From iatp@igc.apc.orgFri Dec  1 17:12:21 1995
Date: Fri, 01 Dec 1995 06:35:53 -0800 (PST)
From: IATP <iatp@igc.apc.org>
To: Recipients of conference <trade-news@igc.apc.org>
Subject: NAFTA & Inter-Am Trade Monitor 12-1-

NAFTA & Inter-American Trade Monitor
Produced by the Institute for Agriculture and Trade Policy
December 1, 1995
Volume 2, Number 30
_________________________________________________
Headlines:
- U.S. WHEAT, DAIRY EXPORTS TO MEXICO
- CHILEAN CROPS AND PESTICIDES
- COFFEE UP, COFFEE DOWN
- CHIAPAS TALKS CONTINUE
- MEXICO AND LATIN AMERICA: POVERTY AND INTEGRATION
- TRUCKING CHANGES AHEAD
- CONTINUING OPPOSITION TO NAFTA WITHIN UNITED STATES
_________________________________________________

U.S. WHEAT, DAIRY EXPORTS TO MEXICO

Mexican authorities held up 45 rail cars of U.S. wheat at the 
border for nearly three weeks in November, alleging that 
inspectors had found small amounts of ergot, a wheat-related 
fungus. Kansas Republican Congressional Representative Pat 
Roberts protested that the Mexican action violated NAFTA, by 
setting standards more stringent than the uniform grain 
quality standards set by NAFTA. The grain had already passed 
USDA inspection, and re-inspection by U.S. and Mexican 
inspectors found that the ergot levels were well below the 
U.S. tolerance level, so Mexico allowed the rail cars to 
enter the country. Both countries agreed to discuss Mexico's 
grain regulations in order to avoid future problems. 

A new USDA dairy export initiative under the Export Credit 
Guarantee Program for fiscal year 1996 has been announced by 
the USDA. The Foreign Agriculture Service of the USDA said 
$700 million of the $1.25 billion in new Credit Guarantee 
Program sales to Mexico will be designated for dairy 
products, including butter, butter oil, milk powder, and 
various cheeses. Mexico also contracted for 12,000 tons of 
nonfat dry milk at the end of the July-September interim 
Dairy Export Incentive Program, for delivery in October-
November. 

Robert H. Brown, "Roberts Says Situation Threatens Trade," 
FEEDSTUFFS, November 27, 1995; "Mexico Allows U.S. Wheat to 
Enter," STAR TRIBUNE, November 21, 1995; "Dairy Included in 
$1.25 Billion in New Export Credits to Mexico," FUMMC MILK 
MATTERS, November 16, 1995. 

CHILEAN CROPS AND PESTICIDES

As the winter fruit season began in late November, the volume 
of Chilean fruit exports to North America was expected to be 
close to last year's record 58.5 million cases. Chile 
provides nearly 5 percent of the fruit consumed in North 
America, up to 15 percent of all fruit sales in pounds from 
January through April. According to Fedefruta president 
Ricardo Arztia, volume of all exports will increase from 154 
million cases in 1994-5 to 160 million cases this season. 
Leading imports include table grapes, kiwi fruit, 
raspberries, plums, pears, nectarines, peaches, and cherries. 

In Chile's fruit-growing Central Valley, Dr. Victoria Mella 
studied birth defects in 1988-90 and found that three times 
as many babies were born without brains or with exposed 
spines and water retention in the brain, compared to periods 
before the fruit industry began heavy use of pesticides. Most 
of the parents of children with brain and spinal defects 
worked in the export fruit industry, which uses about 60 
percent of the $38 million in pesticides imported annually. 
Since Mella's study was released in 1990, little has changed. 
The billion dollar fruit industry employs about 250,000 of 
Chile's 600,000 farm workers in the fields, with another 
100,000 working in packing plants. Most of the industry is 
controlled by six large companies, including Dole, Standard 
Trading, and Unifrutti. 

Although health officials have resigned in protest over 
massive sprayings of Malathion in Santiago in 1994 to 
eliminate fruit flies, agriculture ministry officials argue 
that the pesticides are safe. Chile also uses pesticides 
banned in the United States, such as Lindano and Paraquat, 
and Parathion, which may be used in the United States only by 
specially trained handlers. Methyl bromide, which is banned 
in the United States, is required for fumigation of grapes to 
be exported there. While it dissipates before the end 
consumer receives the fruit, workers and even children in 
nearby schools have been intoxicated or killed by the gas. 

