From iatp@igc.apc.org Date: 08 Aug 94 12:12 PDT From: IATP Reply to: "Conference trade.news" To: "Recipients of conference trade.news" Newsgroups: trade.news Subject: NAFTA & Inter-Am Monitor 8/8/94 Produced by the Institute for Agriculture and Trade Policy - - - - - - - - - - - - - - - - - - NAFTA and Inter-American Trade Monitor, vol. 1, #11 August 8, 1994 - - - - - - - - - - - - - - - - - - HEADLINES INTRA-NAFTA DISPUTES: WHEAT, STEEL, APPLES, SALMON, TIMBER US CHICKEN PRODUCER EXPANDS IN MEXICO AUTOMOTIVE NEWS NAFTA TARIFF REDUCTIONS STUDIED FREE TRADE FAST TRACK SLOWED BY SENATE BANANA UPDATE ACS AGREEMENT SIGNED RESOURCES/EVENTS - - - - - - - - - - - - - - - - - - INTRA-NAFTA DISPUTES: WHEAT, STEEL, APPLES, SALMON, TIMBER At the last possible moment, US Trade Representative Mickey Kantor struck a deal with Canadian Trade Minister Roy MacLaren and Canadian Agriculture Minister Ralph Goodale to sharply reduce Canadian wheat shipments for one year. The agreement does not address allegations of Canadian dumping, but provides for a panel of US and Canadian farm experts to review the evidence and report in one year. Canadian wheat exports to the US have doubled over the past four years to an estimated 2.7 million metric tons over the past year. Lower wheat prices caused by Canadian imports resulted in US payments to wheat farmers of an additional $680 million over the four-year period, according to the US International Trade Commission (ITC). The ITC had recommended using Section 22 of the US farm law to impose quotas and tariffs in order to avoid undue hardships on US producers. Section 22 will become illegal once the new GATT rules go into effect. Specifics of the agreement were withheld, pending Canadian Cabinet approval. US wheat farmers were generally pleased with the Clinton administration's fulfillment of pledges made last year to help win votes for NAFTA, while pasta makers and some consumer groups objected to anticipated higher prices. As the wheat dispute appeared to be ending, Canada's National Revenue Department said that it is investigating allegations of dumping of Delicious, Red Delicious, and Golden Delicious apples on the Canadian market. An anti-dumping duty imposed on the apples in 1989 was lifted in February. Mexico has imposed a 20 percent tax on US apples imported from June 28 through December 1994 as a result of imports exceeding the 55,000 metric ton limit allowed under NAFTA. Charging US steel exporters with "dumping" their products at unfairly low prices, the Mexican Commerce Department (Secofi) imposed tariffs of 78.46 percent on sheet plate and 38.21 percent on galvanized laminated steel imported from the US. Secofi said that the compensatory tariffs will affect Bethlehem Steel, USX, Geneva Steel Company, and Lukens Inc., among others. NAFTA phases out steel tariffs entirely by the year 2004, along with tariffs on textiles, cotton, lumber and cosmetics. As salmon treaty talks resumed on July 7, Canada revoked the $1,500 fee charged to US commercial fishing boats passing through Canadian waters. A special appeals panel ruled that the US must end its 6.5 percent duty on Canadian softwood imports, imposed in 1991 due to allegations of unfair Canadian subsidies, and repay $600 million collected from Canadian lumber exporters since that time. The panel, made up of one US and two Canadain representatives, voted along national lines, as had an earlier panel that came to the same conclusion. Source: Keith Bradsher, "Wheat Pact by Canada and U.S.," NEW YORK TIMES, 8/2/94; Tom Karst, "Canada Alleges U.S. Dumping," THE PACKER, 7/25/94; "American, Canadian Trade Officials Seek Wheat Accord Before Aug. 1 Deadline," MINNESOTA AGRICULTURE, 7/30/94; "Mexico Imposes Tariff on U.S. Apples," "Canada Lifts Fee in Salmon Dispute," CCH NAFTA WATCH, 7/14/94; "Mexico Says U.S. Makers 'Dump' Steel," ASSOCIATED PRESS (New York Times), 8/3/94; "Canada Wins Trade Fight With U.S. Over Lumber," ASSOCIATED PRESS, 8/4/94; "Lumber Prices Drop as Panel Rejects an American Tariff," REUTER, 8/4/94 - - - - - - - - - - - - - - - - - - US CHICKEN PRODUCER EXPANDS IN MEXICO Pilgrim's Pride Corp., the fifth largest producer of chicken products in the US and the second largest in Mexico, has launched a 40 