From notes@igc5.igc.apc.org Fri Dec 15 20:23:56 1995 Received: from us.itd.umich.edu (stimpy.us.itd.umich.edu [141.211.164.7]) by locust.cic.net (8.7.3/8.7.3) with ESMTP id UAA06915 for ; Fri, 15 Dec 1995 20:23:56 -0500 (EST) Received: from igc5.igc.apc.org by us.itd.umich.edu (8.7.1/2.2) with ESMTP id UAA18573; Fri, 15 Dec 1995 20:23:35 -0500 (EST) Received: from cdp.igc.apc.org (cdp.igc.apc.org [192.82.108.1]) by igc5.igc.apc.org (8.7.3/8.7.1) id OAA01690; Fri, 15 Dec 1995 14:51:51 -0800 (PST) Date: Fri, 15 Dec 1995 14:00:44 -0800 (PST) X-Conference: trade.news From: IATP Subject: NAFTA & Inter-Am Trade Monitor 12-15 To: Recipients of conference Message-ID: X-Gateway: conf2mail@igc.apc.org Errors-To: owner-trade-news@igc.apc.org Precedence: bulk Lines: 356 Status: RO X-Status: NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy December 15, 1995 Volume 2, Number 31 ________________________________________________ Headlines: - SLOW CHRISTMAS, SAD CHRISTMAS - MEXICO CORN IMPORTS UP - CHICKEN WARS AHEAD - AFTER NAFTA: MOVING TOWARD FTAA? - DOLE POSTPONES PUBLIC BANANA HEARINGS - MEXICAN SUGAR GROWERS STRIKE - MODEL ENVIRONMENTAL LAW APPROVED - U.S. FARMERS FIGHT FUMIGANT PHASEOUT - U.S. GRAPE GROWERS CHARGE DUMPING ________________________________________________ PUBLICATION SCHEDULE This is the last issue of the NAFTA & INTER-AMERICAN TRADE MONITOR for 1995. We are looking forward to hearing from you again in 1996. ________________________________________________ SLOW CHRISTMAS, SAD CHRISTMAS Many U.S. merchants on the Texas-Mexico border lamented the prospect of slowing Christmas sales, despite an October order of Mexican Treasury officials increasing the duty-free regulations to $400 per person per month. Border merchants note that the Mexican economic crisis has simply left most people with little or no money to buy, and that devaluation of the peso has hit border residents, who purchase more U.S. goods, particularly hard. With 2.4 million people newly out of work this year and the average number of workers per family down from 3.1 in 1994 to one in 1995, Mexican families are preparing for a bitter and lean Christmas. Purchases of records, gifts and toys have fallen 40.4 percent below last year's levels. An estimated one in five Mexicans goes to bed hungry every night. Mexico's falling gross domestic product (slowing by 9.6 percent in the third quarter after a 10.5 percent drop in the second quarter) has affected people at all levels. Even kidnappers have lowered ransom demands because the rich are less liquid now. Philip True, "Peso May Turn Into Grinch Along Border," SAN ANTONIO EXPRESS-NEWS, October 28, 1995; "Bitter Christmas for Most Mexican Families," MEXPAZ, November 28, 1995; Craig Torres and Paul B. Carroll, "Mexico Says Its Economy Contracted 9.6 % in Quarter," WALL STREET JOURNAL, November 20, 1995; John Ross, "Mexico: The Gods Must Be Angry," THE NATION, December 18, 1995. MEXICO CORN IMPORTS UP Mexican corn imports through the end of October rose by 71.9 percent over the same time period in 1994, according to the government-private sector Corn Import Quota Evaluation Committee. Mexico increased tariff-free corn import quotas for 1995 to 3.3 million tons, up 28.3 percent over the amount originally agreed under NAFTA, and corn imports through October 31 totaled 1.9 million tons, or 57.1 percent of the quota for the year. Corn import needs increased because of drought and hurricane damage to Mexican corn crops. Some import quotas will be deferred until next year, at the request of importers. Chris Aspin, "Mexican Corn Imports Up 71.9 Percent to October 31," REUTER, December 1, 1995. CHICKEN WARS AHEAD In a sharp reversal of strategy, Canadian and European chicken producers are joining forces to oppose NAFTA and GATT's market openings to giant U.S. and Brazilian poultry companies. Canadian producers face a pending NAFTA dispute resolution panel hearing U.S. complaints against Canadian tariffs. GATT also forces Canada to open up to seven percent of its chicken market to imports. Last year, the Ontario Chicken Producers Marketing Board instigated a rebellion against the restricted production and allocation of provincial production shares by the Canadian Chicken Marketing