From iatp@igc.apc.orgSat Apr 8 11:06:34 1995 Date: Fri, 07 Apr 1995 15:51:42 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Monitor 4/7/95 NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy Friday, April 7, 1995 Volume 2, Number 10 _________________________________________ Headlines: - NAFTA SUCCESS CLAIMED BY U.S. EMBASSY - MEXICAN ECONMIC UPDATE - LATIN AMERICAN TRADE NOTES - ARGENTINA PASSES NEW PATENT LAW - CHIAPAS UPDATE - COLOMBIAN, MEXICAN COFFEE GROWERS IN TROUBLE _________________________________________ NAFTA SUCCESS CLAIMED BY U.S. EMBASSY A cable from the U.S. Embassy in Mexico cited approvingly the "Darwinian effects" of NAFTA, calling NAFTA "one of the few bright spots in the [Mexican] economy." The cable cited U.S./Mexico/Canada joint ventures in the auto parts, apparel, and footwear industries as textbook examples of increased efficiencies due to free trade, and also credited U.S. firms with aggressively pushing forward a retailing revolution. The retailing revolution was credited by the Embassy with increasing "availability of good quality, fairly priced goods," while at the same time it "increasingly displaced traditional Mexican retail outlets with the concomitant increase in bankruptcies and unemployment." The Embassy also credited NAFTA with helping to stabilize Mexico despite rebellion, political assassinations, and elections. "That the economy withstood almost daily shocks during January and February can be arguably attributed to the existence of anchors like the NAFTA," said the cable. While acknowledging that Mexico's economic crisis may postpone environmental protections sought by the NAFTA side accords, the cable claimed that Mexican labor leaders are solidly behind NAFTA, saying that: "Mexican labor leaders and, as far as we can tell, most organized Mexican workers view NAFTA -- the investment it will draw, the new jobs and the possibility for higher wages that it will create -- as their best hope." The cable acknowledged that farmers may not be happy with NAFTA: "In its Darwinian effects, NAFTA formally ushered in an era of far- reaching economic adjustment that will inevitably hit very hard at certain sectors. Agriculture, for example, will suffer dramatic changes, which although beneficial to the economy overall, will spell the demise of many Mexican farmers and businesses. To be sure, certain sub-sectors, such as seasonal fruits and vegetables, are already thriving under NAFTA, but others -- basic grains, meat and dairy, for example -- will suffer. Long phase-outs and other devices were written into the NAFTA to stretch out the adjustment period for Mexican farmers. ... But this restructuring will take concerted effort, while the exodus from inefficient agriculture continues." "Mexico: NAFTA Effects," U.S. EMBASSY CABLE, 3/30/95. MEXICAN ECONOMIC UPDATE According to government figures, about 400,000 Mexicans lost their jobs in January, far exceeding the figure of 250,000 for January and February combined, which the government had earlier given. By the end of March, Mexican Labor Secretary Santiago Onate predicted that at least a million of the country's 26 million jobs will be lost in 1995. Overall retail sales fell 2.7 percent in January, with domestic car sales dropping by 70 percent. Robberies, assaults, and suicides were all reported to be rising in Mexico City, with relatives claiming that financial problems contributed to at least 50 of the 127 suicides reported in the first 80 days of 1995. In 1994, Mexico City reported 371 suicides for the entire year. Some 13,000 maquiladora workers in the Ciudad Juarez area have gone out on strike since the beginning of 1995, with most winning wage increases. Strikes and protests are widespread, with 100 separate protests reported in Mexico City on a single day in March. The national El Barzon agricultural movement shut down 874 bank branches in a March 16 protest they called the "National Day Against Usury." The traditional May 1 Labor Day parade has been canceled by union directors, though government officials say they will plan some kind of observance. Although Mexican businesses and consumers continued to suffer as a result of increased taxes and prices, macro-economic indicators advanced, giving government officials and investors cause for cautious optimism. The stock exchange recovered 17.5 percent since the March 10 announcement of the government's emergency economic plan, and the exchange rate, which reached eight pesos to the dollar in mid-March, went back down to seven pesos. The Bank of Mexico announced on March 30 that its international currency reserves had risen $9 million over the previous week, reaching $7.86 billion, nearly 28 percent more than on January 2, though far below the $24 billion in hand a year ago. On March 29, the annual interest rate on 28-day government bonds in pesos fell seven percent to 75 percent. Anthony DePalma, "Mexico's Recovery Plan Shows Signs It Is Working," NEW YORK TIMES, 3/25/95; "Mexican Austerity Plan: Crime and Suicide Rates Jump," WEEKLY NEWS UPDATE ON THE AMERICAS, 3/26/95; "El Barzon Shuts Down 874 Bank Branches," MEXPAZ BULLETIN #14, 3/23/95; Eduardo Molina y Vedia, "Macroeconomic Indicators Improve Despite Recession," INTERPRESS SERVICE, 3/30/95; Craig Torres, "Mexico is Drawing on Aid Package as Reserves Fall," WALL STREET JOURNAL, 3/27/95; Andrea Becerril, LA JORNADA, 4/3/95. LATIN AMERICAN TRADE NOTES % Honduras, Guatemala, and El Salvador, members of a group called the Triangle of the North, have suspended trade negotiations with Mexico that they