From iatp@igc.apc.orgThu Jan 26 15:42:36 1995 Date: Tue, 29 Nov 1994 16:56:42 -0800 (PST) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Monitor 11/28/94 Produced by the Institute for Agriculture and Trade Policy - - - - - - - - - - - - - - - - - - NAFTA and Inter-American Trade Monitor, vol. 1, #27 November 28, 1994 - - - - - - - - - - - - - - - - - - HEADLINES FOCUS ON THE MIAMI SUMMIT NAFTA, GATT AND AGRICULTURAL EXPORT ISSUES ECONOMIC STABILIZATION, PRIVATIZATION CONTINUE PROBLEMS U.S. TRADE DEFICIT INCREASES TELECOMMUNICATIONS MARKET MOVES RESOURCES/EVENTS - - - - - - - - - - - - - - - - - - FOCUS ON THE MIAMI SUMMIT The U.S. government designated three themes for the Inter- American Summit in Miami on December 9-10. The first theme is "Making Democracy Work: Reinventing Government," and includes specific initiatives on fighting drug trafficking, protecting investors and financial markets, funding and legal/tax frameworks for non-governmental organizations (NGOs), and enhancing the Organization of American States (OAS). The second theme, "Making Democracy Prosperous: Hemispheric Economic Integration," includes initiatives for hemispheric free trade through "open regionalism," promotion of the free flow of capital and reducing corruption. The third theme, "Making Democracy Endure: Sustainable Development," includes focuses on people (education, health care, and microenterprises) and on environmental protection. Despite the hopes of many Latin American governments for entrance to NAFTA, prospects for hemispheric free trade have worsened over the past year. Latin American regional free trade agreements continue to increase integration, but the U.S. Clinton administration has failed to obtain either "fast track" negotiating authority to extend NAFTA or the NAFTA parity that it promised the countries of Central America and the Caribbean. Both Canada and Mexico appear ready to push for enlargement of NAFTA, with Canada planning negotiations with Chile and Mexico voicing support for Central American efforts to join NAFTA. Some Latin American governments, notably including Brazil, express reservations about bilateral trade agreements with the U.S. and about the desirability of making NAFTA a priority. They advocate, instead, consolidation and expansion of Latin American regional groupings, such as Mercosur, and later to negotiate access to NAFTA for such regional trade groupings. Leaders of the Caribbean Community (Caricom) have asked the U.S. to address some of their concerns at the summit, including parity with Mexico for some Caricom exports, protected access to European banana markets for Caricom members, and the foreign debt of Caricom members. Caricom leaders have also criticized the exclusion of Cuba from the summit, and called for institutionalization of the summit on a regular basis through the OAS. Various NGOs are pushing for changes and additions to the agenda, such as incorporating language on labor rights. Others criticize the omission of any focus on indigenous issues and on human rights issues, particularly since December 10 is Human Rights Day. The exclusion of Cuba has also been protested. The summit itself will consist of closed meetings, to be attended by the president and one designated minister from each country. Various conferences and seminars meeting concurrently with the summit will be attended by business persons, academics, and NGOs. As many as 3,000 journalists are expected to cover the summit and related activities. Luis Lauredo, a Cuban-American business person named by President Clinton to organize the summit, said in recent interviews that the summit should be seen as a process rather than an end, but that a communiqu might be signed on the final day. Source: Karen Hansen-Kuhn, "9-10 December Miami Summit," DEVELOPMENT GAP, 11/4/94; "CARICOM Leaders Say U.S. Now Listens," REUTER, 11/18/94; "Caribbean Leaders Still Unhappy With Agenda of Americas Summit," IPS, 11/18/94; "Miami Summit is a Process and Not an End," IPS, 11/10/94; Eugenio Valenciano, "Cambio de las Expectativas Relativas a la Cumbre de las Americas," SUCESOS, 11/10/94; "Mexico's Zedillo Backs Centam Entry to NAFTA, REUTER, 11/18/94; Stephen Fidler, Nancy Dunne, Bernard Simon, "Hope Dims for All-Americas Trade Bloc," FINANCIAL TIMES, 11/18/94; Diane Lindquist, "Latin America Free Trade Debated," SAN DIEGO UNION-TRIBUNE, 11/19/94; Marco Antonio Sibaja, "Human Rights: Conspicuous Absentee from Summit," IPS, 11/94. - - - - - - - - - - - - - - - - - - NAFTA, GATT AND AGRICULTURAL EXPORT ISSUES Despite projected widening of opportunities for beef exports from Texas to Mexico under NAFTA, Texan meat processors are critical of progress to date. Liborio Hinojosa, a 47-year veteran of meat processing and exporting, said that his H&H Meat Products Company did brisk business with Mexico, about half a million dollars weekly, during the first three months of NAFTA. Since then, he charges, Mexican authorities have constructed non-tariff barriers to access, including rigid inspection and labeling requirements, and some of his Mexican customers have been harassed. Australian beef exporters complain that recently-imposed limits on their access to tariff-free imported beef and veal will seriously disrupt their operations and cause increased prices to meat processors and consumers in Canada. Complex new Canadian restrictions come under the terms of the GATT agreement. Canadian meat processors say they need more imported beef and veal to remain competitive with U.S. processors, who are increasing their Canadian market share. Texas vegetable and citrus producers also complain about Mexican import restrictions, and about competition from a bumper harvest of Mexican onions. Source: Steven H. Lee, "The State of Texas Agriculture," DALLAS MORNING NEWS, 11/6/94; "Beef