party regarding any matter covered by this Agreement.

It is agreed that the two parties will enter into discussions in the first quarter of 1996 with a view to examining what measures might be necessary for subsequent marketing years.

2. To settle the current WTO Article XXIV:6 negotiations on agriculture and Canada's outstanding XXIV:6 claims on barley arising from past enlargements of the EU, the following has been agreed:

- reduction in the duty rate for canary seed (1008 30 00) to zero,

- MFN TRQ of 50 000 tonnes for durum wheat (minimum vitreous kernel content of 73 %) at zero duty,

- MFN TRQ of 10 000 tonnes for worked oats (1104 22 99) at zero duty,

- to the extent that imports of pork and pork products are covered by both GATT TRQs and preferential TRQs at lower than GATT in-quota rates for Central and East European Countries (CEECs) the Commission, in consultation with the countries concerned, will ensure that the imports in question from CEECs are counted in the first place against the preferential TRQs,

- the sum of the EC TRQs for pigmeat and pigmeat preparations will remain at 75 600 tonnes at the end of Uruguay Round implementation.

The Canadian Government accepts the basic components of the European Community's approach to adjusting the GATT obligations of the EUR 12 and those of Austria, Sweden and Finland, following the recent enlargement of the Community:

- netting out of export commitments,

- netting out of tariff quotas,

- aggregation of domestic support commitments.

The appropriate legal modalities of implementation remain to be agreed upon.

3. As regards bilateral trade in cheese, Canada undertakes to increase the current EC 12 247 tonnes country reserve (60 % of the global tariff quota) to 66 % of the global tariff rate quota. The EC undertakes to increase the existing tariff rate quota of Canadian aged Cheddar to 4 000 tonnes. The Canadian authorities will indicate to the Canadian Dairy Commission that 'certificates of authenticity` for 'aged Cheddar` should only be issued for in-quota quantities. Canada will only permit imports of cheese from the EC under its tariff rate quota accompanied by an export certificate issued by the European Community.

4. The EC will limit export subsidies on fresh, chilled or frozen beef and veal destined for Canada to no more than 5 000 tonnes annually. On the basis of this undertaking European beef exporters may request the Canadian International Trade Tribunal (CITT) to undertake a review under Section 76 of the Special Import Measures Act (SIMA), of the 25 July 1986 finding of the Canadian Import Tribunal in respect of boneless manufacturing beef from the European Economic Community. Section 76 review may be requested by any interested party to the finding in question.

5. Canada agrees to bind at free its duty on pasta products currently subject to the 'pasta remission order` i. e. the pasta products classified under tariff items 1902 19 91, 1902 19 99 and 1902 19 92.

I have the honour to propose that this letter and your letter in reply will constitute an agreement between our two authorities.

Please accept, Sir, the assurance of my highest consideration.

On behalf of the Council of the European Union

B. Letter from Canada

Brussels, 23 December 1995

Sir

I have the honour to acknowledge receipt of your letter of today's date which reads as follows:

'I have the honour to confirm the following understanding reached between the delegations of Canada and the European Community.

1. Taking into account the exceptional market situation which is expected to prevail for the remainder of the 1995/96 marketing year for wheats (common and durum), the European Community agrees to make the following adjustments to its import rules for common and durum wheat, in order to alleviate the current difficult market situation:

(a) From 1 January to 30 June 1996 the abatement for high quality wheat will be increased from ECU 8/tonne to ECU 14 /tonne;

(b) For the same period the requirement for durum wheat of 73 % of vitreous kernels will be reduced to the standard level of 60 %.

Subject to the foregoing changes being implemented, Canada will terminate its present request for a WTO panel on EC cereals regulations.

Subject to the terms of the preceding paragraphs, each party retains all of its WTO rights. This Agreement is without prejudice to the legal position of either party regarding any matter covered by this Agreement.

It is agreed that the two parties will enter into discussions in the first quarter of 1996 with a view to examining what measures might be necessary for subsequent marketing years.

2. To settle the current WTO Article XXIV:6 negotiations on agriculture and Canada's outstanding XXIV:6 claims on barley arising from past enlargements of the EU, the following has been agreed:

- reduction in the duty rate for canary seed (1008 30 00) to zero,

- MFN TRQ of 50 000 tonnes for durum wheat (minimum vitreous kernel content of 73 %) at zero duty,

- MFN TRQ of 10 000 tonnes for worked oats (1104 22 99) at zero duty,

- to the extent that imports of pork and pork products are covered by both GATT TRQs and preferential TRQs at lower than GATT in-quota rates for Central and East European Countries (CEECs) the Commission, in consultation with the countries concerned, will ensure that the imports in question from CEECs are counted in the first place against the preferential TRQs,

- the sum of the EC TRQs for pigmeat and pigmeat preparations will remain at 75 600 tonnes at the end of Uruguay Round implementation.

The Canadian Government accepts the basic components of the European Community's approach to adjusting the GATT obligations of the EUR 12 and those of Austria, Sweden and Finland, following the recent enlargement of the Community:

- netting out of export commitments,

- netting out of tariff quotas,

- aggregation of domestic support commitments.

The appropriate legal modalities of implementation will need to be agreed upon.

3. As regards bilateral trade in cheese, Canada undertakes to increase the current EC 12 247 tonnes country reserve (60 % of the global tariff quota) to 66 % of the global tariff rate quota. The EC undertakes to increase the existing tariff rate quota of Canadian aged Cheddar to 4 000 tonnes. The Canadian authorities will indicate to the Canadian Dairy Commission that "certificates of authenticity" for "aged Cheddar" should only be issued for in-quota quantities. Canada will only permit imports of cheese from the EC under its tariff rate quota accompanied by an export certificate issued by the European Community.

4. The EC will limit export subsidies on fresh, chilled or frozen beef and veal destined for Canada to no more than 5 000 tonnes annually. On the basis of this undertaking European beef exporters may request the Canadian International Trade Tribunal (CITT) to undertake a review under Section 76 of the Special Import Measures Act (SIMA), of the 25 July 1986 finding of the Canadian Import Tribunal in respect of boneless manufacturing beef from the European Economic Community. Section 76 review may be requested by any interested party to the finding in question.

5. Canada agrees to bind at free its duty on pasta products currently subject to the "pasta remission order" i. e. the pasta products classified under tariff items 1902 19 91, 1902 19 99 and 1902 19 92.

I have the honour to propose that this letter and your letter in reply will constitute an agreement between our two authorities.`

I have the honour to confirm that the above is acceptable to my Government and that your letter and this letter constitute an agreement in accordance with your proposal.

Please accept, Sir, the assurance of my highest consideration.

For the Government of Canada

(1) See Annexes to Regulation (EC) No 3093/95, page 1 of this Official Journal.