Tom Karst, "Volumes Up Slightly," THE PACKER, November, 13, 
1995; Lake Sagaris, "The Killing Fields," CHICAGO TRIBUNE, 
November 5, 1995.

COFFEE UP, COFFEE DOWN

Coffee exporters earned $8.2 billion last year, up from $5.3 
billion in 1992, leading to increased investment in 
plantations. Production is expected to increase by 18 percent 
by the end of the century. Coffee prices may remain high 
until then compared to the historically low prices during the 
1980s, because of damage to Brazil in last year9s frost and 
drought and the retention agreements of the Association of 
Coffee Producing Countries. The retention agreement limits 
the amount of coffee that each producer country will export, 
in order to maintain coffee prices. Demand for coffee is 
expected to grow more slowly, with declining U.S. consumption 
being replaced gradually by increased coffee drinking in 
Japan.

Colombia and Indonesia have agreed to abide by the retention 
agreement, joining Brazil, Ecuador, Costa Rica, El Salvador, 
Angola, Ivory Coast, and Uganda. According to Brazil's 
foreign ministry, exporting countries will not have more than 
65 million bags of coffee to sell in 1995-96, though consumer 
countries will want 72 million. The shortfall is due to the 
continuing effects of last year's frost and drought in 
Brazil, which cut the Brazilian harvest in half. Brazil's 
share of world production is expected to fall from 25 percent 
to 20 percent by the end of the century, with Vietnam and 
Colombia increasing their shares. Brazilian coffee production 
has fallen so low that, for the first time in 200 years,  
Brazil expects to import less expensive Mexican and 
Guatemalan coffee this year to meet domestic demand, since 
its own crop is entirely contracted for export. 

Meanwhile, a campaign by a coalition of labor activists including 
the U.S./Guatemala Labor Education Project (U.S./GLEP) and the 
International Labor Rights Education and Research Fund (ILRERF) 
won an agreement from Starbucks, the largest U.S. retailer of 
specialty coffees to put in place a "Framework Code of Conduct" 
encouraging good labor and environmental practices by its 
producers. The framework affirms the right of farm workers to 
unionize and to earn wages and benefits that provide for "the 
basic needs of workers and their families." While U.S./GLEP points 
to significant shortcomings in the framework, including lack of 
enforcement mechanisms, it said Starbucks' response "is a 
statement that the company considers itself publicly accountable 
for abuses and worker rights violations on plantations from which 
it buys." In addition, says U.S./GLEP, the media coverage of the 
Starbucks statement  "means that concerned groups and individuals 
have new leverage to press for significant changes from the 
growers from whom Starbucks buys and to make Starbucks accountable 
for conditions on those plantations."

Alison Maitland, "Coffee Production 'to rise 18 percent by 
2000,'" FINANCIAL TIMES, September 19, 1995; George Meek, 
"World Coffee," VOICE OF AMERICA, September 21, 1995; George 
Meek, "Brazil Coffee," VOICE OF AMERICA, November 22, 1995; 
"U.S. Coffee Firm Adopts Labour Guidelines," INTERPRESS 
SERVICE, October 24, 1995; "Starbucks Releases Code of 
Conduct," GUATEMALA WORKER RIGHTS UPDATE, NOVEMBER 3, 1995. 

CHIAPAS TALKS CONTINUE

After six days of talks, the second round of discussions on 
Indigenous Rights and Culture in San Andres Larrainzar 
concluded on November 19 with some points of agreement, 
notably on the rights of indigenous people in the judicial 
system, and with disagreements on issues of autonomy and 
changes to land tenure provisions of Article 27 of the 
constitution. The government wants to restrict autonomy to 
the community level, while the EZLN proposes autonomous 
regions or Indian nations. The next round of discussions, 
beginning on January 10, will analyze concrete proposals on 
the theme of indigenous rights and culture. 

