From iatp@igc.apc.org Tue Jul 26 09:13:43 1994 Date: 25 Jul 94 19:03 PDT From: IATP Reply to: "Conference trade.news" To: "Recipients of conference trade.news" Newsgroups: trade.news Subject: NAFTA & Inter-Am Monitor 7/25/94 Produced by the Institute for Agriculture and Trade Policy - - - - - - - - - - - - - - - - - - NAFTA and Inter-American Trade Monitor, vol. 1, #9 July 25, 1994 - - - - - - - - - - - - - - - - - - HEADLINES NAFTA PROTEST SEWAGE PLANT: "NAFTA DREAM COME TRUE" PROBLEMS HELPING DISPLACED WORKERS NAFTA HITS SMALL MEXICAN BUSINESSES NAFTA NOTES FOREIGN INVESTMENT IN MEXICO RISES U.S. ELECTRICITY EXPORTS TO MEXICO RISING BOLIVIA, CHILE DISCUSS AFFILIATION WITH MERCOSUR AGREEMENT REACHED ON ECUADORAN AGRARIAN LAW RESOURCES/EVENTS - - - - - - - - - - - - - - - - - - NAFTA PROTEST "No Justice, No Banquet" was the chant of hundreds of trade unionists who disrupted a Seattle dinner at which business operators from Mexico, the US, and Canada were supposed to receive "Free Trader of the Year" awards. The protesters occupied a banquet hall at the Seattle International Trade Center, preventing the banquet that was to have closed a two-day NAFTA trade show and conference sponsored by the Pacific Corridor Enterprise Council. Source: "Protest Stops Pro-NAFTA Dinner," UNION ADVOCATE, 7/11/94 - - - - - - - - - - - - - - - - - - SEWAGE PLANT: "NAFTA DREAM COME TRUE" The sewage plant in the Mexican resort city of Cuernavaca was built by the US Filter Corporation of Palm Desert, CA for the city of Cuernavaca, which holds title to the plant. US Filter Corporation has a thirteen-year concession that will allow it to collect sewage fees from the half-million person city for thirteen years to cover its costs and make a profit. "It's almost like we have a franchise on sewage," said Richard Heckman, the chair of US Filter. The plant treats 13.8 million gallons daily and composts sludge. According to Heckman, the concession arrangement is the wave of the future because municipalities are out of money. "The whole story here is a NAFTA dream come true," said Heckman, pointing out that his company would not have invested in Mexico without NAFTA's guarantees of legal redress of grievances for the company. Source: Scott Pendleton, "Mexican Sewage Plant Proves to be 'NAFTA Dream Come True,'" CHRISTIAN SCIENCE MONITOR, 7/11/94 - - - - - - - - - - - - - - - - - - PROBLEMS HELPING DISPLACED WORKERS A recent (11/93) report from the US General Accounting Office criticized US Labor Department plans for providing assistance to workers displaced by NAFTA, saying that the Labor Department plan would replicate or even intensify problems under the existing Trade Adjustment Assistance (TAA) program. Among the report's criticisms: "We estimate that 63 percent of the petitions filed in 1990 and 1991 had flawed investigations ... because of pressure to complete the complex investigations in 60 days. "Second, Labor generally approves certifications of employees of companies that provide services or component parts if the company also produces the finished product that is impacted by imports; but denies certification to workers who provide services or produce component parts for another company that is trade impacted. ... We found that about 40 percent of the petitions filed in 1990 and 1991 were for workers who provide services or produce component parts. "Third, some workers are dislocated even when there is no increase in imports. The relocation of production facilities to another country may result in the loss of jobs that produced items for export. However, because the job loss is not tied to imports, the workers are not eligible for TAA assistance." Source: "Dislocated Workers: Proposed Re-employment Assistance Program," US GAO, 11/93 - - - - - - - - - - - - - - - - - - NAFTA HITS SMALL MEXICAN BUSINESSES Electronics and toys are two of the Mexican industries hit hard by NAFTA, according to Vladimiro Brailovsky, an economist at Economia Aplicada, a private consulting firm. Small toy makers, such as a factory