International Trade: Canada's Restrictions on Certain Salmon Imports
(Letter Report, 04/20/95, GAO/GGD-95-117).

Canada restricts imports of fertilized salmon eggs and smolts to British
Columbia, thereby reducing market opportunities for Washington State
salmon producers. In response to congressional concerns that the North
American Free Trade Agreement intended to allow the free flow of goods
between the United States, Canada, and Mexico without unreasonable
restrictions, this report (1) identifies the key elements of and the
rationale for Canada's policy on the imports of fertilized eggs and
smolts, (2) discusses the views of concerns parties in the United States
and Canada on the reasonableness of the Canadian policy, and (3)
examines opportunities for U.S. producers to boost exports of fertilized
salmon eggs and smolts to British Columbia.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-95-117
     TITLE:  International Trade: Canada's Restrictions on Certain 
             Salmon Imports
      DATE:  04/20/95
   SUBJECT:  Fishing industry
             Import restriction
             Foreign governments
             Food industry
             Import regulation
             Exporting
             International agreements
             Marine policies
             Aquaculture
             Anadromous fishes
IDENTIFIER:  NAFTA
             North American Free Trade Agreement
             Washington
             Canada
             British Columbia (Canada)
             
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Cover
================================================================ COVER


Report to the Honorable
Slade Gorton, U.S.  Senate

April 1995

INTERNATIONAL TRADE - CANADA'S
RESTRICTIONS ON CERTAIN SALMON
IMPORTS

GAO/GGD-95-117

Canada's Restrictions on Certain Salmon Imports


Abbreviations
=============================================================== ABBREV

  DFO - Department of Fisheries and Oceans
  NAFTA - North American Free Trade Agreement

Letter
=============================================================== LETTER


B-260224

April 20, 1995

The Honorable Slade Gorton
United States Senate

Dear Senator Gorton: 

This report responds to your request for information on Canada's
policy regarding imports of fertilized salmon eggs and smolts\1 to
British Columbia.  Canadian restrictions on such imports to that
province have resulted in a loss of market opportunities for
Washington State salmon producers.  As you indicated in your letter
to us, the North American Free Trade Agreement (NAFTA) was intended
to allow the free flow of goods between the United States, Canada,
and Mexico without unreasonable restrictions.\2 To address the
concerns raised in your letter, we (1) identified the key elements of
Canada's policy concerning imports of fertilized salmon eggs and
smolts to British Columbia and the rationale for the policy, (2)
obtained the views of the concerned parties in the United States and
Canada regarding the reasonableness of the Canadian policy, and (3)
examined whether there are opportunities for U.S.  producers to
increase exports of fertilized salmon eggs and smolts to British
Columbia. 


--------------------
\1 Smolts are young salmon at the stage of development when they are
ready to go from a fresh water to a salt water environment. 

\2 NAFTA contains rules relating to the enforcement of sanitary and
phytosanitary (plant health) measures to protect humans, animals, and
plants.  The rules state that each party is to use "international
standards, guidelines, or recommendations" in order to try to achieve
equivalent or identical measures.  However, each country may choose
its own level of protection and maintain standards higher than
international standards if such measures conform to other provisions
of the agreement.  These measures must (1) be based on scientific
principles (taking into account relevant factors, including
geographic conditions), (2) be based on a risk assessment appropriate
to the circumstances, and (3) treat imports in the same way as
domestic products. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Since 1985, Canadian authorities have maintained a policy that
requires quarantine of imports of fertilized Atlantic salmon eggs and
bans imports of Atlantic salmon smolts into British Columbia.\3 The
policy is a federal requirement that the Canadian Department of
Fisheries and Oceans (DFO) has applied only in the province of
British Columbia.  Hatchery facilities must also be certified by DFO
as free of certain diseases specified in Canadian regulations over a
period of 18 months in order to export fertilized salmon eggs to the
province.  According to DFO officials, this policy was developed to
protect British Columbia's valuable fishery resources from
pathogens\4

that could be inadvertently introduced via imports of fertilized fish
eggs or live fish.  In 1992, DFO revised certain elements of the
policy, reducing the length of time required for quarantine and
lifting the limit on the number of eggs that could be imported. 

