From iatp@igc.apc.orgMon Nov 14 15:12:03 1994 Date: 13 Nov 94 19:01 PST From: IATP To: "Recipients of conference trade.news" Newsgroups: trade.news Subject: NAFTA & Inter-Am Monitor 11/1 Produced by the Institute for Agriculture and Trade Policy - - - - - - - - - - - - - - - - - - NAFTA and Inter-American Trade Monitor, vol. 1, #25 November 14, 1994 - - - - - - - - - - - - - - - - - - HEADLINES CHILE MAY PLAN NAFTA TALKS WITHOUT U.S. AT&T BIDS FOR MEXICAN LONG DISTANCE MARKET INVESTMENT NOTES APPROACHING THE MIAMI SUMMIT COMMERCE AND THE ENVIRONMENT CUBA TRADE PROSPECTS - - - - - - - - - - - - - - - - - - CHILE MAY PLAN NAFTA TALKS WITHOUT U.S. Disappointed by the Clinton administration's failure to obtain fast-track negotiating authority from Congress, Chile is contemplating beginning negotiations for NAFTA membership with Canada and Mexico. According to a Chilean foreign ministry official, his country will begin exploratory talks with Canada and Mexico and will invite the U.S., "and then it is going to have to decide if it can participate without the fast track. Instead of using the fast track and the U.S. as the starting point, we're starting with NAFTA." Mexico and Canada have previously expressed support for Chile's entry to NAFTA. Chile wants a free trade zone throughout the hemisphere, from the Arctic Circle to Tierra del Fuego. Its entrepreneurs are investing throughout South America, building supermarkets and helping to run the telephone system in Peru, banking in Argentina, setting up a pension fund in Colombia, and investing in manufacturing in a number of countries. Source: Matt Moffett, "Chile, Eager to be Part of Nafta, May Aim for Talks Without U.S.," WALL STREET JOURNAL, 11/1/94; Matt Moffett, "Chilean Firms Blaze Cross-Border Trails," WALL STREET JOURNAL, 11/7/94. - - - - - - - - - - - - - - - - - - AT&T BIDS FOR MEXICAN LONG DISTANCE MARKET AT&T announced a $1 billion alliance with Grupo Industrial Alfa S.A., with plans to provide long-distance telephone service when Mexico's Telmex monopoly ends in 1997. Analysts were surprised that AT&T chose to enter the market with Alfa, rather than with Mexico's largest telephone company, Telefonos de Mexico (Telmex.) AT&T spokespersons said that they ended negotiations with Telmex itself because of concerns about possible US antitrust law applications. Southwestern Bell bought 10 percent of Telmex in 1990, when the latter was privatized, and the US Federal Communications Commission bars US regional phone companies from competing in the long- distance market. Alfa is one of Mexico's largest corporations, with $2.49 billion in sales in 1993. The company has four business groups, with products ranging from steel to plastics to food but it has no previous telephone background. Alfa also has substantial experience in working alliances with 15 other foreign companies from the US, Japan, Germany, Belgium, Netherlands, Italy, and France. MCI and Sprint have joined Mexican partners to bid for the Mexican long-distance business, and GTE Corporation and Motorola have also expressed interest. None has the expertise and technological advantages of the giant AT&T or the financial resources of Alfa. Source: Anthony DePalma, "AT&T Gets Mexico Partner for Long- Distance Service," NEW YORK TIMES, 11/10/94. - - - - - - - - - - - - - - - - - - INVESTMENT NOTES % Mexican entrepreneur Bernardo Domnguez Cereceres has pulled out of a deal for the purchase of most of the Westin hotel chain, blaming rising interest rates for his inability to obtain financing. Other sources noted the widespread belief that he was overpaying for Westin. % Michigan-based Upjohn Company agreed to sell its Asgrow Seed Company to the Mexican agribusiness firm, Empresa La Moderna, for $300 million in cash in December. The deal is part of Upjohn's plan to divest its nonpharmaceutical operations. Asgrow is the world's fifth-largest seed producer, with sales last year of $270 million. Empresas had a small agribusiness unit focused on vegetables in southern California, but earned 90 percent of its 1993 revenues of $300 million in its Mexican cigarette operations. % Beta