producing wooden dolls and blocks, crumble under the mass advertising of US competitors selling Jurassic Park dinosaurs and Barbies. Brailovsky predicted failure of "thousands" of Mexico's small to medium-sized businesses. Raimon Artis, owner of a metal-bending factory in Mexico, has laid off 30 of his 35 workers. He says that a single part he uses to make laboratory valves costs him more than the entire finished product exported to Mexico by a US firm. "Free trade is good for the big businesses here and there (US), but I don't think it's good for the small businesses here or there," said Artis. Source: Nancy Nusser, "Free-Trade Agreement Has Mexican Manufacturers Singing The Blues," SAN ANTONIO EXPRESS-NEWS (Cox News Service), 6/26/94 - - - - - - - - - - - - - - - - - - NAFTA NOTES % Victor Lichtinger, a Mexican national and a former UN representative to the Rio Conference on the Environment (1992), was named to head the NAFTA Commission for Environmental Cooperation in late June. The Commission will be based in Montreal with a mission of promoting sustainable development and anti-pollution policies among the NAFTA nations. % A British auto-parts manufacturer, T&N PLC, will invest $15 million to build a plant on the grounds of the Chrysler de Mexico plant in Saltillo, Mexico. T&N will manufacture parts for Chrysler vehicles bound for the US market. Source: "Mexican to Head NAFTA Commission," EL FINANCIERO, 7/4- 10/94; John M. Nagel, "UK Auto-Parts Maker Building Plant in Mexico," 7/5/94 - - - - - - - - - - - - - - - - - - FOREIGN INVESTMENT IN MEXICO RISES During the first five months of 1994, $6.45 billion in foreign capital was invested in Mexico, with US investors accounting for 57.7 percent of the total, followed by 30 percent from the European Union (EU), and 5.8 percent from other Latin American countries. According to a report from the Mexican Commerce Secretariat (Secofi), investment is up 42.7 percent over the same period in 1993. More than half of the total was invested into the equity market, with the remainder going to direct investment. Direct investment of $2.64 billion showed a 21 percent increase over 1993. Despite the increased foreign investment during this five-month period, foreign investment in Mexican stocks totaled only $46.45 billion at the end of June, down ten percent from May and 15 percent from 1993. The exchange's principal index, the IPC, fell 13 percent during the first six months of the year to 2262.58 at the end of June. Source: Justin Bicknell, "Foreign Investment Still Rising," EL FINANCIERO, 7/4-10/94; "Foreign Investment in Mexico Slipped 15% in First Half of 1994," WALL STREET JOURNAL, 7/12/94 - - - - - - - - - - - - - - - - - - US ELECTRICITY EXPORTS TO MEXICO RISING US utilities along the US-Mexico border expect increasing electricity sales across the border, a process known as "wheeling." El Paso Electric Co. has contracted with the Comision Federal de Electricidad (CFE), the state-owned Mexican power company, to meet power shortfalls in Ciudad Juarez. An El Paso Electric official said that demand for electricity on the Mexican side of the border is growing from 6-12 percent per year, compared to US demand growth averaging only two percent. Part of the demand in Ciudad Juarez comes from the growing maquiladora industry. El Paso Electric officials said that they expect NAFTA to continue to drive electricity demand upwards. Arizona officials are also considering CFE requests to look at possibilities for interconnection at multiple points. The Arizona Public Service Co. is also looking at possibilities of building multiple power lines and transmission towers, and of exporting photovoltaic technology. Southern Electric Co. in Atlanta is one of three investors in a cogeneration plant in Monterrey. Southern predicts the building of dozens of "self-use" power plants of less than 50 megawatts during the next decade. Distributing electricity to the Mexican countryside remains a challenge, with CFE reporting that more than 64,000 miles of transmission