5. Each Party may count the in-quota quantity under a tariff rate quota applied to a qualifying good in accordance with its Schedule to Annex 302.2 toward the satisfaction of commitments regarding an in-quota quantity of a tariff rate quota or level of access under a restriction on the importation of that good:

a) that have been agreed under the GATT, including as set out in its GATT Schedule of Tariff Concessions; or

b) undertaken by the Party as a result of any agreement resulting from agricultural multilateral trade negotiations under the GATT.

6. Subject to this Section and for purposes of this Section, Canada and Mexico incorporate their respective rights and obligations with respect to agricultural goods under the GATT and agreements negotiated under the GATT, including their rights and obligations under Article XI of the GATT.

7. Notwithstanding paragraph 6 and Article 309:

a) the rights and obligations of the Parties under Article XI:2(c)(i) of the GATT and those rights as incorporated by Article 309 shall apply with respect to trade in agricultural goods only to the dairy, poultry and egg goods set out in Appendix 703.2.B.7; and

b) with respect to such dairy, poultry and egg goods that are qualifying goods, either Party may adopt or maintain a prohibition or restriction or a customs duty on the importation of such good consistent with its rights and obligations under the GATT.

8. Without prejudice to Chapter Eight (Emergency Action), neither Party may seek a voluntary restraint agreement from the other Party with respect to the exportation of a qualifying good.

9. Notwithstanding Chapter Four (Rules of Origin), Mexico may treat a good provided for in Mexican tariff item 1806.10.01 (except those with a sugar content less than 90 percent) or 2106.90.05 (except those that contain added flavoring matter) that is exported from the territory of Canada as non- originating for purposes of applying a rate of customs duty to that good, if any material provided for in HS subheading 1701.99 used in the production of such good is not a qualifying good.

10. Notwithstanding Chapter Four (Rules of Origin), Canada may treat a good provided for in Canadian tariff item 1806.10.10 or 2106.90.21 that is exported from the territory of Mexico as non-originating for purposes of applying a rate of customs duty to that good, if any material provided for in HS subheading 1701.99 used in the production of such good is not a qualifying good.

Trade in Sugar

11. Mexico shall apply a rate of customs duty equal to its most-favored-nation over-quota tariff rate to a sugar or syrup that is a qualifying good.

12. Canada may apply a rate of customs duty on a sugar or syrup good that is a qualifying good equal to the rate of customs duty applied by Mexico pursuant to paragraph 11.

Agricultural Grading and Marketing Standards

13. The Parties hereby establish a Working Group, comprising representatives of Canada and Mexico, which shall meet annually or as otherwise agreed. The Working Group shall review, in coordination with the Committee on Standards-Related Measures established under Article 913 (Committee on Standards-Related Measures), the operation of agricultural grade and quality standards as they affect trade between the Parties, and shall resolve issues that may arise regarding the operation of the standards. This Working Group shall report to the Committee on Agricultural Trade established under Article 706.

Definitions

14. For purposes of this Section:

qualifying good means an originating good that is an agricultural good except that, in determining whether such good is an originating good, operations performed in or material obtained from the United States shall be considered as if they were performed in or obtained from a non-Party.

where:

ANPS = adjusted net production surplus

PP = projected domestic production of sugar

CP = projected total consumption of sugar

CF = correction factor

y = next marketing year,

and

CF = (PAys - CAys) - (PPys - CPys)

where:

PA = actual domestic production of sugar

CA = actual total consumption of sugar

ys = most recent previous marketing year for which the Parties projected a net production surplus for that Party.

2. For purposes only of paragraph 1, neither the projected net production surplus (PPys -CPys) nor the actual net production surplus (PAys - CAys) in the most recent marketing year for which the Parties projected a net production surplus for that Party may be considered to:

a) exceed the quantity, if any, in Section A(15) applicable to that year; or

b) be lower than the greater of

(i) 7,258 metric tons raw value, or

(ii) the quantity in paragraph 14(b) of Section A applicable to that year.

