NAFTA - Chapter Seven:

Agriculture and Sanitary and Phytosanitary Measures (A)

PART TWO: TRADE IN GOODS

Chapter Seven: Agriculture and Sanitary and Phytosanitary Measures

Section A - Agriculture

Article 701: Scope and Coverage

Article 702: International Obligations

Article 703: Market Access

Article 704: Domestic Support

Article 705: Export Subsidies

Article 706: Committee on Agricultural Trade

Article 707: Advisory Committee on Private Commercial Disputes Regarding Agricultural Goods

Article 708: Definitions

Annex 702.1: Incorporation of Trade Provisions

Annex 702.3: Intergovernmental Coffee Agreement

Annex 703.2: Market Access - Section A

Annex 703.2: Market Access - Section B

Annex 703.2: Market Access - Section C

Annex 703.2: Appendices

Annex 703.3: Special Safeguard Goods

Section B - Sanitary and Phytosanitary Measures

Article 709: Scope and Coverage

Article 710: Relation to Other Chapters

Article 711: Reliance on Non-Governmental Entities

Article 712: Basic Rights and Obligations

Article 713: International Standards and Standardizing Organizations

Article 714: Equivalence

Article 715: Risk Assessment and Appropriate Level of Protection

Article 716: Adaptation to Regional Conditions

Article 717: Control, Inspection and Approval Procedures

Article 718: Notification, Publication and Provision of Information

Article 719: Inquiry Points

Article 720: Technical Cooperation

Article 721: Limitations on the Provisions of Information

Article 722: Committee on Sanitary and Phytosanitary Measures

Article 723: Technical Consultations

Article 724: Definitions

Section A - Agriculture

Article 701: Scope and Coverage

1. This Section applies to measures adopted or maintained by a Party relating to agricultural trade.

2. In the event of any inconsistency between this Section and another provision of this Agreement, this Section shall prevail to the extent of the inconsistency.

Article 702: International Obligations

1. Annex 702.1 applies to the Parties specified in that Annex with respect to agricultural trade under certain agreements between them.

2. Prior to adopting pursuant to an intergovernmental commodity agreement, a measure that may affect trade in an agricultural good between the Parties, the Party proposing to adopt the measure shall consult with the other Parties with a view to avoiding nullification or impairment of a concession granted by that Party in its Schedule to Annex 302.2.

3. Annex 702.3 applies to the Parties specified in that Annex with respect to measures adopted or maintained pursuant to an intergovernmental coffee agreement.

Article 703: Market Access

1. The Parties shall work together to improve access to their respective markets through the reduction or elimination of import barriers to trade between them in agricultural goods.

Customs Duties, Quantitative Restrictions, and Agricultural Grading and Marketing Standards

2. Annex 703.2 applies to the Parties specified in that Annex with respect to customs duties and quantitative restrictions, trade in sugar and syrup goods, and agricultural grading and marketing standards.

Special Safeguard Provisions

3. Each Party may, in accordance with its Schedule to Annex 302.2, adopt or maintain a special safeguard in the form of a tariff rate quota on an agricultural good listed in its Section of Annex 703.3. Notwithstanding Article 302.2, a Party may not apply an over-quota tariff rate under a special safeguard that exceeds the lesser of:

a) the most-favored-nation (MFN) rate as of July 1, 1991; and

b) the prevailing MFN rate.

4. No Party may, with respect to the same good and the same country, at the same time:

a) apply an over-quota tariff rate under paragraph 3; and

b) take an emergency action covered by Chapter Eight (Emergency Action).

Article 704: Domestic Support

The Parties recognize that domestic support measures can be of crucial importance to their agricultural sectors but may also have trade distorting and production effects and that domestic support reduction commitments may result from agricultural multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT). Accordingly, where a Party supports its agricultural producers, that Party should endeavor to work toward domestic support measures that:

a) have minimal or no trade distorting or production effects; or

b) are exempt from any applicable domestic support reduction commitments that may be negotiated under the GATT.