Salmon producers in Washington State and British Columbia as well as
U.S.  state and federal government officials have raised questions
about the appropriateness of certain elements of the Canadian policy. 
For example, both Washington State and British Columbian producers
questioned whether a lengthy and costly quarantine of imported eggs
is necessary, given DFO's strict requirements for certifying hatchery
facilities that can export to Canada.  The effectiveness of DFO's
strict certification requirements is reflected in the fact that in 9
years of testing, none of the hatchlings from imported eggs have been
found to carry pathogens. 

Similarly, Washington State and U.S.  federal fish and wildlife
officials questioned the need for a ban on exports of smolts from
Washington State to British Columbia.  They noted that the coastal
waters off Washington State and British Columbia constitute a common
watershed.\5 (See fig.  1.) Wild salmon populations from various
river systems that drain into this watershed on both sides of the
border migrate past net pens\6 where farmed salmon are kept.  They
argued that farmed salmon smolts transferred to net pens off the
coast of British Columbia from Washington State would not present a
greater risk of introducing pathogens than do wild salmon populations
that migrate freely in this watershed. 

   Figure 1:  Coastline of
   Washington State and British
   Columbia

   (See figure in printed
   edition.)

Canada's restrictions on imports of fertilized salmon eggs and smolts
to British Columbia have resulted in a loss of market opportunities,
according to representatives of the Washington Fish Growers
Association.  Major Washington State exporters indicated that if a
more open import policy were adopted, there would be great market
potential in British Columbia for their fertilized salmon eggs and
moderate to great market potential for their smolts.  Spokespersons
for the British Columbia Salmon Farmers Association agreed that there
is a potential market in the province for imports of salmon eggs and
smolts from Washington State. 


--------------------
\3 Atlantic salmon is the principal salmon species used in worldwide
aquaculture production (the production of plants or animals in water
under controlled conditions) and accounts for about 60 percent of
farmed salmon production in British Columbia.  In 1988, Canada
established a similar policy for Pacific salmon imports.  However,
there is a limited market for Pacific salmon eggs and smolts in
British Columbia. 

\4 Pathogens are disease agents, including bacteria, viruses, fungi,
and parasites. 

\5 A watershed is defined as a region draining into a common body of
water.  In the case of the geographic region of British Columbia and
Washington State, this includes the contiguous waters of Puget Sound,
the Strait of Juan de Fuca, and the Strait of Georgia. 

\6 Net pens are floating structures anchored relatively close to
shore. 


   BACKGROUND
------------------------------------------------------------ Letter :2

Aquaculture is defined as the production of any plant or animal in
water and under controlled conditions.  In the United States,
aquaculture is a relatively new but rapidly growing industry.  The
value of U.S.  aquaculture production more than quadrupled during the
1980s.  Salmon is one of the four principal aquaculture products in
the United States.  Salmon farming operations begin in fresh water
facilities, where ready-to-spawn broodstock or parent fish are
stripped of eggs and sperm.  The fertilized eggs are held in fresh
water containers for about 2 months until they hatch.  The hatchlings
or fry are then raised in tanks from 4 to 15 months until they reach
smolt stage, at which time they are capable of adapting to a salt
water environment.  Once the salmon reach this stage, they are
transported to salt water net pens to begin the "grow out" phase. 
Depending on the species or variety of salmon, the fish are ready to
be marketed for human consumption between 9 months and 2 years from
the time they are placed in the pens. 