"Negotiations," MEXPAZ, November 21, 1995; Rosa Rojas and 
Elio Henriquez, "Se perdieron los Consensos en Larrainzar; 
Nueva Cita, 10 de Enero," LA JORNADA, November 21, 1995. 

MEXICO AND LATIN AMERICA: POVERTY AND INTEGRATION

As Mexico's economy continues to slide, other Latin American 
markets follow the peso's ups and downs. The so-called 
Tequila Effect drove ING Barings Latin America index down 
nearly 20 percent from August's post-devaluation peak, as the 
peso's renewed slide shook Argentine, Brazilian, Peruvian and 
Chilean markets. 

Regional economic connections have been fostered by 
subregional trade agreements of Mercosur, the Andean Group, 
the Group of Three, the Central American Common Market, and 
the Association of Caribbean States. Trade within Latin 
America doubled to $32.3 billion in 1994 from $16 billion in 
1990. Trade within the Mercosur group nearly tripled in the 
same time period, and is expected to increase further when 
Bolivia and Chile join Mercosur in the near future. Mercosur 
is also negotiating a preferential trade agreement with the 
European Union. 

Although Mexico has insisted repeatedly that it is and will 
continue to be "profoundly Latin American," Latin American 
economic and political integration have taken a back seat to 
economic integration with the United States. Mexico's 
membership in NAFTA and Chile's pursuit of NAFTA membership 
show the continued economic dominance of the United States in 
the region. 

International trade has not alleviated problems of poverty 
that plague the region. According to the United Nations 
Economic Commission for Latin America and the Caribbean 
(ECLAC), the region's Gross Domestic Product will grow less 
than two percent in 1995, with real wages falling and 
unemployment rising.  Nearly half of all Latin Americans live 
in poverty with monthly incomes of $60 or less. According to 
a study by the Institute for Economic Research at the 
National Autonomous University of Mexico (UNAM), the 
percentage of Latin Americans who could be classified as poor 
(lacking sufficient caloric intake) grew from 43 to 46 
percent (200 million people) from 1986 to 1990 and those in 
extreme poverty grew from 19 to 22 percent (98 million 
people). UNAM's research showed that the percentage of income 
received by the poorest 50 percent declined between 1980 and 
1990, while the percentage of income received by the richest 
10 percent of the population increased. 

UNAM socio-economic researcher Osorio Paz blames the 
development model imposed on the region by international 
lending institutions for the increasing inequality of income 
in the region. Foreign debt doubled since 1982 to $530 
billion, with debt and interest payments from Latin America 
to creditor nations and multinational lenders exceeding loans 
and aid received by $35 billion in 1994, according to 
Salvador Arriola, permanent secretary of the Latin American 
Economic System (Sela). The U.N. Conference on Trade and 
Development predicts falling economic growth throughout the 
region, from 3.7 percent in 1994 to less than two percent in 
1995. 

"Mexico and Latin America," EL FINANCIERO, September 25-October 1, 
1995, October 2-8, 1995; October 9-15, 1995, October 16-22, 1995; 
Matt Moffett and Jonathan Friedland, "South American Markets 
Yanked by Peso," WALL STREET JOURNAL, November 17, 1995; "1995  A 
Year of Low Growth and High Unemployment," INTERPRESS SERVICE, 
November 9, 1995; Charles W. Thurston, "Latin America's Regional 
Commerce Outpacing Trade With Rest of World," JOURNAL OF COMMERCE, 
November 21, 1995. 

TRUCKING CHANGES AHEAD

The U.S.-Mexico border is set to open to foreign trucking on 
December 18, as required by NAFTA, but some issues remain 
unresolved. Texas insurance regulators worry that Mexican 
carriers may not be able to obtain adequate insurance 
coverage. According to Gloria Leal, international legal 
counsel for the Texas Department of Insurance, U.S. insurance 
companies have no history of working with Mexican truckers 
and no information on which to base underwriting assumptions. 

Frustrated Mexican truckers feel that insurance issues amount 
to non-tariff barriers. In addition to paying $800 per truck 
registration requirements, they will have to meet minimum 
insurance requirements costing about $3,000 annually and 
provide workers compensation coverage for drivers while they 
are in Texas. 