lines have been built since 1988, an increase of 22 percent. In 1988, says CFE, 82.5 percent of all Mexicans had access to electricity, but that number has risen to 94.5 percent in 1994. Source: Kevin G. Hall, "US Utilities on Mexican Border See Electricity Exports Rising," JOURNAL OF COMMERCE, 7/6/94 - - - - - - - - - - - - - - - - - - BOLIVIA, CHILE DISCUSS AFFILIATION WITH MERCOSUR Officials of the four Mercosur governments (Argentina, Brazil, Paraguay, Uruguay) will begin preliminary conversations with representatives of Bolivia and Chile about their possible association with Mercosur. Bolivia indicated its intent to incorporate with Mercosur in 1991, when Mercosur began. Bolivia's participation in the Andean Pact has been an obstacle since, according to Mercosur, there would be a conflict in membership in both groups. Chile, looking to accession to NAFTA, wishes to associate itself with Mercosur, but not to be a full member. Source: "Mercosul: Comecam as Negociacoes Formais com Chile e Bolivia," IPS, 7/14/94 - - - - - - - - - - - - - - - - - - AGREEMENT REACHED ON ECUADORAN AGRARIAN LAW After weeks of negotiations, representatives of indigenous people, the Ecuadoran government, the National Congress, the Catholic Church, and large landowners agreed on modifications to the Ecuadoran agrarian law changes that sparked nationwide protests in June. The modifications include changes in land ownership provisions to preserve ownership rights of indigenous peasant communities who currently hold fifty percent of Ecuador's rural land. The last provision to be agreed upon was that dealing with ownership and control of water resources. Provisions for privatization of water were scrapped, leaving control with the State. Government officials called the process of negotiations, which was headed by President Sixto Duran-Ballen, "a democratic triumph." Indigenous leaders warned Congress not to change "even one comma" of the agreed-upon text. Source: "Indigenous and Government Agree on Agricultural Law," IPS, 7/8/94; "Listas Reformas a Ley Agraria," SERVIDATOS, 7/15/94; "Un Triunfo Democratico," SERVIDATOS, 7/18/94; "No Cambiara Ni Una Coma," SERVIDATOS, 7/19/94; "Whose land?" THE ECONOMIST, 6/25/94 RESOURCES/EVENTS "Dislocated Workers: Proposed Re-employment Assistance Program." GAO report on the effectiveness of the Department of Labor's proposed re-employment assistance program for workers who lose their jobs as a result of NAFTA. Document GAO/HRD-94-61 (11/93). Related document: Dislocated Workers: Trade Adjustment Assistance Program Flawed (GAO/T-HRD-94-4, 10/19/93) Order by mail from US General Accounting Office, P.O. Box 6015, Gaithersburg, MD 20884-6015. Telephone (202) 512-6000, fax (202) 258-4066. "BorderLines." Quarterly newsletter ($10/yr inside US; $15/yr outside US) published by the Inter-hemispheric Education Resource Center, Box 4506/Albuquerque, NM 87196. Telephone (505)842-8288; email resourcectr@igc.apc.org. "NAFTA-Related Border Funding: Separating Hype from Help." Analysis of NADBank and other environmental funding promised through NAFTA concludes that little, if any, additional funds have been committed. Three dollars from Inter-hemispheric Education Resource Center, Box 4506/Albuquerque, NM 87196. Telephone (505)842-8288; email resourcectr@igc.apc.org. "Inter-American Trade and Investment Law." Weekly bulletin and InterAm on-line database that includes texts of laws and commentaries -- $395/year. From National Law Center for Inter- American Free Trade, 255 W. Alameda, City-Hall - 7th Floor East, P.O. Box 27210, Tucson, AZ 85726. Telephone (800) 529-3463. - - - - - - - - - - - - - - - - - - The NAFTA and Inter-American Trade Monitor is available in both English and Spanish on Association for Progressive Communications (APC) computer networks on the conference eai.news. It can also be faxed or sent via mail on request. We welcome your comments and contributions. - - - - - - - - - - - - - - - - - - Produced by: Mary C. 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