3. In appropriate circumstances, a Party shall consider adjustments to projections of its net production surplus when:

Fc greater than (B + 10 %)

where

F	is the percentage change in stocks from the beginning to the end of a marketing year z, expressed as a positive percentage
c	is current marketing year
F	is calculated in accordance with the following formula:
	Sb - Se F  =  ------------   x   100               Sb
Sb	beginning stocks in marketing year z
Se	ending stocks in marketing year z
B	the average annual percentage change in stocks over the previous 5 marketing years, calculated in accordance with the following formula:
N	previous marketing years, ranging from 1 (first preceding year) to 5 (fifth preceding year).

4. For purposes of determining net production surplus or projected net production surplus:

a) domestic production means all sugar and syrup goods derived from sugar cane or sugar beets grown in a Party's territory; and

b) total consumption means all sugar and syrup goods consumed directly, or indirectly in the form of a good containing such goods, in the territory of a Party.

5. Each Party shall permit representatives from the other Party to observe and comment on its statistics on production, consumption, trade and stocks and on the methodology it uses to prepare such statistics.

6. Statistics on production, consumption, trade and stocks shall be provided by:

a) the Secretaría de Agricultura y Recursos Hidráulicos, the Secretaría de Comercio y Fomento Industrial, and the Secretaría de Hacienda y Crédito Público; and

b) the U.S. Department of Agriculture (USDA).

Appendix 703.2.B.7: Dairy, Poultry and Egg Goods

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

Schedule of Canada

For Canada, a dairy, poultry or egg good is a good provided for in one of the following Canadian tariff items:

Canadian Tariff Items	Description
0105.11.20	Broilers of the species Gallus domesticus for domestic production, weighing not more than 185 g.
0105.91.00	Live fowls of the species Gallus domesticus, weighing 185g. or more.
0105.99.00	Live ducks, geese, turkeys and guinea fowls, weighing 185g. or more.
0207.10.00	Meat of poultry of heading No. 01.05, not cut in pieces, fresh or chilled.
0207.21.00	Meat of fowls of the species Gallus domesticus, not cut in pieces, frozen.
0207.22.00	Meat of turkeys, not cut in pieces, frozen.
0207.39.00	Cut meat and edible offal (including livers other than fatty livers of geese or ducks), of the poultry of heading No. 01.05, fresh or chilled.
0207.41.00	Cut meat and edible offal, other than livers, of fowls of the species Gallus domesticus, frozen.
0207.42.00	Cut meat and edible offal, other than livers, of turkeys, frozen.
0207.50.00	Livers of poultry of heading No. 01.05, frozen.
0209.00.20	Poultry fat (not rendered), fresh, chilled, frozen, salted, in brine, dried or smoked.
0210.90.10	Meat of poultry, salted, in brine, dried or smoked.
0401.10.00	Milk and cream, not concentrated nor containing added sugar or other sweetening matter of a fat content, by weight, not exceeding 1 percent.
0401.20.00	Milk and cream, not concentrated nor containing added sugar or other sweetening matter of a fat content, by weight, exceeding 1 percent but not exceeding 6 percent.
0401.30.00	Milk and cream, not concentrated nor containing added sugar or other sweetening matter, of a fat content, by weight, exceeding 6 percent.
0402.10.00	Milk and cream, concentrated or containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, not exceeding 1.5 percent.
0402.21.10	Milk, concentrated, not containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5 percent.
0402.21.20	Cream, concentrated, not containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5 percent.
0402.29.10	Milk, whether or not concentrated, containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5 percent.
0402.29.20	Cream, whether or not concentrated, containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5 percent.
0402.91.00	Milk and cream, concentrated, not containing added sugar or other sweetening matter, not in powder, granules or other solid forms.
0402.99.00	Milk and cream, whether or not concentrated, containing added sugar or other sweetening matter, not in powder, granules or other solid forms.
0403.10.00	Yogurt.
0403.90.10	Powdered buttermilk.
0403.90.90	Liquid buttermilk, curdled milk and cream, kephir and other fermented or acidified milk and cream, whether or not concentrated or containing added sugar or other sweetening matter or flavored or containing added fruit, nuts or cocoa.
0404.10.10	Whey powder and modified whey powder, whether or not concentrated or containing added sugar or other sweetening matter.
0404.10.90	Whey and modified whey, not in powder, whether or not concentrated or containing added sugar or other sweetening matter.
0404.90.00	Products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included.
0405.00.10	Butter.
0405.00.90	Fats and oils derived from milk, other than butter.
0406.10.00	Fresh (unripened or uncured) cheese, including whey cheese, and curd.
0406.20.10	Cheddar cheese and cheddar types of cheese, grated or powdered.
0406.20.90	Grated or powdered cheese of all kinds, other than cheddar and cheddar types.
0406.30.00	Processed cheese, not grated or powdered.
0406.40.00	Blue-veined cheese.
0406.90.10	Cheddar cheese and cheddar types of cheese, not grated, powdered or processed.
0406.90.90	Other cheese not elsewhere specified or included.
0407.00.00	Birds' eggs, in shell, fresh, preserved or cooked.
0408.11.00	Dried egg yolks, whether or not containing added sugar or other sweetening matter.
0408.19.00	Egg yolks, fresh, cooked by steaming or by boiling in water, moulded, frozen or otherwise preserved, whether or not containing added sugar or other sweetening matter.
0408.91.00	Bird's eggs, not in shell, dried, whether or not containing added sugar or other sweetening matter.
0408.99.00	Birds' eggs, not in shell, fresh, cooked by steaming or by boiling in water, moulded, frozen or otherwise preserved, whether or not containing added sugar or other sweetening matter.
1601.00.11	Sausages and similar products of meat, meat offal or blood of poultry of heading No. 01.05 or food preparation based on these products, in airtight containers.
1602.10.10	Homogenized preparations of chicken or turkey.
1602.20.20	Poultry liver paste.
1602.31.10	Prepared meals of prepared or preserved turkey meat, meat offal or blood, other than sausages and similar products.
1602.31.91	Prepared or preserved turkey meat, meat offal or blood, other than sausages and similar products, and other than prepared meals, in air-tight containers.
1602.31.99	Prepared or preserved turkey meat, meat offal of blood, other than sausages and similar products, other than prepared meals, not in air-tight containers.
1602.39.10	Prepared meals of prepared or preserved meat, meat offal or blood of poultry of heading No. 01.05 other than turkey (i.e., Gallus domesticus, ducks, geese or guinea fowls), other than sausages and similar products.
1602.39.91	Prepared or preserved meat, meat offal or blood of poultry of heading No. 01.05 other than turkey (i.e., Gallus domesticus, ducks, geese or guinea fowls), other than sausages and similar products, and other than prepared meals, in air-tight containers.
1602.39.99	Prepared or preserved meat, meat offal or blood, of poultry of heading No. 01.05 other than turkey (i.e., Gallus domesticus, ducks, geese or guinea fowls), other than sausages and similar products, other than prepared meals, not in air-tight containers.
1901.90.31	Food preparations of goods of headings Nos. 04.01 to 04.04, not containing cocoa powder or containing cocoa powder in a proportion by weight of less than 10 percent, not elsewhere specified or included, containing more than 10 percent on a dry weight basis of milk solids.
2105.00.00	Ice cream and other edible ice, whether or not containing cocoa.
2106.90.70	Egg preparations not elsewhere specified or included.
2309.90.31	Complete feeds and feed supplements, including concentrates, containing over 50 percent by weight in the dry state of milk solids.
3501.10.00	Casein.
3501.90.00	Caseinates and other casein derivatives; casein glues.
3502.10.10	Egg albumin, dried, evaporated, desiccated or powdered.
3502.10.90	Other egg albumin.

