From iatp@igc.apc.orgTue Sep 12 22:52:13 1995
Date: Mon, 11 Sep 1995 07:24:44 -0700 (PDT)
From: IATP <iatp@igc.apc.org>
To: Recipients of conference <trade-news@igc.apc.org>
Subject: NAFTA & Inter-Am Trade Monitor 9-8-

NAFTA & Inter-American Trade Monitor
Produced by the Institute for Agriculture and Trade Policy
September 8, 1995
Volume 2, Number 24
__________________________________________
Headlines: 
- FREE TRADE IMPACT ON LABOR
- U.S.-MEXICO AG TRADE ISSUES
- PERU CHANGES AGRARIAN LAWS
- BANANA WAR UPDATE
- REGIONAL TRADE ALLIANCES MEET
- MEXICAN NATIONAL CONSULTATION DRAWS ONE MILLION PLUS

__________________________________________
FREE TRADE IMPACT ON LABOR

In Mexico, industry groups and the government are pressing 
labor unions to make concessions, including change from a 
daily to an hourly wage in some industries, hiring more non-
union workers, and greater management freedom in hiring and 
firing part-time workers.  Some unions agree that a "new 
labor culture" is needed, while others say that the phrase is 
a euphemism for reducing legal protections for workers.  An 
independent union leader in the auto sector, Benedicto 
Martinez, says business is taking advantage of the situation: 
"We can fight for better pay or we can fight to maintain 
jobs."  Since the peso was devalued last December, at least 
one million of Mexico's 35 million jobs have disappeared, and 
Mexico's economy continues to slow, contracting by 10.5 
percent in the second quarter of 1995.  

In the United States, skilled workers are watching as their 
jobs move overseas.  "Information age" jobs that require 
computer skills can be done anywhere that computers, modems, 
and telephone cables are available, and white-collar jobs are 
moving to lower-wage sites around the globe.  One example: 
Sea-Land, a division of the CSX Corporation, shut down 
offices in New Jersey and contracted the computer programming 
work previously done by approximately 300 U.S. workers in New 
Jersey to programmers in India and the Phillipines.  
Experienced programmers in India earn $1,200 to $1,500 
monthly, compared to $4,000 and up in the United States.  

Blue-collar jobs in the United States remain at risk, both 
when companies move abroad and when they use the threat of 
moving to control employees.  B.W. Harris Manufacturing 
Company recently closed a plant in West St. Paul, MN, moving 
its clothing manufacturing to the Caribbean.  Like many other 
manufacturers, Harris will cut cloth in Florida, ship it to 
the Caribbean Basin for sewing, and sell the finished 
clothing in the United States.  Caribbean manufacturers 
benefit from U.S. Caribbean Basin Initiative and Section 807 
trade legislation.  The number of U.S. textile and apparel 
industry jobs has declined from more than 1.1 million in 1985 
to 969,400 in 1994, according to the U.S. Bureau of Labor 
Statistics.  In contrast, Caribbean Basin countries have 
increased apparel exports to the United States by more than 
25 percent to $2.45 billion during the first quarter of 1995, 
while Mexican apparel exports rose by 60 percent to $1.35 
billion.

Among U.S. workers feeling the pressure of the threat of 
moving abroad are workers at Leaders Manufacturing Inc. in 
Willmar, MN, who met this summer to begin organizing a union.  
One organizer has been fired and some workers report that the 
company's personnel director showed up at an organizing 
meeting and threatened to move jobs to Mexico if a union was 
voted in.  Company officials declined to discuss the charges.  

Dianne Solis, "Mexico's Economic Crisis Pushes Unions to 
Consider Concessions," WALL STREET JOURNAL, August 25, 1995; 
"Mexican Recession Worse; Output Off 10% in Quarter," NEW 
YORK TIMES, August 17, 1995; Keith Bradsher, "Skilled Workers 
Watch Their Jobs Migrate Overseas," NEW YORK TIMES, August 
28, 1995; Tom Fredrickson, "B.W. Harris Shifts Work to 
Caribbean," CITY BUSINESS, August 31, 1995; Jill Hodges, 
"Workers at Willmar Manufacturing Company Press On With Their 
Effort to Organize a Union," STAR TRIBUNE, July 15, 1995; 
Canute James, "Caribbean Sees Jump in Apparel Exports to US," 
JOURNAL OF COMMERCE, August 31, 1995.