Farmed salmon production worldwide has increased from about 48,000
metric tons in 1985 to 331,000 metric tons in 1992.  This increase in
farmed production has transformed the international market for
salmon.  Currently, farmed salmon represents about 27 percent of the
salmon brought to market worldwide.  The principal international
producers of farmed salmon are Norway, Chile, the United Kingdom, and
Canada.  Relative to these countries the United States is a minor
producer, accounting for about 4 percent of total world production. 


      U.S.  FARMED SALMON
      PRODUCTION
---------------------------------------------------------- Letter :2.1

U.S.  production of farmed salmon is concentrated almost entirely in
Maine and Washington State.  In 1992, domestic farmed salmon
production was about 12,000 metric tons, with Washington State
accounting for approximately 40 percent of the total.  U.S. 
production is expected to reach nearly 17,000 metric tons in 1995. 
Domestic production supplies approximately 23 percent of total U.S. 
consumption. 

Salmon farming in Washington State is a $40 million a year industry. 
There are about 18 salmon farming operations in Washington State. 
Some of these are only involved in raising salmon for human
consumption, while others run hatcheries that produce fertilized eggs
and smolts.  According to Washington State producers, they have
developed a market niche in the production of quality fertilized
salmon eggs, which are then exported to such countries as Chile,
Japan, and Canada. 


      CANADIAN FARMED SALMON
      PRODUCTION
---------------------------------------------------------- Letter :2.2

Canada is the principal supplier of farmed salmon to the United
States.  In 1992, Canadian exports, mainly from British Columbia,
accounted for 44 percent of U.S.  farmed salmon consumption.  Canada
exports about 75 percent of its total farmed salmon production to the
United States.  In 1992, Canada produced 29,500 metric tons of salmon
with an estimated Canadian value of $200 million.  British Columbia
accounted for about 66 percent of total Canadian production.  The
province of New Brunswick, on the Atlantic coast, is the other major
Canadian producer of farmed salmon. 

The salmon farming industry in British Columbia has grown
dramatically in recent years.  There are now approximately 100 salmon
farming operations in British Columbia, producing about three times
as much salmon as Washington State.  According to industry spokesmen
in British Columbia, while domestic hatcheries supply most of the
fertilized eggs needed by the province's salmon farms, there is still
room in the market for imported eggs. 

As the industry has expanded, British Columbian salmon farmers have
shifted production from various native Pacific salmon species, such
as Coho or Chinook, to Atlantic salmon.  In fact, Atlantic salmon has
become the preferred species for aquaculture production around the
world because it is less vulnerable to certain pathogens and has a
lower feed-to-body-weight ratio than Pacific salmon varieties. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3

To ascertain Canada's restrictions on imports of salmon eggs and
smolts into British Columbia, we reviewed the various policies
implemented since 1985 and clarified key elements of these policies
with officials from DFO; the British Columbian Ministry of
Environment, Lands and Parks; and the Ministry of Agriculture,
Fisheries and Food.  To gain an understanding of the rationale for
these policies, we obtained and reviewed documents provided by DFO,
and we discussed the basis for these policies with DFO and British
Columbian officials. 

To obtain industry views concerning the implementation and impact of
the Canadian policy, we met with representatives of the British
Columbia Salmon Farmers Association and the Washington Fish Growers
Association.  We also discussed the basis for the Canadian
requirements with officials from the U.S.  Fish and Wildlife Service,
the National Marine Fisheries Service, and the Department of
Agriculture's Office of Aquaculture as well as its Animal and Plant
Health Inspection Service.  We also discussed technical aspects of
the Canadian policy with researchers from the University of
Washington's School of Fisheries, the National Biological Survey, and
Washington State's Department of Fisheries.  In addition, we met with
officials from the Office of the U.S.  Trade Representative to obtain
their views regarding the international trade ramifications of the
Canadian policy. 

To determine what opportunities existed for U.S.  producers to
increase exports of salmon eggs and smolts to British Columbia, we
interviewed representatives of the Washington Fish Growers
Association and major Washington State exporters of fertilized salmon
eggs and smolts.  In addition, we obtained the views of the British
Columbia Salmon Farmers Association and of spokespersons for two
leading British Columbian salmon producers. 