Schedule of Mexico
For Mexico, a dairy, poultry or egg good is a good provided for in one of the following tariff items:

Mexican Tariff Items	Description
0105.11.01	Day old chickens without being fed during its transportation
0105.91.01	Game cocks
0105.91.99	Other
0105.99.99	Other poultry
0207.10.01	Turkey
0207.10.99	Other
0207.21.01	Chickens
0207.22.01	Turkey
0207.39.01	Mechanically deboned of poultry or turkey (not provided for in heading 16.01 or 16.02)
0207.39.02	Turkey
0207.39.99	Other
0207.41.01	Mechanically deboned of poultry or turkey (not provided for in heading 16.01 or 16.02)
0207.41.99	Other
0207.42.01	Mechanically deboned of poultry or turkey (not provided for in heading 16.01 or 16.02)
0207.42.99	Other
0207.50.01	Poultry livers, frozen
0209.00.01	Chicken or turkey fat
0210.90.99	Other
0401.10.01	In hermetic containers milk not concentrated
0401.10.99	Other
0401.20.01	In hermetic containers
0401.20.99	Other
0401.30.01	In hermetic containers
0401.30.99	Other
0402.10.01	Milk powder
0402.10.99	Other
0402.21.01	Milk powder
0402.21.99	Other
0402.29.99	Other
0402.91.01	Evaporated milk
0402.91.99	Other
0402.99.01	Condensed milk
0402.99.99	Other
0403.10.01	Yogurt
0403.90.01	Powdered milk whey with a protein content less than or equal to 12 percent
0403.90.99	Other butter whey
0404.10.01	Whey, concentrated, sweetened
0404.90.99	Other
0405.00.01	Butter, including the immediate container, with a weight less than or equal to 1 kg
0405.00.02	Butter, including the immediate container, with a weight over 1 kg
0405.00.03	Butiric fat, dehydrated
0405.00.99	Other
0406.10.01	Fresh cheese, including whey cheese
0406.20.01	Cheese, grated or powdered
0406.30.01	Melted cheese, not grated or powdered
0406.30.99	Other, melted cheese
0406.40.01	Blue veined cheese
0406.90.01	Hard paste cheese called sardo
0406.90.02	Hard paste reggi cheese
0406.90.03	Soft paste cologne cheese
0406.90.04	Hard or semi-hard cheeses with a fat content by weight less than or equal to 40 percent, and with a water content by weight in non-fat matter less than or equal to 47 percent (called "grana", "parmigiana" or "reggiano,") or with a non-fat matter content by weight over 47 percent without exceeding 72 percent (called "danloo, edam, fontan, fontina, fynbo, gouda, Avarti, maribo, samsoe, esron, italico, kernhem, Saint-Nectaire, Saint-Paulin, or talegi ")
0406.90.05	Petit suisse cheese
0406.90.06	Egmont cheese
0406.90.99	Other hard and semihard cheese
0407.00.01	Fresh birds eggs, fertile
0407.00.02	Frozen eggs
0407.00.99	Other poultry eggs
0408.11.01	Dried yolks
0408.19.99	Other
0408.91.01	Frozen or powdered
0408.91.99	Other
0408.99.01	Frozen or powdered
0408.99.99	Other
1601.00.01	Sausages or similar products of poultry or turkey
1602.10.01	Homogenized preparations of poultry or turkey
1602.20.01	Prepared or preserved liver of poultry or turkey
1602.31.01	Prepared or preserved turkey meat
1602.39.99	Other
1901.90.03	Food preparations containing over 10 percent, by weight, of milk solids
2105.00.01	Ice cream and similar products
2106.90.09	Egg preparations
2309.90.11	Preparations containing over 50 percent by weight of milk solids
3501.10.01	Casein
3501.90.01	Casein glues
3501.90.02	Caseinates
3501.90.99	Other
3502.10.01	Egg albumin