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The following text is intended for general reference only. It is currently under review for accuracy and completeness, as well as formatting.
Canadian Embassy Ambassade du Canada
501 Pennsylvania Ave. NW
Washington, D.C. 20001
October 23, 1992
Mr. David A. Weiss
Deputy Assistant U.S. Trade Representative
for North American Affairs
Executive Office of the President
Office of the United States Trade
Representative
Washington, D. C. 20506
Dear Mr. Weiss,
Please find attached a copy of our letter of
October 14, 1992 to the President of KFC, Mr. Dennis Frezzo. I am
confident that the arrangements that we have proposed to KFC with
regard to the introduction of new products and the changes in the
administration of our import controls will address to a great
extent the company's practical concerns about the supply of
chicken in Canada.
You will note that we have undertaken to review the arrangement during the second half of 1993. At that time, we expect that KFC will be in a position to assess its test marketing program and review the prospects for 1994. As we have indicated to KFC, we have noted their request for an increased quota allocation and we will take into account their interests when considering our response to the CITT report.
As a final point, I would like to underline our satisfaction with the mutually satisfactory resolution of this issue and to reiterate our understanding that action under U.S. trade law would not be pursued vis-a-vis Canada's chicken import controls while the arrangements remain in effect.
Yours sincerely,
D. E. Hobson
Minister Counsellor
KPM--0686
File: 718-1
P.O. Box 481
Station "A"
Ottawa, Ontario
K1N 9K6
October 14, 1992
Mr. Dennis Frezzo
President
KFC - CANADA
10 Carlson Court
Suite 300
Rexdale, Ontario
M9W 6L2
Dear Mr. Frezzo:
I am writing in connection with the recent discussions that have taken place between officials of your company and of External Affairs and lnternational Trade Canada regarding KFC's concerns about introducing new chicken products into Canada and about maintaining a satisfactory level at chicken supply that meets your technical specifications.
As discussed with KFC, in order to address your concerns about new product introduction, we would be prepared, based on the submission of an acceptable test marketing application by KFC, to issue supplementary permits to the end of 1993 for up to 4.2 million kilograms in imports of specific KFC proprietary products not currently made in Canada or marketed by KFC's Canadian stores.
We look forward to receiving your company's submission for test marketing so we can finalize details on the timing of imports and the types of products to be imported. Based on our discussions, we are prepared in this instance to accept a single consolidated application for what would ordinarily need to be treated as several separate applications under our test marketing supplementary import permit system. This approach will help to provide KFC with greater planning certainty and flexibility for its 1993 introduction of new products. Given the large quantities of imports which will be involved in this test marketing arrangement, we also will want to work closely with you to ensure that the program does not conflict with production planning by domestic chicken agencies and that the opportunities for developing potential Canadian supply at the products concerned are maximized.
In addition to provisions for test marketing, we also intend to proceed in two other areas that will be of significant benefit to KFC. We would change the administration of import controls so that, beginning in January 1993, non-chicken ingredients, such as breading and battering, would not be counted in the utilization of imports quotas and permits. In order to facilitate KFC's use of the supplementary import permit system for market shortages of specific products, we will also be prepared on a case-by-case basis to accept applications for these permits directly from KFC. This is an exception to the current procedure, whereby retailers must apply through processors. Officials of my Bureau look forward to meeting with KFC to discuss fully this supplementary import permit system import permit system and how it can utilized to address problems related to shortages of chicken meeting KFC's specification.
We would undertake to review the arrangement described above in the second half of next year. KFC can then evaluate the progress at its test marketing and the results of the other changes. KFC would also be better able to assess the prospects of a favourable quota distribution being implemented based an the overall policy review which will follow the publication of the Canadian International Trade Tribunal's report. While we cannot predict the results of this process nor make any commitments before the policy review has been completed the Government has noted KFC's requests for an increased import quota allocation and will take into account the interests of KFC and other fast food companies when considering its response to the CITT report.
Please be assured that we take very seriously KFC's concerns regarding the availability of chicken in Canada. We are confident that, in the manner described above, they can be addressed within the current syntax of import controls in support of supply management. Given the background to the development of these arrangements, I must of course also add that it is our understanding that action under U.S. trade law would not be pursued vis-a-vis Canada's chicken import controls while the arrangements remain in effect. Should this prove not to be the case, the arrangements would of course be subject to cancellation.
Yours sincerely,
/S/
Tom A. McDonald
Director General
OFFICE OF THE UNITED STATES
TRADE REPRESENTATIVE
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON
20506
October 26, 1992
Mr. R. G. Wright
Director General
United States Trade & Economic Policy
Bureau
Ministry of External Affairs and International
Trade
Ottawa
Dear Mr. Wright:
Thank you for the letter of October 23, 1992,
conveyed to me from Mr. D. E. Hobson of your Embassy in
Washington, regarding the arrangements proposed to Kentucky Fried
Chicken (KFC)-Canada for increased supplementary import permits
in 1993 and changes in the administration of import controls
which will be of help to KFC-Canada in meeting their concerns
about the supply of chicken in Canada.
I have taken note that the Government of Canada will review the arrangement during the second half of 1993. While I understand that the Government of Canada cannot predict the results of the overall policy review which is to be undertaken following the publication of the Canadian International Trade Tribunal's report, nor make firm commitments before this policy review has been completed, I also understand that you have noted KFC's request for an increased quota allocation for 1994, and that you will take their interests into account when considering your response to the CITT report.
As you are aware from the consultations held earlier this year between the Governments of Canada and the United States and representatives of KFC-Canada, KFC-Canada's hopes and expectations are that their test marketing efforts during 1993, to be undertaken using the supplementary permits to import up to 4.2 million kilograms of specific KFC proprietary products not currently made in Canada, will be successful. Should this in fact be the case, they will, therefore, require additional quota for 1994 and beyond. To that end, KFC-Canada's expectations and hopes are that the policy review to be undertaken in the second half of 1993 will result in a reallocation of the global quota for 1994 and beyond such that KFC-Canada's allocation under the global quota will be commensurate with the level of their imports including the additional imports under the supplementary permits.
We are pleased that our mutual efforts have resulted in a satisfactory resolution of this issue, at least for the short term. We also remain hopeful that, following your policy review in 1993, we will be able meet in the second half of next year to work out a similarly satisfactory resolution for the longer term, i.e. for 1994 and beyond. I would suggest that, since we have agreed to revisit the issue in the second half of 1993, we both undertake to monitor the arrangements, and use our periodic consultations on the broader U.S. - Canada bilateral trade agenda to keep each other apprised of any further developments which may affect this issue.
Sincerely yours,
/S/
David A. Weiss
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