Mexican truckers are pushing for a repeal of last year's 
permission for 53-foot trailers and longer-combination 
vehicles, worrying that the longer trailers will give U.S. 
truckers an advantage when border states are opened to 
international trucking. The Mexican government is considering 
a return to the previous 48-foot limit on trailer length, but 
is not expected to act until early 1996. U.S. truckers and 
transport officials also complain that Mexican rules and 
regulations are vague and that Mexico has not provided 
sufficient details on application for permits. 

Texas Attorney General Dan Morales complains that federal 
regulators have not provided sufficient safeguards to prevent 
damage to Texas roads from overweight Mexican vehicles. 
Morales has also expressed concern about lack of control over 
Mexican truckers carrying hazardous wastes. 

Kevin G. Hall, "Insurance Worries Mexican Truckers," JOURNAL 
OF COMMERCE, November 17, 1995; Kevin G. Hall, "US Truckers: 
Mexico Fails to Supply Operating Rules," JOURNAL OF COMMERCE, 
November 16, 1995; "Texas Official Seeks Way to Control 
Mexican Haulers," KNIGHT-RIDDER/TRIBUNE, November 13, 1995; 
Kevin G. Hall, "Mexico Thinking of Rescinding Rule Allowing 
53-Foot Trailers," JOURNAL OF COMMERCE, November 17, 1995. 

CONTINUING OPPOSITION TO NAFTA WITHIN UNITED STATES

On the second anniversary of NAFTA's ratification in mid-
November, debate showed continuing opposition to NAFTA. 
Opponents, such as Lori Wallach of Ralph Nader's Public 
Citizen's Global Trade Watch, characterized NAFTA as "a 
disaster" in a recent multi-national forum in St. Paul, 
Minnesota. Canadian Tony Clarke, former chair of the Action 
Canada Network public interest group, said Canada's six years 
of liberalized trade with the United States, both before and 
during NAFTA, have cost Canada more than 23 percent of its 
manufacturing jobs. Mario Monroy, of the Mexico Action 
Network, pointed to a decline in Mexican wages since NAFTA 
took effect in January 1994, and to the increase in 
billionaires in Mexico from one in 1990 to 24 in 1994, 
according to a FORTUNE magazine report. Sara Larrain, of the 
Chilean National Environmental Coalition, warned that the 
extension of NAFTA to Chile would endanger the environment by 
increasing exports of natural resources at an unsustainable 
rate. 

In a press release, William H. Bywater, president of the 
electrical workers' union, contrasted NAFTA's promises of a 
$12 billion trade surplus and 200,000 jobs with its delivery 
of a $15 billion trade deficit and 300,000 jobs lost. 
Congressional opponents introduced a bill to set conditions 
for the United States to stay in NAFTA, with the support of 
both Democrats and some conservative Republicans. The NAFTA 
Accountability Act would set the stage for a repeal of NAFTA 
in 1997, unless some of its terms are renegotiated. 

NAFTA supporters said that 21 months of experience is not 
enough to judge its effects, and that Mexico's recession and 
currency crisis have more to do with Mexican governmental 
policies than with NAFTA. They also dispute the number of 
jobs lost, pointing out that only about 40,000 U.S. workers 
have been given special aid for displacement due to NAFTA. 

"U.S. Lawmakers Propose Conditions to Stay in NAFTA," 
REUTERS, November 20, 1995; Mike Meyers, "NAFTA Under Fire," 
STAR TRIBUNE, November 20, 1995; Nick Delle Donne, "IUE Labor 
Leader William Bywater Hails NAFTA Accountability Act," IUE 
NEWS RELEASE, November 16, 1995.

RESOURCES/EVENTS

The North-South Agenda Papers, "Odd Couples: Joint Ventures 
Between Foreign Capitalists and Cuban Socialists" by Jorge F. 
Pirez-Lspez. No. 16 in an occasional series of papers of the 
North-South Center, 1995. 38 pp. University of Miami North-
South Center Press, 1500 Monza Avenue, Coral Gables, FL 
33146-3027. Economist discusses recent history of foreign 
investment in Cuba, changes to foreign investment law passed 
in September 1995, benefits to Cuba of foreign investment, 
and remaining risks to investors. 
____________________________________________
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