The Parties further recognize that a Party may change its domestic support measures, including those that may be subject to reduction commitments, at the Party's discretion, subject to its rights and obligations under the GATT.

Article 705: Export Subsidies

1. The Parties share the objective of the multilateral elimination of export subsidies for agricultural goods and shall cooperate in an effort to achieve an agreement under the GATT to eliminate those subsidies.

2. The Parties recognize that export subsidies for agricultural goods may prejudice the interests of importing and exporting Parties and, in particular, may disrupt the markets of importing Parties. Accordingly, in addition to the rights and obligations of the Parties specified in Annex 702.1, the Parties affirm that it is inappropriate for a Party to provide an export subsidy for an agricultural good exported to the territory of another Party where there are no other subsidized imports of that good into the territory of that other Party.

3. Except as provided in Annex 702.1, where an exporting Party considers that a non-Party is exporting an agricultural good to the territory of another Party with the benefit of export subsidies, the importing Party shall, on written request of the exporting Party, consult with the exporting Party with a view to agreeing on specific measures that the importing Party may adopt to counter the effect of any such subsidized imports. If the importing Party adopts the agreed-upon measures, the exporting Party shall refrain from applying, or immediately cease to apply, any export subsidy to exports of such good to the territory of the importing Party.

4. Except as provided in Annex 702.1, an exporting Party shall deliver written notice to the importing Party at least three days, excluding weekends, prior to adopting an export subsidy measure on an agricultural good exported to the territory of another Party. The exporting Party shall consult with the importing Party within 72 hours of receipt of the importing Party's written request, with a view to eliminating the subsidy or minimizing any adverse impact on the market of the importing Party for that good. The importing Party shall, when requesting consultations with the exporting Party, at the same time, deliver written notice to a third Party of the request. A third Party may request to participate in such consultations.

5. Each Party shall take into account the interests of the other Parties in the use of any export subsidy on an agricultural good, recognizing that such subsidies may have prejudicial effects on the interests of the other Parties.

6. The Parties hereby establish a Working Group on Agricultural Subsidies, comprising representatives of each Party, which shall meet at least semi-annually or as the Parties may otherwise agree, to work toward elimination of all export subsidies affecting agricultural trade between the Parties. The functions of the Working Group shall include:

a) monitoring the volume and price of imports into the territory of any Party of agricultural goods that have benefitted from export subsidies;

b) providing a forum for the Parties to develop mutually acceptable criteria and procedures for reaching agreement on the limitation or elimination of export subsidies for imports of agricultural goods into the territories of the Parties; and

c) reporting annually to the Committee on Agricultural Trade, established under Article 706, on the implementation of this Article.

7. Notwithstanding any other provision of this Article:

a) if the importing and exporting Parties agree to an export subsidy for an agricultural good exported to the territory of the importing Party, the exporting Party or Parties may adopt or maintain such subsidy; and

b) each Party retains its rights to apply countervailing duties to subsidized imports of agricultural goods from the territory of a Party or non-Party.

Article 706: Committee on Agricultural Trade

1. The Parties hereby establish a Committee on Agricultural Trade, comprising representatives of each Party.

2. The Committee's functions shall include:

a) monitoring and promoting cooperation on the implementation and administration of this Section;

b) providing a forum for the Parties to consult on issues related to this Section at least semi-annually and as the Parties may otherwise agree; and

c) reporting annually to the Commission on the implementation of this Section.

Article 707: Advisory Committee on Private Commercial Disputes regarding Agricultural Goods

The Committee shall establish an Advisory Committee on Private Commercial Disputes regarding Agricultural Goods, comprising persons with expertise or experience in the resolution of private commercial disputes in agricultural trade. The Advisory Committee shall report and provide recommendations to the Committee for the development of systems in the territory of each Party to achieve the prompt and effective resolution of such disputes, taking into account any special circumstance, including the perishability of certain agricultural goods.

