From iatp@igc.apc.org Date: 17 Oct 94 04:54 PDT From: IATP To: "Recipients of conference trade.news" Newsgroups: trade.news Subject: NAFTA & Inter-Am Monitor 10/17/94 Produced by the Institute for Agriculture and Trade Policy - - - - - - - - - - - - - - - - - - NAFTA and Inter-American Trade Monitor, vol. 1, #21 October 17, 1994 - - - - - - - - - - - - - - - - - - HEADLINES NAFTA LABOR COMPLAINTS DISMISSED NAFTA GENERATES CUSTOMS PROBLEMS NAFTA INVESTMENT AND TRADE FIGURES BRAZIL OPENS TO MORE TRADE ARGENTINA'S TRADE DEFICIT RISES CARIBBEAN INVESTMENT NEWS - - - - - - - - - - - - - - - - - - NAFTA LABOR COMPLAINTS DISMISSED US Labor Secretary Robert Reich dismissed the first two complaints filed by unions under NAFTA. US and Mexican unions accuse Honeywell and General Electric of thwarting union organizing drives by firing dozens of workers and using other illegal tactics, and say further that the Mexican government condones such actions and fails to enforce its own labor protection laws. The companies and the Mexican government objected to review of the unions' charges under NAFTA, saying that the complaints concerned corporate, not government, action, and hence did not fall under the provisions of the NAFTA labor accord. While Irasema T. Garza, secretary of the Labor Department's National Administrative Office (NAO) said that the "timing of the dismissals appears to coincide with organizing drives," she said that available evidence "does not establish that the Government of Mexico failed to promote compliance with or enforce the specific laws involved." Garza also reported that most of the fired workers accepted severance pay rather than contesting their dismissals, and that some cases are pending before Mexican labor officials. Mark A. Anderson, director of the AFL-CIO task force on trade, expressed disappointment with the Clinton Administration, saying it had failed to make the most of even the limited NAFTA labor accord. Source: Allen R. Myerson, "Reich Supports Mexico on Union Organizing," NEW YORK TIMES, 10/13/94. - - - - - - - - - - - - - - - - - - NAFTA GENERATES CUSTOMS PROBLEMS Despite steady growth in trade among the NAFTA partners, US exporters complain bitterly about new Mexican customs procedures. Certificate of origin rules have recently been clarified -- but not necessarily simplified. The rules are tough and aimed at keeping out Chinese-made textiles, apparel, and footwear. US exporters have trouble because they frequently import large quantities of Asian-made goods and then re- export some to Mexico. Other manufacturers complain because the certificate of origin forms must meet certain regional content requirements. With more and more manufactured goods made up of components from around the world, assessing North American content is frequently difficult. In addition, new labeling rules requiring original Spanish-language labeling on a number of imports will mean higher export costs. Smaller US exporters are particularly hard-hit by the need to comply with sometimes complex regulations. Some thought NAFTA was a panacea, opening the borders to free trade. They have found that, even though tariffs are lowered or eliminated by NAFTA, they must still pay for customs brokers, import licenses, and processing paperwork. The US Department of Commerce launched a series of seminars on customs procedures under NAFTA this January. Mexican commerce officials have also attempted to simplify regulations. An American Chamber of Commerce of Mexico survey of 225 companies operating in Mexico, showed executives almost evenly divided on whether customs procedures under NAFTA are the same, more difficult, or easier than before. More than half of the executives surveyed do believe that NAFTA will eventually simplify customs procedures. Source: Maria Carlino, "Rough Trade," EL FINANCIERO, 9/26- 10/2/94; Kevin G. Hall, "Apparel Importers in US Find Doors Closed in Mexico, JOURNAL OF COMMERCE, 9/27/94. - - - - - - - - - - - - - - - - - - NAFTA INVESTMENT AND TRADE FIGURES According to Mexico's Ministry of Trade and Industry, foreign investment was up 29 percent during January-August 1994, compared to the same