Because the Census Bureau does not collect data on exports of
fertilized salmon eggs and smolts by using a distinct tariff code, we
were unable to obtain official figures on the level of exports of
these commodities.  Nevertheless, by directly contacting major
exporters in Washington State, we were able to obtain some data on
exports of fertilized salmon eggs and smolts.  However, because of
the proprietary nature of these data and producers' concerns about
confidentiality, we were unable to report the level of exports to
specific countries or regions, including British Columbia.  Further,
Washington State and British Columbian producers were unable to
provide us with definitive data on the production costs of salmon
eggs and smolts. 

In February and March 1995, we obtained oral comments from the
director of DFO's Aquaculture and Habitat Science Branch and the
National Aquaculture Coordinator of the Department of the Interior's
Fish and Wildlife Service.  Their comments are discussed at the end
of this letter. 

We conducted our work from June 1994 to February 1995 in accordance
with generally accepted government auditing standards. 


   ELEMENTS OF BRITISH COLUMBIA'S
   IMPORT POLICY FOR SALMON EGGS
   AND SMOLTS
------------------------------------------------------------ Letter :4

Since 1985, DFO, in coordination with the British Columbian Ministry
of Environment, Lands and Parks, has required extended quarantine for
imports of fertilized Atlantic salmon eggs.  Further, DFO has banned
all imports of Atlantic salmon smolts.  This policy was established
to protect the province's valuable wild and cultured salmonid\7
stocks from inadvertent contamination by pathogens that might be
introduced with imported fish eggs or live fish.  The policy was
officially adopted in writing in 1987.\8 The following were some
major elements of the 1987 policy: 

  Imports had to comply with the Canadian national fish health
     protection regulations.\9 Imports were permitted only from
     facilities that had been approved or certified by a Canadian
     fish health officer appointed by DFO. 

  Only fertilized eggs that had been surface disinfected in an iodine
     solution could be imported.  No live fish (smolts) or
     unfertilized eggs were allowed. 

  All Atlantic salmon eggs and resultant stock had to be held under
     strict quarantine for a minimum of 12 months. 

  Shipments were limited to 300,000 eggs per year per import license. 

  Eggs were allowed only from broodstock or parent fish that had been
     held at the source facility (hatchery), separate from other
     stocks, for one full generation. 

  After March 31, 1989, no further imports of Atlantic salmon were to
     be permitted.  Importers were required to hold a number of fish
     to maturity for reproduction purposes.\10

In 1992, DFO revised its policy by relaxing the restrictions on
imports of fertilized Atlantic salmon eggs.  According to DFO
officials, they decided to ease the original requirements because
they had not detected any pathogens in tests of hatchlings from
imported eggs since the policy had been put into effect.  As shown in
table 1, the revised policy, which is still in effect, (1) repealed
the limit on the size of shipments of egg imports, (2) eliminated the
prohibition on imports of Atlantic salmon after March 31, 1989, and
(3) reduced the period during which eggs had to be quarantined.  DFO,
however, did not lift its ban on imports of Atlantic salmon smolts. 



                           Table 1
           
           Principal Differences Between DFO's 1987
             and 1992 Import Policies on Atlantic
                    Salmon Eggs and Smolts

1987 policy                    1992 policy
-----------------------------  -----------------------------
Limit of 300,000 eggs per      No limit on number of eggs
year per license               per license

After March 31, 1989, no       No prohibition on further
further imports of fertilized  imports of fertilized
eggs except for research or    Atlantic salmon eggs
broodstock development


Eggs and resultant stocks      Eggs and resultant stock
held in quarantine for         held in quarantine for a
minimum of 12 months           minimum of 120 days or until
                               they reach 3 gram size. The
                               fish are then held in
                               isolation until transferred
                               to salt water
------------------------------------------------------------
Source:  DFO. 