Article 708: Definitions

For purposes of this Section:

agricultural good means a good provided for in any of the following:

Note: For purposes of reference only, descriptions are provided next to the corresponding tariff provision.

(a)

Harmonized System (HS) Chapters 1 through 24 (other than a fish or fish product); or

(b)

HS subheading 2905.43 manitol

HS subheading 2905.44 sorbitol

HS heading 33.01 essential oils

HS headings 35.01 to 35.05 albuminoidal substances, modified starches, glues

HS subheading 3809.10 finishing agents

HS subheading 3823.60 sorbitol n.e.p.

HS headings 41.01 to 41.03 hides and skins

HS heading 43.01 raw furskins

HS headings 50.01 to 50.03 raw silk and silk waste

HS headings 51.01 to 51.03 wool and animal hair

HS headings 52.01 to 52.03 raw cotton, cotton waste and cotton carded or combed

HS heading 53.01 raw flax

HS heading 53.02 raw hemp

customs duty means "customs duty" as defined in Article 318 (National Treatment and Market Access for Goods - Definitions);

duty-free means "duty-free" as defined in Article 318;

fish or fish product means a fish or crustacean, mollusc or other aquatic invertebrate, marine mammal, or a product thereof provided for in any of the following:

HS Chapter 03 fish and crustaceans, molluscs and other aquatic invertebrates

HS heading 05.07 tortoise-shell, whalebone and whalebone hair and those fish or crustaceans, molluscs or other aquatic invertebrates, marine mammals, and their products within this heading

HS heading 05.08 coral and similar materials

HS heading 05.09 natural sponges of animal origin

HS heading 05.11 products of fish or crustaceans, molluscs or other aquatic invertebrates; dead animals of Chapter 3

HS heading 15.04 fats and oils and their fractions, of fish or marine mammals

HS heading 16.03 "non-meat" extracts and juices

HS heading 16.04 prepared or preserved fish

HS heading 16.05 prepared preserved crustaceans, molluscs and other aquatic invertebrates;

HS subheading 2301.20 flours, meals, pellets of fish

material means "material" as defined in Article 415 (Rules of Origin - Definitions);

over-quota tariff rate means the rate of customs duty to be applied to quantities in excess of the quantity specified under a tariff rate quota;

sugar or syrup good means "sugar or syrup good" as defined in Annex 703.2;

tariff item means a "tariff item" as defined in Annex 401; and

tariff rate quota means a mechanism that provides for the application of a customs duty at a certain rate to imports of a particular good up to a specified quantity (in-quota quantity), and at a different rate to imports of that good that exceed that quantity.

Annex 702.1

Incorporation of Trade Provisions

1. Articles 701, 702, 704, 705, 706, 707, 710 and 711 of the Canada - United States Free Trade Agreement apply, as between Canada and the United States, which Articles are hereby incorporated into and made a part of this Agreement.

2. The definitions of the terms specified in Article 711 of the Canada - United States Free Trade Agreement shall apply to the Articles incorporated by paragraph 1.

3. For purposes of this incorporation, any reference to Chapter Eighteen of the Canada -United States Free Trade Agreement shall be deemed to be a reference to Chapter Twenty (Institutional Arrangements and Dispute Settlement Procedures) of this Agreement.

4. The Parties understand that Article 710 of the Canada - United States Free Trade Agreement incorporates the GATT rights and obligations of Canada and the United States with respect to agricultural, food, beverage and certain related goods, including exemptions by virtue of paragraph (1)(b) of the Protocol of Provisional Application of the GATT and waivers granted under Article XXV of the GATT.

Annex 702.3

Intergovernmental Coffee Agreement

Notwithstanding Article 2101 (General Exceptions), neither Canada nor Mexico may adopt or maintain a measure, pursuant to an intergovernmental coffee agreement, that restricts trade in coffee between them.

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