Agency. Ontario, which accounts for about a third of Canadian production, was joined by Quebec, which accounts for another third. Producers and processors said that lower prices and higher production were necessary to prepare for competition that would be coming from the United States under the provisions of GATT and NAFTA. As chicken prices fell to $1.09 Canadian per kilogram live weight in 1995, versus $1.16 in 1993, production increased by 10 percent. Under the new system, producers in each province are allowed to produce as much chicken as that province's processors want, at a price negotiated between producer and processor organizations. If the two fail to agree on a price, they submit their final two prices to an arbitrator, who then chooses one of the two offers, not a middle ground. Chicken consumption is increasing as chicken shortages to the consumer become only a memory. During a government-organized trip to study chicken production in the Netherlands and France, Canadians discovered that European producers blame the United States and GATT for current problems and are preparing to fight GATT restrictions on national supply management systems. Instead of focusing on reducing producer prices to compete with the giant U.S. firms, Canadian producers now plan to join the fight. Jim Romahn, "A Bold New Strategy," MEAT & POULTRY, November, 1995; "It's Official! Chicken Shortages are a Thing of the Past," ONTARIO CHICKEN, October, 1995. AFTER NAFTA: MOVING TOWARD FTAA? Despite continuing opposition to NAFTA within all three member countries, the Clinton administration reiterated its commitment to moving toward a hemispheric free trade area by sending Treasury Secretary Robert Rubin to Argentina and Brazil in early December. Rubin said his visit will reassure trading partners that, despite Congress' recent inclination to "look inwards," President Clinton remains firmly committed to economic integration in the Americas. Rubin termed failure to enact fast-track trade negotiating authority "very disappointing." NAFTA opponents cite a variety of problems that they say are either caused by or suspiciously coincident with the accord. Promised job creation in the United States hasn't happened, but job losses have, while real hourly wages for the 77 million production workers in the U.S. dropped three percent during NAFTA's first year. In Mexico, the collapse of the peso was accompanied by an economic crisis that cost jobs and reduced wages. U.S. companies have found investment opportunities in cash-starved Mexican companies, and U.S. agribusiness giant Archers Daniel Midland calls Mexico a "great market for basic foods." Mexican small-scale producers have been devastated by the country's economic crisis and competition from abroad, leading to increases in malnutrition and malnutrition-related deaths of children. Last year's Summit of the Americas in Miami set a goal of achieving a hemispheric trading bloc by 2005. One year later, Venezuela and Mexico are in economic crisis with effects in Argentina and Brazil. U.S. Senate Majority Leader and Republican presidential candidate Bob Dole is urging a moratorium on trade pacts. Chile has all but given up hope of joining NAFTA until at least 1997, and has run into problems with Mercosur, the Southern Cone Common Market that includes Argentina, Brazil, Paraguay and Uruguay, and with European Union negotiations as well. Some of the problems stem from trying to join more than one trade grouping. For example, NAFTA and Mercosur rules of origin conflict, raising obstacles to Chilean membership in Mercosur. Chile also wants to exclude agriculture from the trade agreement that it is trying to negotiate with Mercosur, while Mercosur wants everything on the table. Nonetheless, movement toward integration is evident in Latin America. Bolivia just signed a framework agreement to create a free trade zone with Mercosur. The European Union is aggressively moving to forge ties with various Latin American nations and will sign a formal pact with Mercosur providing possible trading preferences and may negotiate similar pacts with Chile and Mexico. At the annual Miami Conference on the Caribbean and Latin America in early December, financial analysts insisted