period in 1993. Just about half of the $9 billion was invested in the Mexican stock market. The remaining 49.4 percent was invested in productive sectors, particularly in manufacturing in the areas of food, beverage and tobacco production. Mexico's trade deficit with the US for the January-July period rose to $1.7 billion, but analysts predicted that increasing export sales would help to erase the deficit within a few years. Exports to the US rose from $22.5 billion during the first seven months of 1993 to $27 billion during the same period in 1994. Mexico's global trade deficit is estimated at between $17 and $18 billion. During January-June 1994, Canadian exports rose by 14.8 percent, compared to the same period in 1993. Imports rose by 16 percent, particularly in the machinery and equipment sector. In August, U.S. car and truck exports to Mexico reached a record high of 6,062, compared to 936 for August 1993. Mexican auto exports rose 25.7 percent during the first eight months of 1994 compared to the same period in 1993. Nissan Motor Company said it will begin next year to make Sentra cars for the US market in Mexico, rather than in Japan. Nissan expects to sell up to 20,000 Mexican-made Sentras in the US in 1995. In early October, Ford Motor Company announced a $60 million expansion to boost production by one-third at its Cuautitlan plant, where Ford Contour and Mercury Mystique are produced. Source: "Foreign Investments Up 29 Percent in1994," IPS, 9/23/94; "Nissan Plans to Build Cars for U.S. in Mexico;" "U.S. Car Exports to Mexico Hit Record High;" " Maria Carlino, "Trade Deficit Grows," EL FINANCIERO, 9/26-10/2/94; Catherine Harris, "For Little Canada, Trade is a Minefield," FINANCIAL POST, 10/1/94. - - - - - - - - - - - - - - - - - - BRAZIL OPEN TO MORE TRADE As Fernando Henrique Cardoso prepares for his inauguration as Brazil's new president, increased trade appears to be the prescription of the day. Cardoso has promised to allow foreign investment in oil, telecommunications, mining, and public works. Despite nearly $5 billion in income from privatization anticipated in the 1995 budget, the budget deficit will still reach nearly $10 billion. The government will also open banking and insurance sectors in November (to be followed by stock markets, transportation, and ports) to at least the other Mercosur countries, circumventing constitutional protections for these industries by taking advantage of a loophole for international accords. Foreign investors can be expected to enter the expanding telecommunications sector, where a billion dollars in installation contracts could be awarded in the next few years. Sergio Amaral, Secretary of International Affairs of the Finance Ministry, said that Brazil's economy will expand with the elimination of obstacles to imports. According to Amaral, regulation of cleaning and personal hygiene products by the Health Ministry and of US agricultural imports by the Agriculture Ministry will be eliminated. Brazil's imports have increased by 50 percent, to $30 billion, over the past two years, with new foreign investment rising to $23 billion. Brazilian government officials predict that trade will increase to $120 billion by 1996. Imports from the US alone are expected to rise by 25-35 percent in 1994. Argentina, which last year had a $756 million trade deficit with Brazil on total trade of $6.4 billion, also looks forward to greater Brazilian imports and to increasing Brazilian consumption, which will reduce Brazilian exports to Argentina. Source: "Brasil Vai Abrir Mercado de Servicios," IBASE, 10/6/94; James Brooke, "For Brazil, New Praise and Potential," NEW YORK TIMES, 10/10/94; "Economic Opening to Expand Service Sector," IPS, 10/6/94; "Some State Monopolies to Admit Private Capital," IPS, 10/6/94; "Cardoso Victory Seen as Good News for Argentina," IPS, 10/4/94. - - - - - - - - - - - - - - - - - - ARGENTINA'S TRADE DEFICIT RISES Argentina's trade deficit for the first eight months of 1994 is $3.8 billion, compared to a $3.7 billion deficit for all of 1993 and a $2.6 billion deficit for all of 1992. Argentine government officials and International Monetary Fund