U.S.-MEXICO AG TRADE ISSUES

California growers, last year enthusiastic about increased 
exports to Mexico under NAFTA, have seen those exports fall 
dramatically in the wake of Mexico's economic crisis.  Tomato 
sales to Mexico, which grew from 600,000 25-pound cartons in 
1992 to 2.25 million in 1994, have been cut by 95 percent 
this year.  California wine exports to Mexico, which went 
from $2.3 million in 1990 to $6.8 million in 1994, totaled 
only $547,000 in the first half of 1995.  California growers 
blame both the Mexican economic crisis and border crossing 
problems that never have been resolved.  If border officials 
hold up a shipment for paperwork, perishable produce loses 
value.  

The USDA's Animal Plant Health Inspection Service (APHIS) 
scheduled hearings on its proposal to partially lift a ban on 
Hass avocados from Mexico, allowing their entry to 19 
northeastern U.S. states each year from November through 
February.  According to APHIS, cold weather would kill the 
pests that have been the reason for the 81-year-old U.S. ban 
on Mexican avocado imports.  California's $1 billion avocado 
crop, 90 percent of U.S. avocado production, is sold almost 
entirely in the U.S. at prices two to three times higher than 
prices for Mexican avocados.  

More than one thousand California avocado farmers packed a 
USDA hearing in Escondido, insisting that their opposition 
was based on fear of pests, not fear of competition.  
Outraged voices on the Internet also protest avocado import 
proposals: "The Mexican Avocados have been banned because of 
insects for years because of the bugs down there that we 
don't have here. ...  I don't think bringing in avocados that 
may have worse bugs will help us control bugs. ... Can 
someone tell me why bringing in these avocados will help 
avocado farmers here in the good old U.S.A.  How can they 
quarantine our fruit and not let us sell it yet welcome the 
Mexican fruit that may well destroy our market?"  

USDA officials are also considering ways to transport Mexican 
mangoes, possibly carrying fruit flies, larvae, or pupae, 
through the United States to Canada.  Shippers and exporters 
want to simply ship through the U.S. in sealed containers, 
but the USDA points out that larvae and pupae could fall out 
of the containers when they are being hauled back to Mexico, 
and that there are no controls on where the containers or 
trailers go after the mangoes are unloaded in Canada.  
Mangoes exported to the United States must have a U.S.-
supervised hot water bath to kill fruit flies before entry 
into the country.  

Montieth Illingworth, "Mexican Slump Nips Farm Trade in Bud," 
JOURNAL OF COMMERCE, August 21, 1995; Kevin G. Hall, "USDA 
Aims to Block Mexico-Canada Flyway," JOURNAL OF COMMERCE, 
August 25, 1995; sals@coyote.rain.org, INTERNET POSTING, 
August 15, 1995; Bill Mongelluzzo, "Growers Emphatic in 
Support of Ban on Mexican Avocados," JOURNAL OF COMMERCE, 
September 1, 1995.

PERU CHANGES AGRARIAN LAWS

In mid-July, 27 years after Peru's land reform law was 
instituted by General Juan Velasco's left-wing military 
regime, all limits on landholding were abolished. Proponents 
said that larger agro-industrial operations are necessary to 
produce efficiently for export.  Investors and agri-business 
are expected to buy up thousands of hectares along the 
Peruvian coast from cooperatives that have administered the 
tracts since the Velasco reform.  

Opposition leaders argued unsuccessfully that the abolition 
of limits on landholding will bring a return of latifundios -
- large estates farmed with semi-feudal labor.  The neo-
liberal majority in Congress sees large estates as desirable, 
and is preparing companion legislation to change irrigation 
and water laws and set market prices for water.  Both the 
land and water legislation have been strongly advocated by 
the World Bank and the Inter-American Development Bank, which 
have pledged a billion dollars in loans over the next three 
years to rehabilitate drainage and irrigation infrastructure.  

Sally Bowen, "Peru Set to Sweep Away 27-Year-Old 'Land 
Reform' Laws," FINANCIAL TIMES, July 18, 1995.

BANANA WAR UPDATE

Throughout 1995, the United States has threatened retaliatory 
trade sanctions under its Section 301 trade law to penalize 
the European Union (EU) for its banana regime.  The most 
recent U.S. deadline for EU changes is October 17.  Colombia 
and Costa Rica are also potential targets of the Section 301 
sanctions.  [See NAFTA & Inter-American Trade Monitor, April 
28, 1995.]  In August, the U.S. also said that it will 
initiate a complaint against the EU policy before the World 
Trade Organization.