began last year. Honduran Economy Minister Delmer Urbino cited the negative impact of Mexico's financial crisis throughout Central and South America as a reason, and said the three nations might open negotiations with Colombia. Costa Rica signed a free-trade pact with Mexico in 1994, but saw its exports to Mexico fall by 53 percent in January and February. Nicaragua is currently negotiating a free-trade pact with Mexico. % During March, Brazil imposed increased tariffs on a hundred durable consumer goods, but these tariffs will not apply to imports from Brazil's Mercosur partners -- Argentina, Uruguay, and Paraguay. The move will give important advantages to motor vehicles and consumer electronic goods manufactured in other countries, such as cars imported from Argentina and Uruguay. % Although Uruguay has largely escaped the "tequila effect" because of the small size of its stock market, President Julio Sanguinetti announced a fiscal adjustment plan designed to prepare the country for the expected Argentine recession. Because a drop in consumption in Argentina would decrease Uruguayan exports, President Sanguinetti is asking for an increased Value Added Tax and incentives for exports. The two percent monthly devaluation rate will be maintained, contradicting earlier expectations that the new Sanguinetti administration would significantly devalue the peso against the dollar. Critics called the new plans both "socially regressive" and more stringent than needed. Bill Rodgers, "Cent-Am Mexico Trade," VOICE OF AMERICA, 3/15/95; Kevin G. Hall, "Chile, Anxious to Join Nafta, Fears Impact of Mexico Woes," JOURNAL OF COMMERCE, 3/16/95; "Alzas Arancelarias en Brasil No Se Aplican a Socios," INTERPRESS SERVICE, 3/31/95; Marcelo Jelen, "When Argentina Sneezes, Uruguay Catches Pneumonia," INTERPRESS SERVICE, 3/29/95 ARGENTINA PASSES NEW PATENT LAW In late March, after decades of U.S. pressure, the Argentine legislature passed a new patent law for pharmaceutical products. James Cheek, U.S. Ambassador to Argentina, condemned the new law as "utterly useless." While the new law complies with GATT guidelines, the U.S. considers those provisions inadequate for defending U.S. private interests. Argentina's new law, which could still be vetoed by President Carlos Menem, recognizes inventors' rights to royalty payments, but also says the patent-holder must produce the invention in the country that requests it. U.S. firms oppose this provision, which is intended to keep foreign firms from leaving their home countries and maintaining factories in only one or two countries in the region. Argentina's pharmaceutical industry is one of the most developed in Latin America, employing more than 35,000 people. The new law also states that all biological and genetic material is unpatentable. Marcela Valente, "New Patent Law, a Hollow Victory for the United States," INTERPRESS SERVICE, 3/30/95 CHIAPAS UPDATE In response to the government's stated willingness to negotiate, on March 30 the Zapatista National Liberation Army (EZLN) proposed four possible meeting places in Mexico City: the Metropolitan Cathedral, the Basilica of Guadalupe, the campus of the National Autonomous University, and the offices of the United Nations in Mexico City. In addition, the EZLN submitted a proposed agenda for dialogue. The Secretary of Government stated that parts of the EZLN proposal were "worthy of attention" and other parts were "unviable," but did not specify which parts were which. A few days later, a powerful right-wing organization in San Cristbal de las Casas, which had previously opposed negotiations in their city and had repeatedly attacked Bishop Samuel Ruz, called for negotiations to be held in San Cristbal under the leadership of Bishop Ruz and CONAI. On April 2, COCOPA, the legislative Commission for Concord and Pacification, proposed that negotiations take place in one of six Chiapan municipalities. The Secretary of Government said that the government accepted this proposal, and did not respond directly to the EZLN message. Speaking to a reporter in the Lacandon jungle as military helicopters circled overhead on April 3, a Zapatista spokesperson reiterated that the EZLN cannot enter into dialogue with the federal government in any of the communities located in the zone of conflict, unless and until the army withdraws from those zones. The spokesperson attributed the government's refusal to negotiate in Mexico City to either bad faith or fear, and said that the government had previously negotiated in bad faith in San Cristbal de las Casas and had failed to fulfill the promises made there. During the last week of March, one of the buses of the International Caravan for Peace was attacked and robbed on a highway in Chiapas. Five international observers were detained and then freed in Tumbala. Some 400 civilian delegates, including federal legislative deputies, who attempted to meet in Aguascalientes to discuss possibilities for peace during the last week of March, were turned back by soldiers who claimed to be acting on presidential orders. The delegates met instead in Guadalupe Tepeyac, but agreed that their difficulties demonstrated that negotiations could not take place within zones of military occupation. The 30-day suspension of arrest orders against the Zapatista leaders will expire on April 9. Asked to comment on the deadline, the young, indigenous man who spoke for the EZLN, said: "We are not trembling because the time limit is up. ... More than the end of the time limit, we want to know when will poverty end, when