From iatp@igc.apc.orgMon Oct 31 18:56:09 1994 Date: 31 Oct 94 04:55 PST From: IATP To: "Recipients of conference trade.news" Newsgroups: trade.news Subject: NAFTA & Inter-Am Monitor 10/31/94 Produced by the Institute for Agriculture and Trade Policy - - - - - - - - - - - - - - - - - - NAFTA and Inter-American Trade Monitor, vol. 1, #23 October 31, 1994 - - - - - - - - - - - - - - - - - - HEADLINES MEXICAN BANKING OPENED TO FOREIGNERS SCOTT PAPER EXPANDS IN MEXICO BOYCOTT THREATENED MEXICAN ANTITRUST AGENCY'S FIRST YEAR US-CANADA CULTURE WAR NAFTA & ENVIRONMENT EU OFFER TO MERCOSUR LOOKING TOWARD ASIA BANANAS AND RUM - - - - - - - - - - - - - - - - - - MEXICAN BANKING OPENED TO FOREIGNERS The NAFTA-mandated opening of Mexican markets to foreign banks and brokerage houses occurred in October, with the Mexican Finance Ministry granting 52 licenses to 102 applicants. No applications were rejected outright, though some were returned for additional information. The government issued licenses to 18 commercial banks, 16 securities firms, 12 insurance companies, a leasing company for Citibank, and five financial groups. Citibank has been the only foreign bank operating in Mexico since the 1910 revolution, and is the only bank expected to compete with 35 Mexican commercial banks for retail customers. Foreigners still cannot go beyond 25 percent of the market until 2004. The new banks, including Chemical Bank, Bank of America, Bank of Boston, Banco Santander (Spain) and Bank of Tokyo, are expected to offer services in investment banking, corporate advising, trade financing, and derivatives contracts. Officials expect the new licenses to bring about $1.2 billion in new investment. "With the presence of these institutions, foreign investment will increase, access to the international market will broaden and existing capital resources will be expanded," said Finance and Public Credit Minister Pedro Aspe. Source: Jennifer Tierney, "Foreign Banks to Get Green Light," EL FINANCIERO, 10/10-16/94; Tim Golden, "In Opening Its Finance, Mexico Bets Long Term," NEW YORK TIMES, 10/19/94; "In Mexico, Invasion Is Welcome," NEW YORK TIMES, 10/23/94; "Government Launches Financial Openness Plan," IPS, 10/18/94. - - - - - - - - - - - - - - - - - - SCOTT PAPER EXPANDS IN MEXICO The Mexican affiliate of Scott Paper Company will spend $148 million to expand plants in Mexico. The expansion will include a newsprint machine and a recycled fiber line in Morelos. Scott Paper said in August that it will slash 10,500 jobs worldwide by the end of 1994, but said the Mexican expansion will not replace US jobs. Source: "Scott Paper Unit to Expand Mexican Plants," NEW YORK TIMES, 10/19/94. - - - - - - - - - - - - - - - - - - BOYCOTT THREATENED Mexican groups along the Tijuana-San Diego border are planning a boycott of US products to protest the anti-immigrant Proposition 187 ballot initiative in California and the US Immigration Service's Operation Gatekeeper, which deployed 200 border patrol agents, complete with helicopters, boats, and computerized data bases on October 1. The boycott was scheduled for the week before US elections, with organizers threatening an expansion if the anti-immigrant campaigns continue. California's Republican Governor Pete Wilson has made immigration the top issue in the upcoming election, actively campaigning for Proposition 187, also known as the "Save Our State" (SOS) initiative, which would deny undocumented immigrants such public services as health care and education. According to human rights activist Arturo Sols Gmez, "California has the top gross domestic product ... in the United States, and it is thanks to the cheap Mexican labor it has always exploited." On October 16, 70,000 protesters marched in Los Angeles, calling the SOS initiative racist, mean-spirited, and unconstitutional. Mexico's foreign minister has called the proposal "racist and xenophobic." Source: Jo Bedingfield, "Mexicans Call for Boycott," EL FINANCIERO, 10/10-16/94; "Californians Protest Anti- Immigrant Measure," WEEKLY NEWS UPDATE ON THE AMERICAS, 10/23/94. - - - - - - - - - - - - - - - - - - MEXICAN ANTITRUST AGENCY'S FIRST YEAR The Mexican antitrust agency -- the Federal Economic Competition Commission -- began operations in June 1993, charged with enforcing the first comprehensive antitrust law in Mexico, the Federal Law of Economic Competition. The law prohibits "absolute monopolistic conduct," such as price fixing, bid-rigging, and market division, but allows most agreements among non-competitors. During its first year, the commission reached consent decrees in the credit card and gasoline station franchising markets. The credit card agreement followed an investigation of collaboration between Mexico's three largest banks -- Bancomer, Banamex, and Banco Serfin. The gasoline agreement dealt with Pemex subsidiary Pemex-Refinacin's tying arrangements and exclusive dealings in connection with granting franchises, and will make many more franchises available throughout Mexico. The commission also investigated sixteen other cases and imposed total penalties of $750,000. Source: Sergio Garcia-Rodriguez, "Mexico's New Antitrust Agency," "Analysis of the Antitrust Agency's First Year," INTER-AMERICAN TRADE AND INVESTMENT LAW, 9/30, 10/7/94. - - - - - - - - - - - - - - - - - - US-CANADA CULTURE WAR Canada's Radio-Television and Telecommunications Commission has ordered Nashville's Country Music Television (CMT) out of Canada by January 1, to be replaced by the Canadian-based Country Network. The Country Network promises to have 30 percent Canadian content in 1995, with a goal of 40 percent by 2001. Country music is popular across Canada, with many Canadian artists succeeding on both sides of the border. The Commission acted under specific provisions of free trade agreements with the US that exempt Canadian cultural industries. Commission spokesperson Bill Allen said that the Canadian Broadcasting Act requires it to protect a domestic specialty service from foreign competition on request of the Canadian company. Cable News Network remains