The EU banana regime uses a combination of quotas, tariffs, 
and export licenses to favor imports from former colonies in 
Africa, the Caribbean and the Pacific.  Complicating matters, 
four Latin American banana producers -- Colombia, Costa Rica, 
Nicaragua, and Venezuela -- signed the so-called "banana 
framework agreement" with the EU, agreeing to shelve 
challenges under the World Trade Organization (WTO) rules in 
exchange for somewhat-improved country quotas.  Ecuador -- 
the world's largest banana producer -- and other Latin 
American countries objected to the framework agreement.  

On the request of the Hawaii Banana Industry Association and 
Chiquita Brands International, the world's largest banana 
trader, the U.S. Trade Representative (USTR) began an 
investigation of the EU preferences for Caribbean bananas.  
Latin America produces about 75 percent of the world's 
bananas, and Chiquita Brands controls 65 percent of the 
market.  The U.S.-based companies object to preferences for 
Caribbean producers and to provisions of the EU banana regime 
that give Latin American countries greater authority to 
allocate export licenses to companies.  

Caribbean countries attending a Washington meeting of 
hemispheric defense ministers in early August sought to 
refocus discussions on hemispheric security toward what they 
see as a United States war on their banana producers.  
Speaking for the Caribbean countries, which have small armies 
or none at all, Jamaican Ambassador Richard Bernal said that 
"the key is economic development."  Antigua and Bermuda's 
Ambassador Patrick Lewis agreed, telling reporters, "I think 
the enemy is ourselves unless we can work together."  

In July, EU farm ministers rejected a call by the European 
Commission, the EU executive agency, to increase Latin 
American import quotas by 350,000 tons.  France, Britain and 
Spain insist that they will not accept changes in the EU 
banana regime.  Germany, Belgium, the Netherlands, 
Luxembourg, Austria, Finland, and Sweden want to increase the 
Latin American quota and change the distribution and 
allocation of export licenses.  The European Commission will 
report in September on proposed modifications to the EU 
banana regime.

Yvette Collymore, "Caribbean-Trade: New 'Enemies' Pose as 
Friends," INTERPRESS SERVICE, August 9, 1995; Debra Percival, 
"U.S. Demands May Lead to Modification of EU Regime," 
INTERPRESS SERVICE, July 25, 1995; Canute James, "Caribbean 
Banana Exporters Hit US Stance on EU Regime," JOURNAL OF 
COMMERCE, July 13, 1995; Bruce Barnard, "European Commission 
May Seek OK to Talk Bananas With Washington," JOURNAL OF 
COMMERCE, July 24, 1995; Debra Percival, "EU May Change 
Regime in Bid to Please Washington," INTERPRESS SERVICE, June 
7, 1995; Silvio Hernandez, "Banana War Looms," INTERPRESS 
SERVICE, May 16, 1995; Bill Rodgers, "U-S/Latam Bananas," 
VOICE OF AMERICA, May 24, 1995; Tom Karst, "Trade Debate 
Arises as Market Ascends," THE PACKER, May 22, 1995; "U.S. 
Plans Trade Appeal in Europe Banana Case," NEW YORK TIMES, 
August 19, 1995.

REGIONAL TRADE ALLIANCES MEET

When Mercosur member nations (Argentina, Brazil, Paraguay, 
Uruguay) met in Paraguay this summer, the world's fourth-
largest trading bloc agreed to expand, beginning talks to 
admit Chile and Bolivia.  Moving beyond the common external 
tariff that was implemented on January 1, the summit included 
discussion of cultural, currency, and other integration.  
Argentine President Carlos Menem called for progress toward a 
common currency, but called eradication of poverty and 
unemployment the greatest challenge facing Mercosur members.  
The Bolivian and Chilean presidents called for progress on 
physical infrastructure links, such as highways, railroads, 
and ports.

Both Chile and Bolivia are negotiating with Mercosur, with 
Chile expecting to reach an agreement by the end of the year, 
and Bolivia's president predicting an agreement with Mercosur 
by the end of June.  Cultural officials of Mercosur countries 
and Bolivia signed an agreement to promote cultural 
cooperation, including a regional calendar of cultural 
events, joint publication of a basic collection of works by 
Mercosur authors, and linkage of national libraries and data 
centers.  

Disagreements among member nations included the dispute 
between Brazil and its Mercosur partners over import quotas 
imposed by Brazil on motor vehicles and other items.  Brazil 
exempted other Mercosur countries from its limits on vehicle 
imports, defusing the biggest conflict at the meeting.  Trade 
among Mercosur member nations has tripled during the past 
four years.  

