From iatp@igc.apc.orgThu Jan 26 15:42:49 1995 Date: Mon, 26 Dec 1994 14:44:27 -0800 (PST) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Monitor 12/26/94 Produced by the Institute for Agriculture and Trade Policy - - - - - - - - - - - - - - - - - - NAFTA and Inter-American Trade Monitor, vol. 1, #31 December 26, 1994 - - - - - - - - - - - - - - - - - - HEADLINES NAFTA'S FIRST YEAR YEAR-END ROUND-UP: INTER-AMERICAN TRADE AGREEMENTS RESOURCES/EVENTS NAFTA'S FIRST YEAR While complete trade figures are not available, some changes can be clearly seen from NAFTA's first year. Among them: % Trade between Canada and Mexico increased by 40 percent during 1994, and Canadians invested more than $2 billion in Mexico. Primary Canadian exports to Mexico include furniture, beer, textiles, and telecommunications. % Mexican textile manufacturers have signed trade alliances with 10 Canadian companies and with 14 Spanish companies. Most of the manufactured textiles would be re-exported. % Mexican agricultural exports are expected to total $1.55 billion in 1994, representing 31 percent of all exports. Lower duties under NAFTA significantly boosted agricultural exports. % Mexican trade with the U.S. jumped 21.4 percent during the first eight months of the year, according to the Mexican Commerce Secretariat. % U.S.-based companies, including Exxon, Shell, and Amoco, are investing a billion dollars in oil fields in the Gulf of Mexico area, which are predicted to contain 50 percent more crude oil than in the Alaskan Prudho fields. During the first nine months of 1994, Pemex, the Mexican national oil company, sold nearly 70 percent of production to the United States. % The Bank of Montreal has launched the first mutual fund for NAFTA investments to be marketed in all three countries. Source: "Mexico-Canada Trade Increases 40% This Year," "U.S. Beef Exports to Mexico Rise 55%," Alva Senzek, "Exporters Flock Together," EL FINANCIERO, 11/21-27/94; "Agricultural Exports to Total $1.5 Billion," "Mexico's Trade With U.S. and Canada Soars," EL FINANCIERO, 12/5-11/94; "Major Foreign Investments in Oil Fields," IPS, 12/8/94; Douglas Harbrecht, William C. Symonds, and Elizabeth Malkin and Geri Smith, "What Has NAFTA Wrought? Plenty of Trade," BUSINESS WEEK, 11/21/94. - - - - - - - - - - - - - - - - - - YEAR-END ROUND-UP: INTER-AMERICAN TRADE AGREEMENTS December's Summit of the Americas in Miami focused hemispheric attention on trade issues. Cuba was the only country in the hemisphere that was excluded, and the clear consensus among the heads of state in attendance was to move toward hemispheric free trade. A complex web of bi-lateral and multi-lateral trade agreements are already in effect. Intra-regional trade in Latin America has nearly doubled in the past five years. Just within the four member countries of Mercosur (Mercosul in Portuguese), trade has tripled since 1990 to $10 billion in 1994. Looking to the north, many Latin American countries have talked about joining the U.S., Mexico, and Canada in NAFTA. After a mostly disappointing year, Chile finally received the coveted invitation to join NAFTA at the end of the Miami Summit of the Americas in December. Formal negotiations will begin in May, and Chilean Finance Minister Eduardo Aninat predicted that the agreement may be finalized within 14 months. Other Chilean and U.S. diplomats said this time frame may be too optimistic. MERCOSUR, which includes Brazil, Argentina, Paraguay, and Uruguay, ended the year with approval of significant tariff reductions, though each country still maintains lists of exceptions for protected products. The Brazilian and Argentinean economic ministers also reached bilateral agreements on sensitive sectors, such as Brazilian wheat imports from third countries and the two nations' automotive industries, and on a common external tariff proposal that might be imposed on the two smaller member countries. The European Union is eager to maintain its trading relationship with the