From iatp@igc.apc.orgThu Jan 26 15:42:10 1995 Date: 07 Nov 94 08:35 PST From: IATP To: "Recipients of conference trade.news" Newsgroups: trade.news Subject: NAFTA & INTER-AM MONITOR 11/7/94 Produced by the Institute for Agriculture and Trade Policy - - - - - - - - - - - - - - - - - - NAFTA and Inter-American Trade Monitor, vol. 1, #24 November 7, 1994 - - - - - - - - - - - - - - - - - - HEADLINES NAFTA TO BRING INTELLECTUAL PROPERTY LAW CHANGES HERSHEY TO CUT JOBS MEXICAN LEATHER WEAR COMPANY APPEALS US RULING LABOR DEPARTMENT MAY AMEND NAFTA WORKER RETRAINING PROGRAM AFL-CIO ENDORSES NAFTA BACKERS PRIVATIZATION CONTINUES TRADE WITHIN ALADI NEARLY DOUBLES - - - - - - - - - - - - - - - - - - NAFTA TO BRING INTELLECTUAL PROPERTY LAW CHANGE The International Intellectual Property Association (IIPA) names Mexico as the seventh-biggest offender in the world, with pirated software, books, music, and video products costing $293 million last year. The worldwide cost of such piracy was estimated at $8 billion in 1993. Ordinarily, the US would classify Mexico as a Special 301 Priority Foreign Country to be watched, but NAFTA provides another avenue to exert pressure. Mexico has agreed to legislate and enforce new copyright laws and has invited the US-based IIPA to submit proposals for change. According to the IIPA, lax enforcement is the primary problem, and the current level of fines does not meet NAFTA standards. As an example, copyright violation fines are set at 50 to 500 times the minimum daily wage in the Federal District -- $225 to $2,250. Mexican law also exempts copyright violators who commit crimes "to satisfy their most basic necessities." The IIPA considers this defense too broad. Source: Justin Bicknell, "Property Rights," EL FINANCIERO, 10/17- 23/94. - - - - - - - - - - - - - - - - - - HERSHEY TO CUT JOBS Hershey Foods Corporation, headquartered in Pennsylvania, announced plans to consolidate and streamline its North American operations, probably cutting about 400 jobs. Hershey makes chocolate, candies, and pasta products in the US, Canada, and Mexico. The Canadian plants have been performing "below expectations for three to four years," according to one analyst, and NAFTA will enable Hershey to close those plants. Source: Richard Ringer, "Hershey Plans Streamlining and Will Cut About 400 Jobs," NEW YORK TIMES, 11/2/94. - - - - - - - - - - - - - - - - - - MEXICAN LEATHER WEAR COMPANY APPEALS US RULING Maquiladora Pieles Pitic, S.A. de CV and its US importer, Pitic Leather, have appealed a US Commerce Department ruling that assessed countervailing duties (CVD) on some of its leather wearing apparel. The Commerce Department review focused on 1992 imports and determined a net subsidy of zero for 65 Mexican companies, but assessed a 13.35 percent CVD on other firms, including Pieles Pitic. This is the first challenge of a US trade remedy decision by a Mexican company under the international panel review established by NAFTA. The company argued in its appeal to the US NAFTA Secretariat that the US government "neither informed Pieles Pitic or Pitic Leather of the 1992 review nor requested any information from either company, and that its first information about the CVD came after a shipment was held up for payment of the CVD. Moreover, said attorneys for Pieles Pitic, the CVD amount was arrived at by taking the highest rate of subsidy in the 1980s under two Mexican subsidy programs that no longer exist. The NAFTA review process has also been used by US and Canadian firms. Source: "Leather Wear Co. Is First Mexican Firm to Appeal U.S. CVD Ruling," INSIDE NAFTA, 10/5/94. - - - - - - - - - - - - - - - - - - LABOR DEPARTMENT MAY AMEND NAFTA WORKER RETRAINING PROGRAM The US Labor Department is considering whether to ask Congress to make it easier for displaced workers to qualify for worker retraining programs under NAFTA Trade Adjustment Assistance (NAFTA-TAA). State representatives at a recent meeting raised a number of concerns about the program, and organized labor sources have maintained that problems include lack of familiarity