Funds, based in London, is planning a $50 million investment fund for Cuba under the aegis of its newly created subsidiary, Havana Asset Management. Expected areas of investment include hotels and tourism, mining, food and beverages, high-tech pharmaceuticals, and specialized manufacturing. % The United Kingdom's Confederation of British Industry (CBI) and London's Department of Trade and Industry (DTI) will both launch major initiatives promoting closer economic ties between Britain and Latin America. According to Howard Davies, the CBI's Director-General, the move is spurred by high growth rates in Latin America relative to the European Union and the trend toward more open, free market economies. With $15 billion in investments, Britain is the leading European investor in the region, and its exports to the region have been rising. % Venezuelan iron industry is attracting investments of $1.5 billion, including $1.2 billion from foreign groups led by Japan's Kobe Steel. Kobe Steel is associated with Oregon Steel of the US and Hanbo Steel of South Korea in its Venezuelan projects, and plans to produce ingots for the North American market. % Citing a domestic shortage, Ecuador announced a reduction to zero of the import tariff for Portland Gray cement. % US oil and gas companies are moving to take advantage of new Brazilian openings for oil investment. Two US companies, Tenneco and Enron, have signed agreements as minority partners with Petrobras in a $1.8 billion construction project. Other US oil companies are awaiting approval of a constitutional amendment next year to open more of the oil industry to foreign investment. Source: Anthony DePalma, "Mexican Abandons Purchase of Westin Hotels," NEW YORK TIMES, 11/1/94; Richard Ringer, "Upjohn Set to Sell Unit to Empresa," NEW YORK TIMES, 11/8/94; Pascal Fletcher, "Beta to Launch Fund for Cuba," FINANCIAL TIMES, 10/17/94; Chris Brogan, "British Business Returns to the 'New World,'" IPS, 10/27/94; "Iron Industry Attracts Foreign Investment," IPS, 10/25/94; "Arancel Cero Para Importar Cemento," SERVIDATOS, 10/20/94; James Brooke, "U.S. Oil and Gas Companies Test Waters in Brazil, Again," NEW YORK TIMES, 11/7/94. - - - - - - - - - - - - - - - - - - APPROACHING THE MIAMI SUMMIT A year ago, US Vice President Al Gore cited free trade as a focus for the Summit of the Americas, to be held in Miami on December 9-11. Initial draft agendas for the summit, circulated from the US to Latin American countries, emphasized promoting democracy and human rights, combating corruption, and environmental protection. One US official was quoted as saying sarcastically, in regard to the summit agenda: "In my experience, Latin Americans truly enjoy patronizing lectures from the United States about good governance and sustainable development." Critics fault the US for its perceived lack of commitment to hemispheric free trade, including the de-linking of fast-track and Interim Trade Program legislation from the GATT treaty. A group of public and private leaders gathered as the Inter- American Dialogue called for the Summit of the Americas to be used primarily to build free trade in the region. That outcome seems unlikely at present. Responding to criticism, US Trade Representative Mickey Kantor said that "trade will be the centerpiece" of the summit, though he expressed doubt that any specific timetables for hemispheric free trade would be reached. Colombia and Venezuela are among countries prepared to raise specific trade questions at the summit, their resolve sharpened by recent US restrictions on Colombian and Ecuadoran flower exports and Venezuelan oil. The Colombian finance minister, Guillermo Perry, has noted that developed countries preaching the virtues of free trade to the developing world should not then erect non-tariff barriers against goods from those countries. US Agency for International Development official Mark Schneider said that the US will sign a broad economic and technical cooperation agreement at the summit. "We want to be Central America's main partner," said Schneider, "and that is why we will be signing this agreement at the Americas Summit, as