From iatp@igc.apc.orgThu Jan 26 15:42:41 1995 Date: Mon, 19 Dec 1994 08:44:21 -0800 (PST) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Monitor 12/19/94 Produced by the Institute for Agriculture and Trade Policy - - - - - - - - - - - - - - - - - - NAFTA and Inter-American Trade Monitor, vol. 1, #30 December 19, 1994 - - - - - - - - - - - - - - - - - - HEADLINES ENVIRONMENTAL COMMISSION HEARS CRITICS MEXICAN AUTO INDUSTRY GROWS UNION LEADER COMPLAINS OF LOW WAGES EXPLOITING IMMIGRANTS -- INSIDE MEXICO CANADA AND MEXICO LOOK TO CUBA AGRICULTURE CHARGES ABANDONMENT IN TRINIDAD AND TOBAGO BRAZIL'S ECONOMY UNDER PRESSURE RESOURCES/EVENTS - - - - - - - - - - - - - - - - - - ENVIRONMENTAL COMMISSION HEARS CRITICS The first public meeting of the NAFTA-created Border Environment Cooperation Commission (BECC) in mid-November was dominated by concerned individuals who spoke to urge BECC to listen to private citizens and local governments. BECC is responsible for determining environmental infrastructure needs on both sides of the border, including projects such as wastewater treatment and hazardous waste management facilities. Six million tons of hazardous waste are produced in Mexico each year, for example, but only 200,000 tons are safely disposed of. The North American Development Bank (NADB) will provide some financing for such projects. BECC's first public meeting was held in the polluted Mexican border city of Ciudad Juarez. Because 51 individuals requested time to speak, the time per speaker was cut from 10 to three minutes. Source: John M. Nagel, "Critics Dominate Border Cleanup Group's 1st Session," JOURNAL OF COMMERCE, 11/21/94; Jo Bedingfield, "Late Bloomer," EL FINANCIERO, 12/5-11/94. - - - - - - - - - - - - - - - - - - MEXICAN AUTO INDUSTRY GROWS Mexico's northern corridor -- the states of Nuevo Leon, Coahuila, Sonora, Durango, and Baja California -- expect investment in auto manufacturing to reach $1.5 billion during 1994 and 1995, generating 60,000 new jobs in the auto and auto parts industries. Fully one-third of Mexico's auto exports and even more of the auto parts production will center in the northern corridor. Vitro, Alfa, IMSR, Visa, and Protexa, all based in the northern corridor, are among the largest auto parts producers in Latin America. The Mexican automotive industry is growing at an annual rate of 16.1 percent, particularly in bus and truck production, which are more labor-intensive segments of the industry. In December, General Motors Corporation said it will use output from a new assembly plant in Silao, Mexico to produce sport-utility vehicles for the US market, where demand has outstripped the production capacity of GM's US and Canadian plants. GM plans to double its light-vehicle exports from the US to Mexico in 1995, to arrive at an overall export-import balance with about 15,000 vehicles going each way. This year GM exported 4,500 vehicles to Mexico and imported 26,000 from Mexico to the US. Textron, Inc., a U.S. firm, announced in November that it will build a plant in Coahuila to manufacture dashboards and other auto parts. Germany's Volkswagen will mass produce a new version of the Beetle in Mexico, aiming production at North and South American markets. Source: "Northern Mexico Auto Industry Booms," UPI, 11/25/94; Robert L. Simison and Gabriella Stern, "GM to Retool Delaware Plant and Use Mexican Factory to Meet U.S. Demand," WALL STREET JOURNAL, 12/1/94; "Textron to Manufacture Auto Parts in Mexico," EL FINANCIERO, 11/21-27/94; "Volkswagen to Export Mexican- Made Beetle," EL FINANCIERO, 12/5-11/94. - - - - - - - - - - - - - - - - - - UNION LEADER COMPLAINS OF LOW WAGES Concepcion Guerrero Flores, speaking to the International Labor Conference Against Labor-Management Cooperations Programs in San Francisco on November 13, blasted NAFTA and Mexican labor laws. Charging the new Federal Labor Law denies all Mexican workers the right to strike for higher wages, Guerrero attributed downward wage pressure to privatizations, factory closings, and the threat of plant closures. "In Mexico, as per the law, workers' wages