with the program by local officials, inaccurate or incomplete advice given to workers, and too-rigid time limits. Because of the difficulty in qualifying for NAFTA-TAA, many organized labor officials have encouraged workers to apply for standard TAA benefits. Source: "Labor Dept. May Seek to Amend NAFTA Worker Retraining Program," INSIDE NAFTA, 10/5/94. - - - - - - - - - - - - - - - - - - AFL-CIO ENDORSES NAFTA BACKERS Despite threats of retribution against members of Congress who voted for NAFTA, the AFL-CIO is supporting 64 members who backed NAFTA. AFL-CIO President Lane Kirkland said that labor support could not hinge on a single vote. Union leaders have been concerned about Democratic losses in the coming elections for the Senate and House of Representatives. Source: "Bygones Are Bygones: AFL-CIO Endorses 64 Who Backed NAFTA," NEW YORK TIMES (reprinted in STAR TRIBUNE), 10/27/94. - - - - - - - - - - - - - - - - - - PRIVATIZATION CONTINUES % In Venezuela, the sale of the state thermoelectric plant "Plantacentro" has been delayed until 1995 to allow time for six interested investment groups to participate. Southern Electric Company of the US has reserved the right to equal the best offer. Plantacentro is Latin America's largest thermoelectric plant, and its value approaches one billion dollars. GTE, another US company, already holds 40 percent of the shares in CANTV. % Venezuela may also be ready to abandon public auctions as a method of privatization, selling the government's 49 percent of the national telephone company (CANTV), estimated at $5-6 billion in value, directly and without bids. A consortium led by GTE already holds 40 percent of the shares in CANTV, with 11 percent reserved for employees. The agreement to let Southern Electric equal the best offer on Plantacentro is another retreat from public bidding, as are plans to privatize three racetracks and a recreation center by using concessions. Thirty projects are scheduled for privatization by 1996. Companies from Canada, Italy, Japan, and Switzerland have indicated interest in buying the government's 39.6 percent interest in the Venezuelan Dairy Products Industry, with Italy planning to offer cash payment if the stock is put up for direct sale. % In Brazil, the government hopes to sell provincial banks that are currently owned by state governments. The provincial banks often call on the national government for bailouts, and many are dedicated more to financing local governments than to fostering economic development. % In Nicaragua, the legislature has proposed privatization of the state telecommunications firm, TELCOR. The sale is strongly opposed by the opposition Sandinista party, but government officials say that the president may pass it by decree if the legislature fails to act. Privatization of TELCOR has been promised to international credit institutions. % As the Grenadian government put the light and power company on the market, Grenadians rushed to buy shares, quickly using up all available share application forms. The government is selling 40 percent of the shares to the public and holding on to 10 per- cent. A controlling 50 percent interest has already gone to the US firm, WRB Enterprises. Polls taken prior to the sales showed 61 percent of Grenadians opposed to the privatization. % In Mexico, speculation on the future of Pemex, the state-owned oil monopoly continues, with analysts identifying three scenarios: maintenance of the status quo, which allows strictly limited private participation; complete privatization of Pemex and deregulation of the oil industry, which seems unlikely; and gradual deregulation and opening, primarily in the areas other than exploration and production. The Mexican Constitution prohibits opening the oil industry to private or foreign investment, so the Zedillo Administration will have to work around the constitutional provision, possibly through mixed participation subsidiaries. % In Panama, newly-elected President Ernesto Prez Balladares, a wealthy businessman, says his government will sell state-run companies to