Quota Threatens Processors and Consumers," CANADA NEWSWIRE, 11/9/94. - - - - - - - - - - - - - - - - - - ECONOMIC STABILIZATION, PRIVATIZATION CONTINUE PROBLEMS Despite an inflow of privatization dollars across Latin America, many countries are still struggling with high unemployment and drastic cuts in social programs. Overall, the Latin American economy grew 14.1 percent from 1991 to 1994, but one person in five still lacks an adequate diet, according to the Latin American Economic System (SELA), and 46 percent live below the poverty line. Experts at the SELA meeting in Venezuela in mid-November said that 83 percent of the new jobs created in Latin America from 1990-93 were in the low-paying informal sector, evidencing continuing stagnation of the productive sector. Brazil's economic stabilization plan, credited with winning the presidential election for former Finance Minister Fernando Henrique Cardoso, is now threatened as inflation approaches three percent a month. Current Finance Minister Ciro Gomes, trying to impose economic controls, denounced business leaders as "villains, scoundrels, and thieves." Wage hikes are scheduled to take effect in November. Since the beginning of the 1980s, the Mexican government has divested itself of 911 enterprises ranging from banking to bicycle manufacture, from coffee shops to mines and airlines. Privatization made many of the small to medium-sized businesses more efficient and productive, and brought $22.1 billion into the national treasury under the Salinas administration alone. But privatization also cost the jobs of more than 400,000 workers and concentrated production in the hands of a small number of owners. Rather than breaking up state monopolies, privatization transformed many into private monopolies, say critics. "In international forums, they are enchanted with the privatization process," said Roberto Salinas, director of the Mexico City-based Center for Free Trade Research. "But in Mexico, the public reaction is one of general discontent." That discontent focuses not only on job losses and benefits flowing to a small number of people, but also on failure to achieve any significant improvement in services provided by the newly-private companies. Telmex, the national telephone company, is a case in point. Tens of thousands of complaints against Telmex have been filed since privatization, and Telmex's rates remain significantly higher than telephone rates in other countries. Source: "Economic Growth Fails to Abate Poverty," IPS, 11/9/94; Mario Osava, "Snags in Economic Plan Increase Tensions," IPS, 11/10/94; Jane Holligan, "Trade Gaps, Unemployment Nag Latam Economies," UPI, 11/15/94; Claudia Fernndez, "Private Matters," EL FINANCIERO, 10/31-11/6/94; Estrella Gutierrez, "Over 80 Percent of New Jobs in Informal Sector," IPS, 11/17/94. - - - - - - - - - - - - - - - - - - U.S. TRADE DEFICIT INCREASES The U.S. merchandise trade deficit increased from $14.1 billion in August to $14.6 billion in September, the second-highest level ever. Exports of goods and services declined from $59.9 billion in August to $59.7 billion in September. Economists say the deficit is due to macroeconomic factors, and the US Chamber of Commerce says exports to NAFTA partners are growing. Nonetheless, Congress is expected to use the trade gap to attack the GATT legislation in debate this month. During the first nine months of 1994, according to U.S. Commerce Department officials, the total merchandise trade deficit ran at an annual rate of $148.8 billion. The record annual trade deficit of $152.1 billion was set in 1987. Source: "U.S. Trade Deficit Widens," NEW YORK TIMES, 11/19/94; Nancy Dunne, "US Trade Gap Widens as Exports Fall," FINANCIAL TIMES, 11/19-20/94. - - - - - - - - - - - - - - - - - - TELECOMMUNICATIONS MARKET MOVES In October, the United States and Argentina signed a memorandum of understanding, beginning a five-year effort to share telecommunications information, ensuring that U.S. firms will have access to new market openings in areas ranging from fiber optics to cellular phones. Even before this opening, Continental CableVision, the third-largest cable operator in the U.S., agreed to buy a 50 percent equity interest in Fintelco SA, a holding company for Argentina's Video Cable Communicacin SA. The Fintelco cable companies have more than half a million subscribers in Argentina. US West International has acquired a 49 percent share in Listel, Brazil's largest printer and publisher of telephone directories. US West International publishes more than 300 white and yellow pages directories in the western United States, and has British and Polish units as well, but this is its first venture into Latin America. The Brazilian government has also proposed legislation to lift barriers to importing telecommunications equipment. Source: "US Cable Company Buys Into Fintelco SA;" Paula L. Green, "US Sees Telecom Gains With Argentina Deal," JOURNAL OF COMMERCE, 11/9/94; "US West Takes Stake in Brazilian Firm," JOURNAL OF COMMERCE, 11/10/94; "Government to Lift Import Barriers," IPS, 11/9/94. - - - - - - - - - - - - - - - - - - RESOURCES/EVENTS "The New Supremacy of Trade: NAFTA Rewrites the Status of States," Robert Stumberg with Timothy Boller and Karen Wendelowski. Center for Policy Alternatives. Testimony before Pennsylvania House of Representatives, 9/22/93, 23 pages and Testimony before Florida House of Representatives, November 3, 1993, 33 pages. Center for Policy Alternatives, 1875 Connecticut Ave. NW, Suite 710, Washington, DC 20009. Telephone 202/387- 6030; Fax 202'986-2539. $10 each. Testimony covers NAFTA-related issues of particular relevance to state legislators, including conflicts between NAFTA and state laws. - - - - - - - - - - - - - - - - - - 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