are increased every year on the first of January," Guerrero noted. "This year's increase was the lowest ever: only 4 percent." "Cooperation programs" between employers, government, and labor have also resulted in problems in education and health care, with teachers forced to agree to increased class sizes and with higher patient loads imposed on nurses. Guerrero faults "charro unions," which are subservient to the government, and warns that the government is infiltrating independent unions and attempting to divide and destroy them. Source: Concepcion Guerrero Flores, "Independent Unions in Mexico, in the Age of NAFTA, Are Under Attack More Than Ever," NOVEMBER 13 CONFERENCE. - - - - - - - - - - - - - - - - - - EXPLOITING IMMIGRANTS -- INSIDE MEXICO Immigrant workers from Central American countries, pushed to southern Mexico by economic necessity, meet with some of the same prejudice and discrimination meted out to Mexican immigrants in California and other U.S. states. Most jobs are in the agricultural sector (from coffee picking to shark fishing), urban construction, and domestic services. Mexican wages are higher. Coffee picking, for example, pays almost twice as much in Mexico as in Guatemala. Social services are not readily available to immigrants. Work permits for legal immigrant workers, for example, do not give children the right to attend public schools. Although health services are available, many immigrants believe they are not eligible. About 125,000 immigrant work permits are issued each year. One Mexican border official estimated that an average of 6,000 illegal immigrants are deported through Chiapas monthly. Source: Sallie Hughes, "Mirror Image," EL FINANCIERO, 11/21- 27/94. - - - - - - - - - - - - - - - - - - CANADA AND MEXICO LOOK TO CUBA Canada and Mexico are finding in Cuba an inviting and potentially profitable partner for trade and investment, while U.S. businesses are kept out of the market by the U.S. economic blockade of Cuba. Strengthened legislation cut trade from about $700 million in 1991-92 to almost zero at present. Canadian metal refinery, Sherritt Gordon, has begun a joint venture with the Cuban government to build a nickel refinery. Canadian tourism is also strong, with the number of Canadian visitors increasing by 20 percent yearly. Canadian exports to Cuba increased by 18.3 percent in 1993, compared to 1992. Cuba's economic crisis has hampered efforts to increase trade, with overall trade volume falling from $188.5 million in 1990 to $102.5 in 1993. Mexican telecommunications and environmental services company Grupo Domos International signed a $2 billion contract with the Cuban government this summer, with Grupo Domos purchasing 49 percent of the Cuban telephone system. Unlike other South American countries, Mexico maintained diplomatic relations with Cuba continuously, never yielding to U.S. pressure to break relations. Source: Jo Bedingfield, "Running the Blockade," EL FINANCIERO, 11/21-27/94. - - - - - - - - - - - - - - - - - - AGRICULTURE CHARGES ABANDONMENT IN TRINIDAD AND TOBAGO Economists critical of the government in Trinidad and Tobago charge that plans to allow unlimited agricultural imports in several categories will impact more than 20,000 farm families, costing many half of their income over the next three to five years. The trade liberalization is part of a Common External Tariff agreed upon by Caribbean governments as a move to prepare for possible admission to NAFTA in the undefined future. Economists at the Caribbean Agricultural Research Development Institute (CARDI) say that Caribbean nations are unable to match even the reduced support given to agricultural sectors by "developed" countries, leaving poor farmers even more vulnerable to foreign competition. In the oil-based economy of Trinidad and Tobago, agriculture accounts for only three percent of the gross domestic product, while employing 14 percent of the work force. Source: "Government Accused of Forsaking Sector," IPS, 11/30/94 - - - - - - - - - - - - - - - - - - BRAZIL'S ECONOMY UNDER PRESSURE Higher than expected inflation, slightly