In explaining their rationale for establishing the current policy on
imports of fertilized Atlantic salmon eggs and smolts into British
Columbia, DFO officials cited examples of fish pathogens that had
been transferred with shipments of live fish in other parts of the
world.  Specifically, they referred to two pathogens introduced into
Norway during the mid-1980s.\11 DFO officials noted that there are
numerous reports in the scientific literature of pathogens identified
in various parts of the world, including areas of the United States,
that have not been found in salmonid populations in British
Columbia.\12 They maintained that the current policy was justified in
order to prevent the introduction of such pathogens into the
province, particularly since Atlantic salmon is a species that is not
native to British Columbia.  They argued that the policy was not
intended to be a nontariff barrier to imports; they pointed out that
the policy was applied impartially to imports of Atlantic salmon eggs
and smolts from any source outside British Columbia, including other
Canadian provinces. 


--------------------
\7 The term salmonid applies to various related salmon and trout
species. 

\8 In addition to the import policy for Atlantic salmon eggs and
smolts, in 1988 DFO and the British Columbia Ministry of Environment,
Lands and Parks established a parallel policy for imports of eggs and
smolts of various Pacific salmon species.  This policy, which is
still in effect, is somewhat similar to that for imports of Atlantic
salmon; however, there are some important differences.  For example,
for Pacific salmon (1) while the eggs are usually subject to a
quarantine, the time period for the quarantine is not specified; (2)
egg shipments are limited to 20,000 per license per year; and (3)
after January 1, 1990, the importation of eggs for aquaculture
production purposes is not permitted without prior approval of the
Director General of DFO's Pacific Region and the Director of the
British Columbian Ministry of Environment, Lands and Parks,
Recreational Fisheries Branch. 

\9 Canada's fish health protection regulations set minimum sanitary
standards for imports of fish and fish products into the country and
for the transfer of fish between provinces.  Among other things,
these regulations require that before a facility can be certified and
granted approval to export to Canada, it must be free of specified
disease agents following four consecutive inspections over a period
of not less than 18 months. 

\10 Atlantic salmon eggs were imported for the purpose of developing
aquaculture broodstocks in British Columbia. 

\11 These two cases involved the disease furunculosis (caused by the
bacteria Aeromonas salmonicida) and a strain of the parasite
Gyrodactylus salaris believed to have been introduced into Norway
with imported salmon from Scotland and Sweden, respectively. 

\12 A U.S.  Fish and Wildlife Service official noted that some fish
pathogens detected in the United States may not have been detected in
British Columbia because testing in the United States is more
extensive and comprehensive than in Canada. 


   QUESTIONS CONCERNING DFO'S
   IMPORT POLICY
------------------------------------------------------------ Letter :5

Spokespersons for associations representing producers in both
Washington State and British Columbia challenged the need for the
costly, prolonged quarantine requirement for fertilized eggs, given
DFO's strict rules for certifying hatchery facilities that can export
to Canada.  As noted earlier, under Canadian fish health protection
regulations, such facilities must be certified to be disease free
after four consecutive inspections over a period of 18 months. 
Certification must be obtained from an agent designated and
authorized by DFO.  Test results from hatchlings of imported
fertilized eggs in British Columbia provide an indication of the
effectiveness of DFO's strict certification requirement.  According
to DFO's own data, in 9 years of testing, no pathogens have been
found among hatchlings from imported fertilized eggs. 