on the air since the Canadian Broadcasting Corporation has not requested protection for its Newsworld service. Source: Clyde H. Farnsworth, "The Border War Over Country Music," NEW YORK TIMES, 10/23/94. - - - - - - - - - - - - - - - - - - NAFTA & ENVIRONMENT Despite the environmental side agreement to NAFTA, the agencies created in response to environmental concerns lack the authority and resources to uphold the agreement, according to both ecologists and government sources. As business seeking looser environmental regulations moved to the Mexican side of the border in recent years, the border has become, according to Carl Pope, executive director of the Sierra Club, "the world's largest toxic waste dump." Mexico's strong environmental laws have remained largely unenforced. This summer, a 13-year-old from Laredo, Texas died from an amoebic brain infection after swimming in the Rio Grande. The infection was traced to the 24 million gallons of raw sewage dumped daily in the river by the city of Nuevo Laredo. Mexico and the US have agreed that a US citizen will run the Border Environmental Cooperation Commission, based in Juarez, and a Mexican will head the less-powerful North American Development Bank, based in Texas. Nine months after NAFTA's signing, no border cleanup projects are even close to implementation. The Sierra Club's executive director maintains that "very little progress" has been made. On the record, US officials such as Robert Sussman, deputy chief of the US Environmental Protection Agency, claim that "we're doing pretty darn well, everything considered." Off the record, officials acknowledge impatience with slow progress. US House majority leader Richard Gephardt criticized rules for the Border Environmental Cooperation Commission, which he said limit public participation and enable closed-door decision-making. Source: Allen R. Myerson, "Trade Pact's Environmental Efforts Falter," NEW YORK TIMES, 10/17/94; "NAFTA Weak on Ecological Protection," IPS, 10/17/94. - - - - - - - - - - - - - - - - - - EU OFFER TO MERCOSUR The EU has offered to create a free trade area with Mercosur by 2001, conditioned on Mercosur ending its own internal tariffs and creating a common external tariff. Mercosur countries welcomed the offer, as trade between the EU and Mercosur continues to climb. The EU countries made 48 percent of all direct foreign investments in Mercosur in 1990. Source: "Member Countries Cautiously Welcome Pact with EU," IPS, 10/20/94; Debra Percival, "EU Keen on Free Trade Area with Mercosur," IPS, 10/19/94. - - - - - - - - - - - - - - - - - - LOOKING TOWARD ASIA Chile will join Mexico as a full member of the Asian-Pacific Economic Cooperation pact (APEC) on November 12. US opposition delayed full membership for Chile until this year. Mexico joined the 47-member "super bloc," representing about 40 percent of global trade, in 1993. APEC members include Japan, Australia, China, the United States, and the recently- industrialized Asian "tigers." Chilean imports from non-North American APEC members increased from $623 million in 1980 to $1.4 billion in 1993, with exports growing from $746 million to $2.82 billion. Chile hopes to serve as an intermediary between South America and APEC, and to balance its Mercosur and ALADI trade deficits with its Asian trade surplus. The Mexican business community refers to the Aztecs' sacred animal, the jaguar, as a parallel to the Asian tiger in describing their hopes for increased trade. Both trade and direct investment by Asian-Pacific nations in Mexico have grown dramatically since 1988, though Mexican businesses are wary of competition from low-wage manufacturers. "The country will have to be very careful to carve out niches of complementarity rather than competition, because we're talking about the world's biggest exporters. We can't teach the Pope to pray," said Alejandro Alvarez of the Autonomous University of Mexico. Source: Gustavo Gonzalez, "Looking Ahead to an Asian-Pacific 'Super Bloc,'" IPS, 10/12/94; Maria Amparo Lasso, "In Search of Pacific Markets and 'Jaguar' Status," IPS, 10/20/94. - - - - - - - - - - - - - - - - - - BANANAS AND RUM Caribbean banana exporters are scheduled to lose their preferential access to the European Union (EU) when the World Trade Organization takes over next year. The EU currently favors banana imports from the African, Caribbean and Pacific (ACP) group over those from Latin America. GATT has failed to act on its panels' rulings that the EU quota discriminates, but the World Trade Organization has different, stricter rules. Caribbean producers have a hard time competing with Latin Americans because Caribbean production costs are higher. The United States has recently indicated that it will enter the banana dispute on the side of Latin American governments, perhaps due to the dominance of US companies such as Bandeco, Standard Fruit, and Chiquita Brands in Latin America. The EU has agreed to talk with the US on the banana dispute. Rum producers from the Caribbean oppose the European Union's new proposal to restrict dark rum imports, based on alleged competition with France's domestically-produced rum from its Overseas Departments of Guadeloupe, Martinique, and Reunion. Quota restrictions on "light" rum will be abolished in 1996 under the proposal. Anglophone Caribbean states can now export 224,000 hecto-litres duty-free under the LOME IV Convention "rum protocol," but heavy duties must be paid on any additional rum. The duty-free provision may be eliminated under the new EU proposal, just as Caribbean nations were preparing to push for an even higher duty-free quota, based on increasing European demand for dark rum. Source: Debra Percival, "Caribbean Producers Not Happy With New EU Proposal," IPS, 10/12/94; Scott West, "Bananas Are Early Test for New Trade Body," IPS, 10/12/94; Diego Cevallos, "United States Joins EU Banana Debate," 10/2/0/94; Debra Percival, "Washington Takes on Brussels Over EU Market Policy," IPS, 10/18/94. - - - - - - - - - - - - - - - - - - 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