Mercosur countries, despite any efforts to form a single free trade zone encompassing the Americas. The EU recently proposed talks on a free trade pact between its members and Mercosur. Brazil, a leader in Mercosur and in South American trade generally, has also been considered cool to the idea of an all- American free trade zone, which would presumably be dominated by the United States. Brazil has been a leader in pushing for negotiations between Mercosur and the Andean Pact for a South American Free Trade Agreement or SAFTA. THE ANDEAN PACT has a variable membership, including Ecuador, Colombia, Bolivia, Peru, and Venezuela. Peru is a non-active member, and will remain so until mid-1995. The Andean Pact approved common external tariffs ranging from five to 20 percent to go into effect in February 1995. Exceptions to the tariffs will be made, particularly to protect the less- developed countries of Bolivia and Ecuador. The Andean Pact's financial arm, the Andean Promotion Corporation, loaned member states a total of $2.15 billion in 1994. Two-thirds of the loans went to the private sector, up from 22 percent in 1993. Private sector loans were primarily in the areas of environment, transportation infrastructure, privatization, and co-financing of development projects. THE GROUP OF THREE (G-3), composed of Mexico, Colombia, and Venezuela also comes into existence in 1995, with the goal of phasing out all trade barriers between the three countries within a decade. CARICOM unites a dozen small Caribbean countries, the largest of which are Trinidad & Tobago, Jamaica, and Suriname. Since its inception in 1975, Caricom has worked toward free trade. THE CENTRAL AMERICAN COMMON MARKET joins Guatemala, Costa Rica, El Salvador, Honduras, and Nicaragua in a common purpose of eliminating regional tariffs and establishing a common external tariff. Since its beginning in 1960, the Common Market's movement in that direction has been slow. ALADI, the Latin American Integration Association, includes Mexico and all South American countries except Guyana, French Guiana, and Suriname. Founded in 1980, ALADI is struggling to remain relevant as newer trade groups mushroom around it. Not all agree that free trade, whether a web of bi-lateral and multi-lateral pacts or a single grand free market of the Americas, is the answer to the region's problems. Organizations of indigenous people from Brazil, Colombia, Ecuador, Panama, and Venezuela rejected economic integration as leading to "the ruin of traditional cultivation based on small farm and communal work when confronted with competition from multinational agroindustry." In a letter to the presidents attending the December Summit of the Americas, the indigenous leaders wrote that "integration will reenforce the economic and political dominance of one country over the entire continent." Trade unionists, human rights activists, environmentalists, development, and religious groups also rejected the free trade gospel of the summit. Meeting in an "anti-summit" in Venezuela, many of the groups drew up a "Latin American Social Charter" listing rights and grievances, which will be presented to governments by the Latin American Workers' Association (CLAT). According to former Chilean president Patricio Aylwin, who proposed the meeting, 94 million people (22 percent of the population) in Latin America are "hungry, without health services, education, housing, security or hope." CLAT reports that half of Latin Americans do not have enough to eat and nearly a third lack access to clean drinking water. Source: "Chilean Minister Hopes for NAFTA Membership in 14 Months," IPS, 12/12/94; "Mercosur: Uruguay to Have Longest List of Tariff Exceptions," IPS, 12/7/94; Cardoso Questions Trade Negotiations with Argentina," "Cardoso Clarifies Views on Negotiations With Argentina," IPS, 12/12/94; "Andean Pact: Affiliated Bank Lent 2.15 Billion Dollars to Members in 1994," IPS, 12/12/94; Estrella Gutierrez, "Andean Group-Trade: Unified Tariffs Approved," 11/28/94; Stephen Fidler and George Graham, "Bonds That Bind a Hemisphere," FINANCIAL TIMES, 12/8/94; Stephen Fidler and George Graham, "Pledging a Market Partnership," FINANCIAL TIMES, 12/12/94; "Indigenous People Reject NAFTA-Style Integration," IPS, 12/15/94; Humberto Marquez, """Anti-Summit" Underlines Social Rights," IPS, 12/9/94; Dan Coughlin, "Greens Worried About One More Free Trade Zone," IPS, 12/11/94; Dan Coughlin, "Human Rights Groups Slam Leaders' Agenda," IPS, 12/10/94; "Trade in the Americas: Adding It Up," NEW YORK TIMES, 12/9/94; James Brooke, "South America's Big Trade Strides," NEW YORK TIMES, 12/10/94; Joachim Bamrud, "Summit of the Americas," U.S./LATIN TRADE, 12/94. - - - - - - - - - - - - - - - - - - RESOURCES/EVENTS "On the Line: Life on the US-Mexican Border" by Augusta Dwyer. Latin American Bureau. Monthly Review Press, 122 West 27th Street, New York, NY 10001. Telephone 212/691-2555; fax 212/727-3676. $15. Considers the impact of maquiladora industrialization and worker migration from the standpoint of individual workers in the borderland. "Estado y agricultura en Mexico: Antecedentes e implicaciones de las reformas salinistas," edited by David E. Lorey and Enrique C. Ochoa. The 6th volume of the Cycles and Trends in 20th Century Mexico series directed by James W. Wilkie (UCLA / PROFMEX) and Sergio de la Pena (UNAM). This volume is published by the Universidad Autonoma Metropolitana-Azcapotzalco with support from the William and Flora Hewlett Foundation. For ordering information, contact Arturo Grunstein at grunst@profmexis.dgsca.unam.mx. "NAFTA's First Year: Lessons for the Hemisphere," edited by Sarah Anderson and John Cavanagh, Institute for Policy Studies and David Ranney and Paul Schwalb, University of Illinois at Chicago, Center for Urban Economic Development. Institute for Policy Studies, 1601 Connecticut Ave. NW, Washington, DC 2009, credit card orders 202/234/9382. $5. The report includes sections on work ("Where are the Jobs? ... Quality of Work"), the environment, agriculture, immigration, women and people of color, NAFTA deals, and "Integration That Works," with appendices on NAFTA-TAA certifications resulting from a shift in production to Mexico and on "NAFTA Pork: Who Got What?" "For Richer, For Poorer: Shaping U.S.-Mexican Integration" by Harry Browne with Beth Sims and Tom Barry. Co-published by Inter-Hemispheric Education Resource Center and Latin American Bureau. 1994. 128 pages. The 4th volume in the U.S.-Mexico series. Resource Center, Box 4506, Albuquerque, New Mexico 87196, fax 505/1601, telephone 505/842-8288 and Latin America Bureau, 1 Amwell Street, London EC1R 1UL, fax +44 71 278 0165, telephone +44 71 278 2829. US$9.95 plus $3 s&h inside US, $4 s&h outside US. "Explains the nuts and bolts of globalization, and explores the winners and losers in NAFTA-style free trade, ... examines who supports and opposes NAFTA in the US and Mexico and looks at their arguments, ... outlines alternative strategies to promote a more balanced process of integration that protects workers' rights and the environment as well as business interests." "NAFTA's Impact on the North American Automobile Industry," Vol. 5, No. 1 of North American Outlook, a journal of the National Planning Association, 1424 16th Street NW, Suite 700, Washington, DC 20036, telephone 202/265-7685, fax 202/797- 5516. 1994. 92 pages. 4 issues yearly, $35. Three articles by James P. Womack, Isabel Studer, and Lorraine Eden and Maureen Appel Molot look at the North American auto industry under NAFTA and specifically at the Mexican auto industry and the Canadian auto industry. Back issues of this journal include "An Environmental Agenda for North America: Post-NAFTA," Vol. 4, No. 3; "The Social Charter Implications of NAFTA," Vol. 3, No. 3; and "Adjusting to NAFTA: Strategies for Business and Labor," Vol. 4, No. 1-2. - - - - - - - - - - - - - - - - - - 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