From dwiehoff@iatp.org Tue Feb 11 17:02:30 1997 Date: 11 Feb 1997 07:05:41 From: dwiehoff@iatp.org To: Recipients of conference Subject: NAFTA Inter-Am Trade Monitor 2-10-97 [The following text is in the "iso-8859-1" character set] [Your display is set for the "US-ASCII" character set] [Some characters may be displayed incorrectly] From: dwiehoff@iatp.org (Dale Wiehoff) Subject: NAFTA Inter-Am Trade Monitor 2-10-97 NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy February 10 1997 Vol. 4, Number 3 ____________________________________________ HEADLINES: ACCORDS BREAK DOWN, FARM LEADERS ARRESTED CORN BROOMS AND DISPUTE RESOLUTION AVOCADO IMPORTS ALLOWED MILLING MEXICAN GRAIN CANADIAN CULTURAL PROTECTION ENVIRONMENTAL PROTECTION DECREASES UNDER NAFTA ACCORDS BREAK DOWN, FARM LEADERS ARRESTED As the government rejected a previously-signed agreement on indigenous rights, tension rose in Chiapas and in other rural areas, where residents feared an imminent military attack. Local people, international observers, health workers and Protestant ministers all told the Mexican daily La Jornada that the army has been building up its strength since January 11 in areas of Zapatista National Liberation Army (EZLN) support, where right-wing paramilitary groups have also been active. Some observers fear that January^Ňs early repayment of Mexico^Ňs debt to the United States and the International Monetary Fund is designed to minimize the impact of renewed fighting in Chiapas on the Mexican stock market. The Mexican government may also be preparing to blame renewed unrest in Chiapas for a peso devaluation that has been recommended by experts. On Saturday, January 11, the EZLN rejected the government's counter-proposal to the Congressional Mediation Commission's (COCOPA) proposal for Constitutional reforms to ensure compliance with the San Andres accords, calling the government proposal "a vile and blatant mockery of the indigenous people of Mexico." In November, COCOPA drafted a proposal based on the agreements reached in San Andres by the government and the EZLN. The EZLN accepted the COCOPA proposal, but the Zedillo administration did not, insisting that the COCOPA proposal threatens Mexican sovereignty by giving indigenous peoples autonomy. Indigenous people represent 13 percent of the 93 million Mexican people. The agreement on indigenous culture is the only one that was actually signed between the EZLN and the government in a negotiation process which has been suspended since September 1996, when the guerrilla accused the government of showing no real interest in peace. As military presence increased in rural areas, police officials also moved to arrest campesino organizers. On January 27, Mexican police arrested Benigno Guzmán Martínez, a campesino organizer from the southwestern state of Guerrero, as he was giving his children a reading lesson in his current home in Mexico City. Guzmán, a leader of the Southern Sierra Campesino Organization (OCSS), the target of a June 1995 massacre of 17 campesinos by state police at Aguas Blancas, Guerrero had been living in Mexico City due to his fear of Guerrero authorities. On December 7, Guzmán's brother, Bartolo (another peasant activist), was murdered by four unidentified men while working on his land with his son. Although federal authorities announced that Benigno Guzmán had been arrested as a leader of the rebel Revolutionary Popular Army (EPR), he was charged in connection with demonstrations the OCSS held in 1994 and 1995, and not in connection with the EPR. In Guadalajara, capital of the conservative western state of Jalisco, police arrested Maximiano Barbosa Llamas and six other leaders of El Barzón, a militant organization composed mostly of farmers and small business people unable to pay their bank debts. The seven leaders have been charged with conspiracy, riot, gangsterism and a number of other crimes. Authorities in the southern state of Oaxaca continue to hold most of the municipal government officials of San Augustín Loxicha on charges that they are founding members of the EPR. Cecelia Rodriguez, spokeswoman for the Zapatistas in the United States, charges that: "Under the guise of fighting drug traffickers, the U.S. government has bolstered an anti-democratic and corrupt Mexican government with a laundry list of high-tech military equipment that has been used to violate the basic human right of the people of Mexico.'' The first 20 of a planned transfer of 73 Huey helicopters to Mexico were shipped in cargo planes from Goodfellow Air Force Base in San Angelo, Texas last November. The Hueys are part of a $50 million weapons and reconnaissance package that includes four C-26 reconnaissance planes, 500 bullet-proof armored personnel transporters, 10 million dollars' worth of night vision and C-3 equipment (command control and communications), global positioning satellite equipment, radar, spare parts for 33 helicopters given to Mexico over the past seven years, machine guns, semi-automatic rifles, grenades, ammunition, flame throwers, gas masks, night sticks, uniforms, and food rations. While the military equipment is officially destined for drug interdiction efforts, a June 1996 report from the U.S. General Accounting Office said that U.S.