that hemispheic integration must include financial integration and harmonization of currently differing laws and regulations governing banks and financial markets. The state of Florida announced plans to make Miami the "central finance and information clearinghouse" for all of Latin America through a plan called Cyberport Miami, which would link all Latin American stock exchanges. Richard Lawrence, "Financial Integration Seen as Vital to Hemispheric Trade," JOURNAL OF COMMERCE, December 8, 1995; Richard Lawrence, "Rubin Trip Will Pursue Hemispheric Free Trade Goal," JOURNAL OF COMMERCE, December 1, 1995; Kevin G. Hall & Richard Lawrence, "Hemispheric Trade Pact Faces US Obstacles," JOURNAL OF COMMERCE, December 4, 1995; Richard Lawrence & Kevin G. Hall, "Bilateral Deals Could Keep Chile's Nafta Talks Alive," JOURNAL OF COMMERCE, December 6, 1995; "Bolivia Signs Agreement With Mercosur," UPI, December 7, 1995; Kevin G. Hall, "Chile, Mercosur Extend Trade Talks 90 Days," JOURNAL OF COMMERCE, December 8, 1995; Imogen Mark, "Chile Hits Snags in Pacts Quest," FINANCIAL TIMES, December 8, 1995; "NAFTA: The Second Year," WEEKLY NEWS UPDATE ON THE AMERICAS, December 2, 1995. DOLE POSTPONES PUBLIC BANANA HEARINGS After running into substantial Congressional opposition to his proposal for sanctions on Costa Rica and Colombia, Republican Senator Bob Dole got "too busy" for public hearings on the question. Dole has tried for months to push through the trade sanctions, which are a priority for Chiquita Banana and banana baron Carl Linder, a heavy contributor to political campaigns who provides free travel for Senator Dole's presidential campaign on his corporate jet. Longtime good government crusader Dole was unsuccessful in getting his legislation attached to various spending bills. When Senate Finance committee Chair Bill Roth offered to hold public hearings, in which Chiquita opponents would also testify, Dole aides said the senator would be too busy for hearings for the foreseeable future. Fred Wertheimer, former president of Common Cause, noted that both Linder and Dole would "be crazy to seek publicity for this. It smells bad." Meanwhile, the U.S. has apparently decided to make another effort to negotiate a solution to the banana dispute, and will hold off on challenging the European Union's banana regime in a dispute settlement panel of the World Trade Organization. John Maggs, "Dole Cancels Hearings on Bill to Aid Banana Firm," JOURNAL OF COMMERCE, November 30, 1995; "U.S. Holds Off on WTO Banana Panel, Seeks New Talks With EU," INSIDE U.S. TRADE, December 1, 1995. MEXICAN SUGAR GROWERS STRIKE Mexican sugar growers struck in early December against mil owners, refusing to cut or sell cane unless they receive a 40 percent price increase. The highest offer from mill owners has been a 28.5 percent hike. Mill owners have just agreed to a 25 percent pay hike for sugar workers. Mexico's 61 sugar mills were privatized four years ago, and mill owners claim their debt burden will not allow the price increase. "Instead of buying sugar mills, these people should have bought circuses, because they are acting like clowns," said a frustrated grower. Before the strike, producers hoped for a record 4.4 million ton harvest. Caribbean sugar producers employ about half a million people, sell about 800,000 tons annually, and have seen rising prices and stable export markets in the European Union, Portugal, and the United States. Chris Aspin, "Mexico Sugar Growers Continue Strike, Talks, Tuesday," REUTER, December 5, 1995; Chris Aspin, "Mexico Sugar Growers in Day Seven of No Sales," REUTER, December 7, 1995; Bert Wilkinson, "Sugar Producers Rise to New Challenge," INTERPRESS SERVICE, November 13, 1995. MODEL ENVIRONMENTAL LAW APPROVED Two commissions of the Latin American Parliament (PARLATINO) approved a model law that requires environmental impact studies to be carried out prior to approval of any undertaking that has risks for the environment or quality of life. Meeting in Havana, members of the PARLATINO commissions on Health and the Environment said that the profit motive must give way to a recognition that economic progress, health and environmental conservation are not mutually contradictory. Impact