more than three percent per month, is creating pressure for the government to abandon mandates for salary increases to keep up with rising price indexes. The government index, known as the IPC-r, has risen nearly 20 percent since the Real currency was launched this summer. One proposed remedy would be to allow companies to negotiate directly with workers instead of participating in industry-wide union agreements and indexing. Many in congress believe that indexes and industry-wide bargaining are necessary protections for Brazilian workers. Oil workers went on strike in late November over a long-running wage claim. Outgoing President Itamar Franco had ended an earlier strike by agreeing to most of the workers' demands, but the state-owned oil monopoly, Petrobrs, rejected the accord, which would have cost more than $400 million. When Franco realized the high cost of the accord and its impact on the Real currency and inflation, he also canceled it. Franco still maintains that he wants to raise the minimum wage from 80 to 100 Reals per month before leaving office at the end of the month, though government economists advise against the move. With the most-developed industrial base in South America, Brazil is boosting both production and exports. Lower tariffs, increased trade with Mercosur partners, and increased foreign investment, particularly in the past two years, contribute to continuing economic expansion. Workers complain that the opening of the Brazilian market to imports has cost 300,000 jobs since 1990. President-elect Fernando Cardoso, who will take office on January 1, is expected to step up sales of government-owned businesses in order to finance debt service and other public expenses. Sales planned in the coming weeks include petrochemical companies, two electric companies, a shipping company, and a railroad company. Rioting broke out at the December 7 privatization sale of Embraer, the aircraft manufacturer and a national symbol of Brazilian high technology production. Privatization of the state oil company, PetroBras, is likely to meet with opposition from sectors ranging from the military to unions. Brazil's darker side is largely ignored by the optimistic government and international forecasts of continued economic growth. Despite a per-capita income of $2,920, the highest in Latin America, and a gross national product that has tripled to $450 billion in the past two decades, the richest 20 percent of Brazilians earn 26 times what the poorest 20 percent make -- a ratio far greater than the 9:1 gap in the United States or the 5:1 gap in India. The economic reforms still underway are expected to increase unemployment, and a better economic future for the poor is nowhere in sight. Source: Angus Foster, "Brazil Under Pressure on Indexation," FINANCIAL TIMES, 11/22/94; Angus Foster, "Brazil Refineries Hit by Oil Workers' Stoppage," FINANCIAL TIMES, 11/24/94; Chris Brogan, "Privatization Process to Pay the State's Bills," IPS, 11/22/94; Angus Foster, "A Chance to Flex Some Muscle," FINANCIAL TIMES, 11/30/94; Todd Lewan, "Summit-The Rich and the Poor," AP, 12/12/94; "November Inflation Falls to 3.02 Percent," REUTER, 12/5/94; Tad Simpson, "Brazil President Still Wants to Raise Minimum Wage", REUTER, 12/7/94; Arnaldo Cesar, "President-Elect to Aim for Moderate, Steady Growth," IPS, 12/3/94; "Riots Result From Privatisation Sale," IPS, 12/7/94; "Opening to Imports Has Cost 300,000 Jobs," IPS, 12/12/94. RESOURCES/EVENTS "Reform of Mexican Agrarian Reform" -- conference at Columbia University, April 6-7, 1995. Topics include introduction to land reform, land reform and economic organization, and economic output: the reform of the Ejido, who gains, who loses; land reform, agrarian organizations and the structure of Mexican politics; land use and the environment, land reform and migration, and U.S. and Mexican views of NAFTA. "Agrarian Reform", 606 Dodge Hall, Columbia University, New York, NY 10027; email LRRHC@CUNYVM.CUNY.EDU; phone 212/854- 2389. - - - - - - - - - - - - - - - - - - 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