-provided helicopters were used to transport Mexican military personnel to fight the Zapatista rebels in 1994. U.S. Ambassador to Mexico James Jones reacted to last summer's uprising by the Popular Revolutionary Army in Guerrero state by pledging increased military aid, intelligence and training to help fight the rebels. "Crisis in the Chiapas Negotiations," MEXICO UPDATE, January 14, 1997; Diego Cevallos, "Chiapas' Only Agreement Crumbles," INTERPRESS SERVICE, January 13, 1997; "Mexican Campesino Leader Arrested," WEEKLY NEWS UPDATE ON THE AMERICAS, February 2, 1997; "Mexican Army Planning Attack on Rebels?" WEEKLY NEWS UPDATE ON THE AMERICAS, January 26, 1997; "Peasant Leader Arrested in Mexico City," MEXICO UPDATE, January 29, 1997; Jeffrey St. Clair, "The 'Drug War' Against the Zapatistas," INTERPRESS SERVICE, January 14, 1997; "Negotiations Continue to be Stalled," MEXICO UPDATE, January 22, 1997. CORN BROOMS AND DISPUTE RESOLUTION As Mexico launched a formal challenge to the U.S. increase in tariffs on corn brooms, a coalition of U.S. citizen groups and corporations filed a lawsuit challenging the entire NAFTA dispute resolution process as a violation of the U.S. Constitution. The American Coalition for Competitive Trade (ACCT) charged that the NAFTA panel system infringes on the right of U.S. persons to settle disputes in U.S. courts with appointed judges, as required by Article III of the U.S. Constitution, that the panelists are not appointed by the President with the advice and consent of the Senate, and that the President and Congress have unlawfully delegated judicial powers to the panels. ACCT also charges that the panel system does not provide the due process protections guaranteed by the Fifth Amendment. Although implementing legislation for NAFTA requires that challenges be made to a "determination" of the panel, and although ACCT is not directly aggrieved by any such determination, ACCT maintains that it represents 500,000 U.S. citizens who have been victimized by unfair imports and by "failure to adequately enforce trade laws of the United States, including the antidumping and countervailing duty laws through the establishment of bi-national panels under NAFTA and the FTA . . ." ACCT board members represent citizen groups including the American Defense Institute, America's Future, Americans for the High Frontier, America Take A Stand, Military Order of the World Wars, and private businesses. Advisory board members represent Hard Hats of America, Information Council of the Americas, Citizens for a Sovereign America, Americans for Immigration Control, United Republicans of California, National Business Association, U.S. Taxpayers Alliance, We the People, and the Council for the Defense of Freedom. On January 15, the Mexican government requested the establishment of a dispute resolution panel under NAFTA's Chapter 20, charging that the U.S. tariff increase is "inconsistent" with NAFTA. The U.S. action was based on the U.S. International Trade Commission's (ITC) finding that Mexican imports of broom corn brooms were substantially impacting the U.S. broom corn broom industry. Mexico maintains that the ITC should have included other types of brooms, such as plastic brooms, in its consideration because they are directly competitive with corn brooms. Other Mexican responses to the U.S. action included imposition of higher tariffs on some U.S. imports to Mexico, including fructose, wine and flat glass. ""Mexico Begins Formal Challenge of U.S. Corn Broom Decision," INSIDE U.S. TRADE, January 17, 1997; Citizens Groups Challenge NAFTA Dispute Panels as Unconstitutional," INSIDE U.S. TRADE, January 17, 1997. AVOCADO IMPORTS ALLOWED After more than two years of deliberations, the U.S. Department of Agriculture's Animal and Plant Health Inspection Service (APHIS) published rules for the importation of Hass avocados grown in Michoacán, Mexico into 19 northeastern states during November, December, January and February of each year. The APHIS systems approach to inspection and regulation includes nine elements ranging from ongoing field pest surveys and trapping to restricting shipping to winter months only and regular inspection of packing houses. APHIS acting deputy administrator Alfred Elder emphasized that USDA personnel will be involved with all aspects of the systems approach outlined in the final rule published on February 5 in the Federal Register. Elder said the decision to allow avocado imports and the systems approach program are based on sound science. A box of Mexican avocados sells for $8 in Canada, compared to a U.S. price of $30 per box for California-grown avocados. The United States now imports only a small portion of the $1 billion in avocados purchased each year, with imports coming from Chile, Israel and the Dominican Republic. U.S. growers have vigorously opposed lifting the import ban on Mexican-grown avocados. Avocado prices in the northeastern states are expected to fall by 8-41 percent, with prices falling between 1 and 3 percent in other areas of the country. "Safeguards Allow Opportunity for Mexican Hass Avocado Imports," AGNET, January 31, 1997; Peter Tirschwell, "Mexico Gets Green Light to Sell Avocados in U.S.," JOURNAL OF COMMERCE, February 3, 1997. MILLING MEXICAN GRAIN Even as corn prices fell during the final months of 1996, U.S. and other foreign firms committed to major investments in Mexico's grain marketing and milling sectors. About 40 companies, including Mexican shipping firm Transportación Marítima Mexicana, construction firm Grupo ICA, and corn processor Maíz Industrializado (Minsa), and U.S.