A spokesman for the British Columbia Salmon Farmers Association,
which has an interest in preventing the introduction of pathogens
into the province, stated that raising hatchlings from imported eggs
in isolation rather than under strict quarantine conditions would be
sufficient to minimize the risk of inadvertent introduction of exotic
pathogens.  He noted that imported fertilized eggs would be more
competitive with domestically produced eggs if hatchlings did not
have to be raised under quarantine conditions.  He explained that the
quarantine process is very costly because DFO's quarantine protocol
calls for treating runoff from facilities where imported hatchlings
are raised, to eliminate potential contaminants before the runoff can
be discharged into the ground.  (He noted that the fresh water phase
of salmon farming operations generates considerable runoff.) If the
hatchlings of imported eggs were simply placed in isolation, he
pointed out, they would be raised in separate containers from
domestic hatchlings and monitored until they were placed in the salt
water pens, and the runoff would not have to be treated. 

Questions about DFO's total ban on smolt imports to British Columbia
centered on whether smolts from Washington State should be exempt
from the ban, given the fact that the contiguous coastal waters off
the Pacific Northwest constitute a single watershed.  According to
various academic, industry, and U.S.  government experts, it is
highly unlikely that pathogens found in coastal waters on one side of
the border would not be present on the other side, because wild
Pacific salmon from river systems that drain into these waters
migrate north and south along the coast.  The experts noted that wild
salmon, which are vulnerable to the same pathogens as farmed salmon,
swim past the salt water net pens where the farmed salmon are kept. 
They argued that transporting salmon smolts for aquaculture purposes
from coastal waters off Washington State to coastal waters off
British Columbia would not impose an additional risk of introducing
exotic pathogens because existing wild salmon populations migrate
from Washington past the coast of British Columbia, and vice versa. 

A representative from the British Columbia Salmon Farmers Association
told us that his organization would not oppose imports of smolts from
Washington State as long as the smolts were transported in salt water
containers and placed directly into salt water pens.  Similarly,
spokespersons for the Washington Fish Growers Association told us
that Canadian authorities need to recognize that the waters off
Washington State and British Columbia constitute a common watershed. 
In their view, DFO officials should consider allowing Washington
State producers that comply with Canadian fish health protection
regulations to export to British Columbia.  They pointed out that
currently DFO allows producers from the state of Maine that comply
with these regulations to export Atlantic salmon smolts to the
neighboring Canadian province of New Brunswick. 

Canadian federal and provincial officials in British Columbia told us
that conditions in British Columbia are not comparable to those in
New Brunswick because Atlantic salmon is not native to the Pacific
Northwest.  They argued that it would not be appropriate for
Washington State producers that comply with Canadian fish health
protection regulations to be allowed to export to British Columbia
because Atlantic salmon is an "exotic" species in the Pacific
Northwest.  They expressed concern about the possibility that
Atlantic salmon that escape from aquaculture facilities might
eventually establish wild populations that would compete with the
native Pacific salmon species.\13 On the other hand, Washington State
producers told us that it is unfair to restrict imports of Atlantic
salmon from Washington State on the basis that Atlantic salmon is an
"exotic" species in British Columbia, since the province already has
large farmed Atlantic salmon populations. 

Finally, industry spokesmen, U.S.  state and federal officials, and
academicians we interviewed argued that DFO officials should have
conducted a comprehensive risk analysis before adopting the strict
sanitary measures called for in the Canadian policy.  DFO officials
told us that the policy is based on an accumulation of information on
disease distribution over many years, including data on the
occurrence of pathogens in the United States and British Columbia. 
As noted earlier, DFO officials also cited examples of fish pathogens
that have been transferred with shipments of live fish in other parts
of the world.  However, an official with the U.S.  Fish and Wildlife
Service and various academic experts contended that Canadian
authorities should undertake a risk assessment appropriate to the
unique circumstances in the Pacific Northwest.  They argued that
Canadian sanitary measures should also take into consideration such
factors as geography, ecosystems, and the effectiveness of sanitary
controls in Washington State. 


--------------------
\13 Every year some Atlantic salmon escape from aquaculture net pens
as a result of storms or other accidents.  To date, they have not
established a self-sustaining wild population in the Pacific
Northwest.  According to a report by the British Columbia Ministry of
Agriculture, Fisheries and Food, during the early 1900s various
efforts to intentionally establish wild populations of Atlantic
salmon in British Columbia ended in failure. 