percent expansion in its Mexican operations, and expects to increase its total revenues to one billion dollars during 1995. Pilgrim's Pride employs more than 10,700 people at processing plants, distribution centers, hatcheries, and feed mills in Texas, Arkansas, Arizona, Oklahoma, and Mexico. Source: MEXICO BUSINESS MONTHLY, 8/94 - - - - - - - - - - - - - - - - - - AUTOMOTIVE NEWS Ford Motor Company said that its North American vehicle exports are up 76 percent in the first six months of 1994. Ford exported 57,215 vehicles from North America from January-June, 1994, compared to 32,569 during the same period in 1993. Shipments to Mexico during this time were 8.470, compared to 698 in 1993. Sales to the Asia- Pacific market went from 4,933 in 1993 to 9,144 in 1994, with Japan accounting for 6,765 units, up from 2,742. Ford's European sales rose from 8,386 in 1993 to 15,474 in 1994. Volkswagen is preparing a September introduction for a two-door compact to be manufactured in Brazil for the 200 million person Mercosur market. The car, code named AB9, will succeed Volkswagen's ugly but dependable Gol, a car that earns nearly one- third of Volkswagen Brazil's total revenue. Source: "Ford Exports Surging in '94," NEW YORK TIMES, 7/26/94; "Ford's Exports from US Rise 75%," FINANCIAL TIMES, 7/26/94; "New Car for Latin America Planned," STAR TRIBUNE, 7/28/94 - - - - - - - - - - - - - - - - - - NAFTA TARIFF REDUCTIONS STUDIED The US International Trade Commission is studying the impact on the US economy of speeding up tariff reductions on various products still covered under NAFTA. A process for tariff reductions exists, and the US has pushed for accelerated reductions. The Mexican government has postponed any consideration of accelerated reductions until December, after the new government takes over. Some US producers, such as Bobby McKown, general manager of the Florida Citrus Mutual, oppose accelerated reductions. McKown says that there is an oversupply of grapefruit in Florida, and that tariff reductions are not in the interest of the citrus industry. Potato growers, on the other hand, are expected to favor a quicker tariff reduction, which would boost their exports to Mexico. Most produce is scheduled for tariff reduction within 5-10 years, and all tariffs between Mexico and the US are scheduled to be eliminated within 15 years. Source: Dan Balaban, "Reduction in Tariffs May Be Accelerated," THE PACKER, 7/25/94; MEXICO BUSINESS MONTHLY, 8/94 - - - - - - - - - - - - - - - - - - FREE TRADE FAST TRACK SLOWED BY SENATE Despite the Clinton Administration's push for fast track legislation to help it negotiate future trade agreements, the Senate Finance Committee approved legislation for GATT without attaching fast-track authority for the next round of global trade talks. Differences between the House and Senate bills remain to be worked out in conference, but the House bill does not contain fast track legislation either. If the administration fails to attach the fast track legislation to the GATT approval, it expects to face a battle next year. Congressional Republicans and business groups oppose inclusion of labor and environmental deals in future trade pacts, while Congressional Democrats and labor insist that these side deals are essential and that the fast track legislation does not offer sufficient protection. US labor unions want to slow the rush to free trade agreements because they see jobs heading south, wages falling, and the US standard of living declining. Labor's arguments were bolstered by US Commerce Department statistics showing investments by US firms abroad booming with many firms now employing more people abroad than at home. The Clinton administration insists, in the words of Commerce Secretary Ron Brown, that: "The bottom line is, American exports equal American jobs." Unions counter that the administration is ignoring the other side of the equation: imports into the US equal US job losses. Source: Keith Bradsher, "Panel Clears GATT Accord Without Fast-Track Proviso," NEW YORK TIMES, 8/3/94; John Dillin, "Clinton Plans Open Trade Door to Latin America, Irking Labor," CHRISTIAN SCIENCE MONITOR, 7/27/94; "U.S. Fast-Track Proposal Under Fire," CCH NAFTA WATCH, 7/14/94 - - - - - - - - - - - - - - - - - - BANANA UPDATE Last week's report on the Latin American banana producers' meeting and a worldwide banana surplus has been overtaken by recent events. A strike by Honduran workers at Chiquita banana and storms that damaged banana crops in Mexico and Guatemala sent prices soaring by 300 percent to between $9.50 and $11 per 40 pound crate in the US, still well below the 1991-92 price of $13-15 per crate. Although the strike ended after three weeks, the situation in Honduras remains uncertain, with Chiquita threatening to close nine plantations and workers threateening to resume the strike in protest over the firing of union leaders. Honduras accounted for 13 percent of US banana imports in 1993, and Chiquita ships 60 percent of all Honduran bananas. Bananas are Honduras' largest export. Source: Lyle Niedens, "It's Anybody's Guess," "Rumors Center on Chiquita," THE PACKER, 7/25/94; "Tensions Increase as Banana Company Fires Workers," IPS, 7/28/94 - - - - - - - - - - - - - - - - - - ACS AGREEMENT SIGNED Leaders of 25 countries, including Colombia, Cuba, Mexico, Venezuela, CARICOM, and Central American countries, signed an agreement establishing a regional free-trade bloc in Colombia on July 25. Twelve territories and their colonial powers, Britain, the Netherlands, and France are also part of the ACS grouping as associate members. The new 200-million-person grouping, the world's fourth-largest economic bloc, includes less-developed and more-developed countries, ranging in size from Colombia, with 1.1 million sq. km. and a population of 32.9 million to Antigua-Barbuda, with 441 sq. km. and a population of 64,000. Source: "ACS Hailed as a Step Towards Regional Prosperity," "EU Welcomes New Caribbean Trade Alliance," IPS, 7/25/94; "ACS Could Be A Window into Europe," IPS, 7/26/94; Bob Mantiri, "Ex-Colonial Powers Welcome ACS as a 'Way In'," IPS, 7/26/94; "Caribbean Nations Talk Trade," CHRISTIAN SCIENCE MONITOR, 7/25/94; "Un Mercado Potencial de 200 Millones," SUCESOS, 7/29/94 - - - - - - - - - - - - - - - - - - RESOURCES/EVENTS "CCH NAFTA Watch." CCH Incorporated, 4025 W. Peterson Ave., Chicago, IL 60646. (312) 583-8500. Eight-page, bi-weekly newsletter tracking key North American business and legal developments. $265 in US; $350 in Canada; 850 pesos in Mexico. "Western Hemisphere Economic Integration," by Gary Clyde Hufbauer and Jeffrey J. Schott. INSTITUTE FOR INTERNATIONAL ECONOMICS, 1994. 304 pages. Institute for International Economics, 111 Dupont Circle NW, Washington, DC. (202) 328-9000. Fax: (202) 328-5432 Setting out "readiness criteria" for free trade, the authors rate countries in the hemisphere and recommend movement toward a Western Hemisphere Free Trade Area, saying that such an agreement would benefit both the US and Latin America. "Water and North American Free Trade: Problems and Prospects for a Viable Water in Mexico," Roberto Salinas Len. CENTRE FOR FREE ENTERPRISE RESEARCH, 1992. 33 pages. Solidarity Foundation, 310 West 52nd Street, New York, NY 10019. (212) 765-9510. Fax: (212) 956-4214. Provides information on water rights and international interbasin water transfer projects. "NAFTA TEXT (including supplemental agreements.)" 804 pages. CCH Incorporated, 4025 W. Peterson Ave., Chicago, IL 60646. (312) 583- 8500. $39.50. "The Political Economy of North American Free Trade," edited by Ricardo Grinspun and Maxwell A. Cameron. ST. MARTIN'S PRESS, 1993, 1994. 348 pages. Scholarly and Reference Division, ST. MARTIN'S PRESS, 175 Fifth Avenue, New York, NY 10010. Collection of essays dealing with political and economic background of NAFTA in each of the three countries and the US drift toward hemispheric free trade, "unified by a skeptical view of the management of economic integration in North America." - - - - - - - - - - - - - - - - - - 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. - - - - - - - - - - - - - - - - - - For more information about the Institute for Agriculture and Trade Policy, send email to iatp-info@igc.apc.org. - - - - - - - - - - - - - - - - - - Produced by: Mary C. Turck, Institute for Agriculture & Trade Policy 1313 Fifth St. SE, Suite #303, Minneapolis, MN 55414-1546 USA Tel: (612) 379-5980, Fax: (612) 379-5982, email: mturck@igc.apc.org