raise funds for social investment. Panama may also repeal labor laws to make its work force more attractive to foreign investors. The minimum wage is presently 94 cents an hour, with benefits at least 31 cents an hour more, due in large part to mandatory social security and insurance and job security for workers. Panama also plans to slash import tariffs. % Cuba will allow foreign investment in any productive sector of the economy, including sugar production, said Vice-President Carlos Lage. Lage said that representatives of 69 US companies interested in doing business in Cuba had visited the island during the first six months of the year. % Bolivia is planning for the transfer to the private sector of state enterprises together making up one-eighth of all economic activity in the country, though not calling the process privatization. The Bolivian plan, called capitalization, will invite foreign companies to buy strategic equity stakes in six enterprises, and then will distribute up to half of the remaining shares to the 3.9 million adult Bolivians in the form of special pension accounts to be drawn on as annuities when the holders turn 60. The companies to be capitalized include the state oil and mining industries, railway and airline, and electricity and telephone. Source: "Electric Company Privatization Set for 1995," IPS, 10/27/94; Humberto Marquez, "An End to 'Public' Privatization?" IPS, 10/94; "Minister Rules Out Rapid Sale of Phone Company," IPS, 10/14/94; "Dairy Industry Intrigues Foreign Companies," IPS, 10/20/94; "Government to Privatize Provincial Banks," IPS, 10/21/94; "Storm Brewing Over Planned Privatisation," IPS, 10/20/94; "Power Company's Shares are a Hot Item," IPS, 10/12/94; Victor Rodrguez-Padilla, "The Future of Mexico's Oil Industry," EL FINANCIERO, 10/17-23/94; "Cuba is Removing Limits for Foreign Investments," WALL STREET JOURNAL, 10/31/94; Stephen Fidler, "Bolivia's Way to Shed State Sector," FINANCIAL TIMES, 10/26/94. - - - - - - - - - - - - - - - - - - TRADE BETWEEN ALADI MEMBERS NEARLY DOUBLES The volume of trade between members of the Latin American Integration Association (Aladi) grew by 92 percent from 1991 to 1993, totaling $23.4 billion in 1993. The increase was attributed to consolidation of regional commercial blocs such as the Andean Pact (Bolivia, Colombia, Ecuador, Peru, and Venezuela), Mercosur (Argentina, Brazil, Paraguay, and Uruguay), and the Group of Three (Mexico, Colombia, and Venezuela.) Mercosur will realize a free trade zone and customs union in 1995, while the Group of Three plans a free trade zone by 2005 and the Andean Pact is negotiating a common external tariff. All is not rosy, however, as Argentina continues to experience a growing trade deficit, which includes a deficit of more than half a billion dollars with fellow Mercosur members during the first half of 1994, and a $1.6 billion deficit with NAFTA members. Peru has also had a growing negative balance of trade with the US since the former eliminated tariffs and import limitations in 1991. Source: "Trade Between Aladi Members Up 92 Percent," IPS, 10/26/94; "El Deficit Comercial de Argentina con el Mercosur y el TLC Sigue Creciendo," SUCESOS, 10/94; "Trade Imbalance With United States Grows," IPS, 10/24/94. - - - - - - - - - - - - - - - - - - RESOURCES/EVENTS "The NAFTA Handbook: Your Real-Life Guide to Business Under NAFTA." Baker & MacKenzie. CCH INCORPORATED, 1994. 273 pages. Attn: International Organization, CCH Incorporated, P.O. Box 5490, Chicago, IL 60680-9882; Fax (708) 940-9570. Telephone 1- 800-835-5224, Dept. 4819. $38 plus postage and handling. According to CCH, "The NAFTA Handbook is a thorough resource for agriculturalists and other business people who are interested in exploring trade options with Mexico and Canada. The structure of NAFTA's agricultural provisions is explored in-depth, as are tariffs, safeguards, subsidies, dispute resolution, sanitary and phytosanitary measures and selected country perspectives." - - - - - - - - - - - - - - - - - - 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