-based Cargill, Continental Grain, Farmland, Louis Dreyfus, and Archers Daniels Midland, have organized three consortiums to bid on a government grain elevator network in southern Mexico. Mexican law requires that Mexicans own 51 percent of the Almacenadora Sur warehouse system and that 20 percent be owned by producers. Miller Milling of Minneapolis formed a joint venture with Tablex to build a durum flour mill in the Mexican port city of Guaymas, Sonora, south of Nogales, Arizona. Tablex is Mexico's largest pasta manufacturer, selling its products under the La Moderna brand. Sonora is Mexico's largest durum wheat growing region. In December, the International Finance Corporation signed a $60 million investment agreement with Grupo Minsa, the second largest corn flour producer in Mexico, to help modernize, upgrade and expand existing plants and to build a new corn flour plant. Minsa's six plants employ more than 1,200 people. IFC, a member of the World Bank Group, said its investment in Minsa illustrates its continuing support for privatization, since Minsa was privatized in October 1993. Lowry McAllen, "Mexico Grain Elevator on the Block," JOURNAL OF COMMERCE, January 12, 1997; "Miller Milling in Joint Venture to Build Durum Mill in Mexico," MILLING & BAKING NEWS, December 10, 1996; "IFC Signs US$60 Million Deal for Mexican Corn Flour Producer," WORLD BANK PRESS RELEASE, December 5, 1996; CANADIAN CULTURAL PROTECTION A World Trade Organization panel, in a decision to be made final on February 21, has ruled that Canadian restrictions on so-called "split-run" versions of U.S. magazines violate the WTO's fair trade rules. Split-run magazines contain a mixture of the original U.S. material and added Canadian content, particularly advertising. Because U.S. advertising has paid for the magazine's costs, a magazine can offer Canadian advertisers very low rates. Canada has defended the restrictions as essential to protection of Canadian culture, arguing that U.S. sale of cut-rate advertising constitutes an unfair dumping practice and will skim advertising away from Canadian publications, wiping out Canada's magazine industry. The complaint was originated by Sports Illustrated and Time Warner, Inc. The Canadian government and magazine industry have pledged to find ways to continue to protect the industry. John Maggs, "WTO Backs U.S. in Magazine Dispute," JOURNAL OF COMMERCE, January 21, 1997; Anthony DePalma, "World Trade Body Opposes Canadian Magazine Tariffs," NEW YORK TIMES, January 20, 1997; John Urquhart, "Canadian Magazine Industry May Seek New Rules Curbing Foreign Publications," WALL STREET JOURNAL, January 20, 1997; "WTO Interim Report Calls for End to Canadian Curbs on Magazines," INSIDE U.S. TRADE, January 24, 1997. ENVIRONMENTAL PROTECTION DECREASES UNDER NAFTA Victor Lichtinger, executive director of the NAFTA-created Commission for Environmental Cooperation (CEC), warned business representatives in December that "efforts to deregulate, decentralize, and de-fund environmental programs" are part of "a potentially dangerous trend towards weakening of environmental standards in North America ^× all under the guise, sometimes, of voluntary compliance and self-regulation." Instead of trying to weaken environmental regulations, said Lichtinger, the private sector should aim higher than mandated minimums. The CEC, which lacks any enforcement powers, works to provide a forum on environmental issues and to promote effective enforcement of environmental law. While Lichtinger cited no specific instances of weakened environmental standards, other environmental issues with a direct connection to NAFTA include: ^Ő a suit by U.S. environmental advocates seeking to reverse an Environmental Protection Agency rule issued last March that allows polychlorinated biphenyls (PCBs) to be imported from Canada into the United States for disposal. The groups argue that the EPA is not able to properly regulate incineration of PCBs and that alternative disposal technologies should be used. ^Ő last October's move by the Mexican government to eliminate environmental impact assessment requirements for investments in sectors including petrochemicals, refining, fertilizers and steel. Mexican officials said the elimination of environmental impact statement requirements will increase investment. Among the more positive environmental developments under NAFTA are: ^Ő the December release of the Border XXI Program, a five-year plan describing environmental infrastructure needs along the U.S.-Mexico border. The plan does not call for any funding, but instead says increased coordination and cooperation between federal, state and local agencies on both sides of the border will help greatly in resolving environmental problems. ^Ő a first-ever meeting of governors of U.S. and Mexican border states in November, with a stated purpose of strengthening relationships and identifying priorities for cross-border cooperation. "North American Standards Suffering in Name of Self-Regulation, CEC Director Says," "Groups Urge President to Reverse Rule on PCB Imports From Canada for Disposal," INTERNATIONAL ENVIRONMENT REPORTER, January 8, 1997; Carl Pope, "Nafta's Broken Promises," JOURNAL OF COMMERCE, December 6, 1996; Peter Zirnite, "New Plan for U.S.-Mexico Border Skips Over Funding," INTERPRESS SERVICE, December 16, 1996; "10 States Convene on U.S.-Mexico Border Environment," WESTERN GOVERNORS' REPORT, December 1996; "New U.S.-Mexico Program Directed at Health and Environment Improvements on Border," USDA PRESS RELEASE, December 12, 1996. ____________________________________________ NAFTA & Inter-American Trade Monitor is produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. Edited by Mary C. Turck. Electronic mail versions are available free of charge for subscribers. 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 612-870-3401, or send email to: dwiehoff@iatp.org.