something separate from the bilateral cooperation already granted to the countries." Schneider reiterated previous US commitments to a special trade program for Caribbean Basin Initiative (CBI) countries. Department of Commerce International Trade Specialist Carrie Clark also affirmed con- tinuing commitment to the so-called CBI parity initiative, describing the provision as currently stalled, not dead. Caribbean governments are displeased with the agenda for the summit, saying that some of their concerns, such as the debt question, have been ignored in the agenda set by the US. The 13 Caricom members have a combined foreign debt of $9.2 billion. Caricom members are also concerned about Cuba's exclusion from the meeting. According to Kenneth Hall, deputy Caricom secretary general, the attitude of regional governments is that "it's very difficult for guests to invite other guests." Source: "United States Promises Cooperation Agreement," IPS, 10/25/94; "Region Displeased With Agenda of Americas Summit," IPS, 10/27/94; M. Delal Baer, "The Miami Vision Thing: An Agenda for the Summit," WALL STREET JOURNAL, 10/28/94; "Trade Should Be 'Centerpiece' of the Summit, US Tells Partners," INSIDE NAFTA, 10/5/94; "Trade Row With US at Miami Summit Looks Likely," LATIN AMERICA WEEKLY REPORT, 10/20/94; "DOC Specialist Says the Administration Is Committed to CBI Parity Provisions," BNA INTERNATIONAL TRADE DAILY, 10/21/94; Henry Tricks, "U.S. Seen Dragging Feet on Hemispheric Free Trade," REUTER, 9/29/94; "No U.S. Timetable Seen for Hemispheric Trade," WALL STREET JOURNAL, 11/3/94; "Clinton Supports Anti-Corruption Talks at Summit," IPS, 10/31/94. - - - - - - - - - - - - - - - - - - COMMERCE AND THE ENVIRONMENT The World Wildlife Fund (WWF) warned that the Paraguay- Parana Waterway, planned to cross the world's largest marshland in Brazil, will devastate the environment. The waterway is planned to promote commerce for farmers and businesses in the interiors of Argentina, Brazil, Bolivia, Paraguay, and Uruguay at a cost of $1.3 billion by 2015, with billions more needed for maintenance and operation. The WWF says the waterway will not only divert enough water to supply the entire population of Brazil, but will also change climatic conditions of the marsh region and cause serious losses of plants and animals. According to a study by the European Union, Ecuador's Amazon has been severely damaged by deforestation, petroleum extraction, and colonization. The research was requested by Ecuador's Energy Ministry, and found that soils and rivers in eastern Ecuador are polluted with petroleum, waste water, fuel and oil. The Ecuadoran Amazon, home to 95,000 indigenous people, covers 48 percent of the nation's territory, and has suffered from petroleum exploitation since the 1970's. Indigenous people of the Amazon are resisting petroleum exploitation and demanding government recognition of their ownership and control of ancestral lands. They own three million hectares, but are denied control over use of the sub-soil, which is designated as government property. Petroleum is Ecuador's leading export, and President Sixto Duran Ballen is presently promoting new contracts for increased petroleum extraction. Source: "WWF Foresees Disaster in South American Waterway," IPS, 10/22/94; "Study Confirms Severe Damage in Amazon," IPS, 10/26/94 - - - - - - - - - - - - - - - - - - CUBA TRADE PROSPECTS In late October, Cuba moved to open up its economy by allowing free sale of a variety of materials and consumer products previously controlled by the state. Cuban Vice-President Carlos Lage also announced plans to open all of Cuba's economy to foreign investment, including the areas of real estate, services, and sugar production. Letters of intent for future contracts, to take effect after the US embargo is lifted, have been signed with various US companies. Source: Tim Golden, "Cuba Again Moves to Open Up Its Economy," NEW YORK TIMES, 10/27/94; Pascal Fletcher, "Cuba Opens Up to More Investment From Overseas," FINANCIAL TIMES, 11/1/94. - - - - - - - - - - - - - - - - - - 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