   OPPORTUNITIES FOR U.S.  EXPORTS
   TO BRITISH COLUMBIA
------------------------------------------------------------ Letter :6

When DFO's policy on imports of Atlantic salmon eggs and smolts was
established in 1985, the commercial salmon farming industry in
British Columbia was developing into an international business, and
the market for eggs and smolts was beginning to expand.  According to
representatives of the Washington Fish Growers Association, Canada's
import restrictions effectively precluded most U.S.  producers of
salmon eggs and smolts from entering the British Columbian market. 
Thus, there is no way to determine what share of the market
Washington State producers of eggs and smolts might have been able to
capture if they had been able to compete in the British Columbian
market.  Nevertheless, spokespersons for the Washington Fish Growers
Association and major Washington State exporters agreed that DFO's
restrictions on imports of salmon eggs and smolts have resulted in a
loss of market opportunities for them in British Columbia.  According
to Association representatives, DFO's policy has discouraged most
Washington State producers from exploring British Columbia as a
market, while other companies that tried to export in the past have
given up. 

Major salmon egg exporters from Washington State agreed that there
would be great market potential for their Atlantic salmon eggs in
British Columbia if existing import restrictions were removed. 
Similarly, these exporters believed that there would be moderate to
great market potential for Atlantic salmon smolts in the province if
the ban on them were lifted.  Representatives of the Washington Fish
Growers Association pointed out that, because of its proximity and
the large size of its salmon farming industry, British Columbia
represents a natural market for their salmon eggs and smolts.  They
noted that, although they have been able to develop markets in other
areas of the world, such as Chile and Japan, only a small percentage
of their exports goes to British Columbia.  While there are no exact
figures available on exports of salmon eggs and smolts worldwide,
Washington State exporters reported exporting approximately 47
million salmon eggs worldwide in 1993.  Exports to British Columbia
represented less than 10 percent of this figure. 

Salmon producers we interviewed in British Columbia also told us that
there is a market in the province for imports of Atlantic salmon eggs
and smolts from Washington State.  Their comments echoed the findings
of a September 1990 report on British Columbia's Atlantic salmon
farming industry commissioned by DFO.  In that report, the
availability of more and better quality Atlantic salmon eggs was
cited as one of the industry's highest priorities.  The report noted
the poor quality of the Atlantic salmon strains in British Columbia
and predicted that, unless import requirements for salmon eggs in the
province were simplified, British Columbian salmon farmers would find
it increasingly difficult to compete with producers from other parts
of the world.  One British Columbian producer told us of the
excellent quality of Atlantic salmon eggs he had imported from
Washington State, and he indicated he would like to purchase more
eggs at comparable quality and cost.  He explained that the expense
associated with quarantining imported eggs effectively discouraged
expanding imports from Washington State. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

In February 1995, we provided relevant portions of this report to the
director of DFO's Aquaculture and Habitat Science Branch, and she
provided some technical clarifications that we incorporated where
appropriate.  In addition, on March 6, 1995, we discussed the
contents of this report with the National Aquaculture Coordinator of
the Department of the Interior's Fish and Wildlife Service.  He
agreed with the contents of our report and offered a few clarifying
comments, which we have incorporated where appropriate. 


---------------------------------------------------------- Letter :7.1

We are sending copies of this report to the Secretaries of
Agriculture, Commerce, State, and the Interior and to the U.S.  Trade
Representative.  We will also make copies available to other
interested parties upon request. 

Major contributors to this report were Elizabeth Sirois, Assistant
Director; Juan Gobel, Project Manager; and Larry Thomas,
Evaluator-In-Charge.  Please call me at (202) 512-4823 if you have
any questions concerning this report. 

Sincerely yours,

Allan I.  Mendelowitz, Managing Director
International Trade, Finance,
 and Competitiveness