will the misery end, when will our not having anything to eat end? What is ending is our life. Time periods of 30 days which the government has given us are not ending. For this reason we have never talked of going backwards or giving up." Meanwhile, Chiapas continues under military occupation. While some of the indigenous families who fled before the advancing government troops in February have returned to their devastated villages, others refuse. About 4,000 Tzeltal and Tojobal people still in the Lacandon jungle, have pledged to continue resisting until the soldiers leave their homes. One leader of the group explained, "[The Army] came destroying houses, seeds, and animals, the sustenance of the indigenous communities, our daily bread. After the soldiers came through, the government began to start up 'Solidarity" programs and had the soldiers to "social service" work. They began to ffer bags of food and signature loans. And since the people have so much need because hunger is such a bitch, some accepted it." Some of the indigenous people who have returned report continued harassment by the military. Some homes and lands formerly occupied by the indigenous refugees have also been given to pro-government returnees who had fled Chiapas during the Zapatista rebellion in January, 1994. Chiapas is the poorest state in Mexico, with nearly 80 percent of its indigenous population malnourished, two medical clinics for every 10,000 people, and 1.5 of its 3.5 million people without any access to health care. More than 70 percent of its children fail to finish first grade, more than half of the schools go up to only third grade, and half of all schools have only one teacher for all age levels. Since the renewed conflict in February, 372 schools have closed in Chiapas, leaving 14,800 students out of the classroom. Mary Jo McConahay, "Chilling Mood in Chiapas Evokes Memories of El Salvador, Guatemala," PACIFIC NEWS SERVICE (via STAR TRIBUNE), 3/27/95; Elio Henrquez and Jos Gil Olmos, "La Catedral, La Basilica, CU La ONU, Las Sedes Planteadas;" "El Comunicado Rebelde Tiene Puntos Atendibles y Otros Inviables," LA JORNADA, 3/30/95; Diego Cevallos, "Military Occupation Put End to Zapatista 'Socialism',"; INTERPRESS SERVICE, 3/23/95; Jos Gil Olmos, "Refugees Refuse to Return," LA JORNADA, 3/25/95; Mireya Cuellar, LA JORNADA, 4/2/95; Jos Gil Olmos, LA JORNADA, 4/4/95; EZLN COMMUNIQUE, 3/24/95; "Chronology," MEXPAZ BULLETIN #15, 3/30/95. COLOMBIAN, MEXICAN COFFEE GROWERS IN TROUBLE Ten thousand small Colombian coffee growers are demanding government assistance to help them survive the effects of high debts, low domestic prices, and the broca parasite that hit half of the country's coffee plants last year. The Catholic Church has supported the demands of growers for debt adjustments, but the National Coffee Growers Fund (NCGF), the government office concerned with coffee production, has refused to consider the demands. Agriculture Minister Antonio Hernandez Gamarra admitted that situation is critical, but ruled out the use of NCGF funds to alleviate the growers' debts, saying the funds were dedicated to buying up surplus coffee stocks to maintain prices. Last year's higher international coffee prices supported a 5.7 percent growth in the Colombian economy, but did not trickle down to the producers. This year, producers are buying 38 percent less fertilizer than last year and workers on small coffee farms (under 10 hectares) earn 25 percent less than in 1994. Coffee producers blame debts built up over the last five years that total $350 million. Some 350,000 families depend on coffee production in Colombia, the world's second- largest producer. This year's harvest is expected to be 20 percent below normal, due to the broca plague. Some 100,000 Mexican coffee-growers rejected the government's austerity measures and demanded that credit be made available to finance cultivation of coffee in the 1995-96 growing season. In Oaxaca, San Luis Potos and Chiapas, coffee producers took over offices of SAGDR (the agriculture ministry), blocked roads, and staged demonstrations and marches, demanding the restructuring of the Mexican Coffee Council and the transformation of FIDECAFE into a permanent forum for producers. At the same time, representatives of several coffee-growers' organizations met with agriculture officials in Mexico City. Mexican coffee production has fallen 30 percent in the past five years, and growers need additional financing to reactivate production. Mexico has 280,000 coffee producers, 195,000 of whom are minifundistas, who, with only 1.5-5 acres each, live at levels of poverty and extreme poverty. Yadira Ferrer, "Small Coffee Producers Demand Assistance," INTERPRESS SERVICE, 3/31/95; Matilde Prez, "100 Mil Cafeticultores Rechazan Medidas," LA JORNADA, 3/16/95. RESOURCES/EVENTS Understanding Chiapas by Peter Rosset with Shea Cunningham, 1995. Food First Action Alert. 10 pp. Institute for Food & Development Policy, 389 60th Street, Oakland, CA 94618. Telephone 800-888-3314 or 510-654-4400. Email foodfirst@igc.apc.org. Price: Free to members; others 50" each; 5/$2; additional quantity discounts; minimum order $2. Focuses on present-day social, economic, political situation of Chiapas, with emphasis on agriculture. _______________________________________________ Produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. Edited by Mary C. Turck. The NAFTA & Inter- American Trade Monitor is available free of charge to Econet and IATPNet subscribers. 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