representatives say the deficit may reach $6 billion by year's end. Argentina sold $2.21 billion in goods to Mercosur members, while importing $2.83 billion. The government attributes the rising trade deficit to increased capital goods purchases in the industrial sector during the first half of the year. Source: "January-August Trade Deficit Tops Total for 1993," IPS, 10/6/94. - - - - - - - - - - - - - - - - - - CARIBBEAN INVESTMENT NEWS % Garment and textile industries in Central America and the Caribbean suffered a trade setback with the Clinton Administration's move to decouple Interim Trade Program (ITP) provisions from GATT fast-track legislation. The ITP would provide parity with Mexico for Caribbean Basin Initiative (CBI) countries. Clothing and textile exports from CBI countries to the US have grown in recent years, despite the continuing 17-21 percent tariffs. Exporters from Caribbean and Central American countries lost ground this year, as tariffs on Mexican clothing and textiles were reduced. %JDespite 60 percent popular opposition, the government of Grenada has given control of the local light and power company, Grenlec, to the US firm, WRB Enterprise. WRB bought half of the shares of Grenlec for $5.6 million. Opposition parties and trade unionists say the price is too low. Much of the opposition stems from a sentiment in favor of national ownership of such a key enterprise, although neighboring countries have recently sold their power companies. The Grenadian National Commercial Bank was sold to Trinidadian investors two years ago, and ten more state companies will soon be sold. %JGuyana has seen heavy Canadian investment in its mining industry, including recent deals for granite quarries, gold mines, and waste rock. US mining concerns have also moved into Guyana's mining sector. % Jamaica's Digiport International (JDI) in the Montego Bay Free Zone is owned by AT&T of the United States, Cable and Wireless of Britain, and Telecommunications of Jamaica. JDI offers high-speed information processing and international toll- free switched and dedicated services for order processing. The market for off-shore information processing is rapidly expanding, and JDI is part of the Jamaican government's effort to expand its traditional export earnings base. % Suriname, devastated by a civil war following a 1980 military coup, is seeking increased export earnings, turning from its Dutch colonial focus to the Caribbean and the United States sphere of influence. Pittsburgh-based Alcoa is the most substantial foreign investor, running the Suralco bauxite mine and alumina refinery since 1915. Other US firms are planning offshore drilling activities and a fertilizer plant. The biggest potential investor is Indonesia's MUSA Group, which wants to invest $1 billion in lumber operations in six million hectares of Suriname's Amazon hardwood forests -- a third of the country's territory. Environmentalists oppose MUSA, pointing to its clearcutting of Indonesian forests. A Malaysian firm already heavily involved in neighboring Guyana also wants a million hectares of rain forest. Source: Edward Orlebar, "U-Turn by US Hits Caribbean Exporters," FINANCIAL TIMES, 10/11/94; Hamlet Mark, "Power Passes to Overseas Investors," IPS, 10/6/94; "Canadian Investors Find Country a Gold Mine of Opportunity," IPS, 9/20/94; Canute James, "Jamaica's Window to the World," U.S./LATIN TRADE, 10/94; Larry Luxner, "Suriname Blues," U.S./LATIN TRADE, 10/94. - - - - - - - - - - - - - - - - - - The NAFTA and Inter-American Trade Monitor is available in both English and Spanish on Association for Progressive Communications (APC) computer networks on the conference eai.news. It can also be faxed or sent via mail on request. We welcome your comments and contributions. - - - - - - - - - - - - - - - - - - For more information about the Institute for Agriculture and Trade Policy, send email to iatp-info@igc.apc.org. - - - - - - - - - - - - - - - - - - Produced by: Mary C. Turck, Institute for Agriculture & Trade Policy, 1313 Fifth St. SE, Suite #303, Minneapolis, MN 55414- 1546 USA Tel: (612) 379-5980, Fax: (612) 379-5982, email: mturck@igc.apc.org