studies are required from 25 listed activities, including nuclear power and chemical plants, iron and steel works, dams, mining installations and toxic waste management. The model law will be effective only when and if it is enacted by the government of each country, but its recommendation by PARLATINO adds weight to national initiatives. Dalia Acosta, "Latin American Parliament Approves Model Law," INTERPRESS SERVICE, December 2, 1995. GRAPE GROWERS CHARGE DUMPING Stung by an increase in Mexican grape exports to the United States from 3.9 million 22-pound boxes in 1994 to 7.9 million boxes in 1995, U.S. table grape growers are threatening to pursue anti-dumping charges against Mexico. Mexican growers, faced with a disappearing market at home due to the economic crisis, began selling grapes on a consignment basis, essentially sending grapes north for whatever price they could get, instead of continuing the traditional firm sale arrangement based on a pre-agreed price. Last month the Florida Fruit & Vegetable Association requested that U.S. Agriculture secretary Dan Glickman take action to curb surges in bean, cabbage, sweet corn, pepper, radish, tomato and cucumber imports, adding their voice to the long-standing complaint of Florida tomato growers about Mexican imports. Peter M. Tirschwell, "US Growers Threaten Action Against Mexican Table Grapes," JOURNAL OF COMMERCE, December 11, 1995. U.S. FARMERS FIGHT FUMIGANT PHASEOUT Led by California strawberry growers, U.S. farm groups are fighting to ban methyl bromide use worldwide by January 1, 2001, the date when the U.S. Clean Air Act requires its phaseout inside the United States. The question of worldwide limits on methyl bromide use was considered at the Montreal Protocol meeting in Vienna in early December. The Montreal Protocol is an international body that governs ozone- depleting substances. Methyl bromide is used to eradicate pests prior to planting and after harvest, but it has also been cited as a cause of ozone depletion. California strawberry producers say yields will be reduced by 40-50 percent without methyl bromide, and the Methyl Bromide Working Group, a coalition of some 2,000 farm groups, says that even a freeze in use during the first year of a phaseout will cost $401 million. Neither European nor developing nations support a worldwide methyl bromide ban. Japan and some other Asian countries require some crops to be fumigated with methyl bromide prior to export. Since U.S. farmers are unlikely to achieve a worldwide ban, they are also lobbying to lift the U.S. ban and stop the phaseout schedule until an affordable alternative to methyl bromide is found or an international uniform phaseout date is reached. Peter M. Tirschwell, "Fumigant Phaseout Faces Stiff Fight," JOURNAL OF COMMERCE, December 7, 1995. RESOURCES/EVENTS Migration News, a monthly summary of immigration and integration developments, available in three formats. Paper copy (approx. 8,000 words) $30 U.S. and $50 international; email (12,000-14,000 words) and gopher (14,000-18,000 words) versions are available free of charge. To subscribe, send email address to: Migration News (migrant@primal.ucdavis.edu) or access current and back issues on Migration News Home Page -- http://migration.ucdavis.edu. For paper subscription, send check payable to UC Regents to Philip Martin, Department of Agricultural Economics, University of California, Davis, CA 95616. Produced with the support of the University of California-Berkeley Center for German and European Studies and the German Marshall Fund of the United States. ____________________________________________ NAFTA & Inter-American Trade Monitor is produced by the Institute for Agriculture and Trade Policy and edited by Mary C. Turck. Electronic mail versions are available free of charge for subscribers. For information about fax subscriptions contact: IATP, 1313 Fifth Street SE, Suite 303, Minneapolis, MN 55414. For information on subscribing to this and other IATP news bulletins, send e-mail to: iatp- info@iatp.org. IATP provides contract research services to a wide range of corporate and not-for-profit organizations. For more information, contact Dale Wiehoff at 612-379-5980, or send email to: dwiehoff@iatp.org.