Central American countries lack a strong trade pact, though 
trade within the region has grown from $750 million in 1990 
to more than $1.4 billion in 1994.  While several bilateral 
pacts, such as agreements between Costa Rica and Mexico or 
Nicaragua and Mexico, are pending or in place, severe 
national economic problems remain the main preoccupation of 
Central American nations.  

The Central American nations are included in the world's 
newest trade bloc, the Association of Caribbean States (ACS), 
together with members of the 14-nation Caribbean Community 
(Caricom), the Group of Three (Colombia, Mexico and 
Venezuela), Cuba, the Dominican Republic, and Haiti, and 15 
dependent territories in the region.  Citing NAFTA to the 
north and Mercosur to the south, a Venezuelan delegate to the 
August ACS meeting warned that, "We in this region are likely 
to be either squeezed, or left out, or both, and we cannot 
allow this to happen."  

Caricom already has a common external tariff and is moving 
toward lower tariffs and a common currency.  The ACS has the 
potential to be one of the world's largest trade blocs, but 
it has just begun work on significant regional issues: trade, 
transportation, and tourism in the region.  

George Meek, "Mercosur," VOICE OF AMERICA, August 3, 5, 7 
1995; Mario Osava, "Trade Bloc Fraught With Constant 
Bickering," INTERPRESS SERVICE, August 4, 1995; Marcela 
Valente, "Argentina Calls for Realism, Flexibility and 
Goodwill," INTERPRESS SERVICE, August 5, 1995; Maricel 
Sequiera, "Central America: Regional Pacts Need Updating," 
INTERPRESS SERVICE, July 5, 1995; Maricel Sequiera, "Central 
America: Towards Integration, With Eyes Wide Open," 
INTERPRESS SERVICE, June 26, 1995; Wesley Gibbings, 
"Caribbean Meets on Tourism, Trade and Transportation," 
INTERPRESS SERVICE, August 11, 1995; Scott West, "Caribbean: 
Regional Grouping Moves Slowly Towards Common Market," 
INTERPRESS SERVICE, July 24, 1995; Canute James, "Beachhead 
Against Shifting Trade," "Caribbean Leaders Meet to Forge 
Trade Bloc," FINANCIAL TIMES, August 17, 1995; Ian Elliott, 
"U.S., EU Watch as Mercosur Gains Market Strength," 
FEEDSTUFFS, August 21, 1995.  

MEXICAN NATIONAL CONSULTATION DRAWS ONE MILLION PLUS

The August 27 National Consultation for Peace and Democracy, 
an unofficial plebiscite sponsored by the rebel Zapatista 
National Liberation Army (EZLN), won the participation of 1.2 
million Mexicans.  The number of voters was about three 
percent of the turnout for the 1994 national elections, with 
heaviest participation in southern states and Mexico City.  
The number was far greater than the 330,000 who voted in a 
plebiscite on home rule for Mexico City in 1993 or the 
631,193 who voted in a plebiscite on national policy last 
February.
	
Early returns showed 97.4 percent of participants supporting 
EZLN demands for land, justice, democracy, education, and 
social development and 92.5 percent backing the idea of a 
"broadbased opposition front" to work for their goals, with 
94.3 percent calling for "profound political reform" in 
Mexico.  More than half of the voters -- 53.2 percent -- 
voted for the EZLN to become a "new, independent political 
force," while 48.1 percent voted in favor of coalition with 
other organizations.  
	
The grassroots plebiscite was administered by the Civic 
Alliance, a non-governmental election monitoring group, and 
financed by individual donations and fundraising concerts and 
dances.  Voters came to 10,032 tables around the country, and 
55,000 votes from outside the country, including more than 
9,000 from the US, were registered.  Voters produced 
identification and had their hands stamped with indelible ink 
when they voted.  
	
The government generally honored its pledge of non-
interference, though some unidentified persons videotaped or 
photographed voters, and government officials prevented 
tables from being set up in two towns in Oaxaca and some 
parts of Mexico City.  

"Mexicans Vote for Rebels to Form Independent Political 
Force," WEEKLY NEWS UPDATE ON THE AMERICAS, September 3, 
1995; "National Consultation for Peace and Democracy," 
MEXPAZ, August 29, 1995.
___________________________________________
Produced by the Institute for Agriculture and Trade 
Policy, Mark Ritchie, President.  Edited by Mary C. 
Turck.  The NAFTA & Inter-American Trade Monitor is 
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