From iatp@igc.apc.orgMon Dec 12 20:26:47 1994 Date: Mon, 12 Dec 1994 09:35:39 -0800 (PST) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Monitor 12/12/94 Produced by the Institute for Agriculture and Trade Policy - - - - - - - - - - - - - - - - - - NAFTA and Inter-American Trade Monitor, vol. 1, #29 December 12, 1994 - - - - - - - - - - - - - - - - - - HEADLINES CHILE INVITED TO JOIN NAFTA SUMMIT OF THE AMERICAS: FOCUS ON TRADE ZEDILLO CONTINUES FREE TRADE POLICIES TRADE BEYOND THE AMERICAS AGRICULTURAL EXPORTS: FISH, FORESTS, WINE, CRANBERRIES, BANANAS RESOURCES/EVENTS - - - - - - - - - - - - - - - - - - CHILE INVITED TO JOIN NAFTA In a surprise move at the close of the Summit of the Americas, Mexico, Canada and the United States invited Chile to join the North American Free Trade Agreement. Chile has long been considered the leading candidate to expand NAFTA. With only 13 million people, Chile does not pose the challenge that is seen in larger economies, particularly Brazil and Argentina, both of whom are expected to eventually join NAFTA. Smaller countries fear that the rapid liberalization of trade is not in their interest, with the Prime Minister of Barbados, Owen Arthur, warning that "a rising tide can also overturn small boats." Chilean Finance Minister Eduardo Aninat said that his country's entrance to NAFTA will be "simple, clear and straightforward" with bipartisan support in the US Congress. Chile and the current NAFTA members will now begin a series of negotiations over exact conditions of entrance. Source: David E. Sanger, "Chile is Admitted as North American Free Trade Partner," NEW YORK TIMES, 12/12/94; MONITOR RADIO REPORT, 12/12/94 - - - - - - - - - - - - - - - - - - SUMMIT OF THE AMERICAS: FOCUS ON TRADE The Summit of the Americas produced an agreement to reach an agreement: by 2005, they will complete negotiation of a treaty establishing a free-trade zone for the Americas. The US appeared to be the least enthusiastic about moving forward, with some Latin American presidents saying that the timetable is too slow. Although President Clinton was forced to drop fast-track free- trade negotiating authority from his legislative agenda in 1994, five Republican representatives led by Newt Gingrich, the next Speaker of the House, have written a letter offering their support for fast-track legislation -- provided that no labor or environmental conditions are imposed on trade agreements. Other agreements reached at the summit included measures for reducing corruption by adopting conflict-of-interest standards for government workers and extradition agreements for people charged with corruption; for fighting drug trade by pushing for legislation to confiscate the proceeds of money laundering; for encouraging private investment in highways, electricity, and telecommunications projects. Leaders also called for universal access to education, for lowering child and maternal mortality rates, and for ending the use of leaded gasoline in the hemisphere. A Brazilian diplomat complained that "the corruption and democracy talk is a little patronizing," noting that the US doesn't bring up corruption with the Europeans because it might embarrass Italy and France and doesn't bring up democracy with the Pacific Basin for fear of offending China. Democracy and human rights appeared on the agenda mainly by exclusion -- that is, the US excluded Cuba on the grounds that it is undemocratic and violates human rights. On the opening day of the summit, Human Rights Watch issued a report critical of the US and European nations for adopting "commercial diplomacy" as their human rights policy, "hawking trade and investment deals while relegating human rights to the ineffectual realm of private diplomacy." Source: James Brooke, "U.S. and 33 Hemisphere Nations Agree to Create Free-Trade Zone," NEW YORK TIMES, 12/11/94; Barbara Crossette, "Human Rights Group Urges Stronger U.N. Action," NEW YORK TIMES, 12/11/94. - - - - - - - - - - - - - - - - - - ZEDILLO CONTINUES FREE TRADE POLICIES Ernesto Zedillo, inaugurated December 1 as president of Mexico, will continue his predecessor's emphasis on free markets and free trade. His cabinet includes Jaime Serra Puche, the Yale- educated economist who led Mexico's way to NAFTA, as Finance Minister. Herminio Blanco, another NAFTA figure, will be Minister of Commerce and Industrial Development. Responding to criticism of government investigations of recent political assassinations, President Zedillo named an opposition PAN member, Antonio Lozano, as Attorney General. Deputy Attorney General Mario Ruiz Massieu investigating the September assassination of his brother, PRI Secretary General Francisco Ruiz Massieu angrily resigned before the inauguration, charging PRI president Ignazio Pichardo with blocking the investigation. Mr. Pichardo was named Energy Minister in the new government. About 4,000 demonstrators protested the inauguration, and unrest continues in Chiapas. Zedillo promises decentralization and political and economic reform, as well as fostering economic expansion, fighting poverty, and overhauling the justice system. His inauguration was marked by a five-page advertising section in the New York Times titled "Mexico Investor." Source: John Rice, "Mexico-Inauguration," AP, 12/1/94; Martin Langfield, "President-elect Names More Open, Free-Trade Cabinet," REUTER, 11/30/94; Anthony DePalma, "New Cabinet in Mexico is Pro-Market," NEW YORK TIMES, 12/1/94; Damian Fraser, "Zedillo Names Reformists to Join Cabinet," FINANCIAL TIMES, 12/1/94. - - - - - - - - - - - - - - - - - - TRADE BEYOND THE AMERICAS The European Union (EU) is ready to increase trade with Latin America, and Latin American regional trade alliances seem ready, too. The EU plans to move ahead on upgrading relations with Mexico in the first three months of 1995, with a leaked document warning that "relations with Mexico could be eroded or stalled if it is not compensated with a new framework for Mexico/EU relations." The EU has tripled exports to Mexico since 1985, to $7.6 billion in 1993. Mexico reportedly prefers a full-fledged free trade agreement, while the EU is not yet ready to move that far, preferring a partial free trade agreement. A partial agreement, however, could violate GATT, and would still allow the US a comparative advantage. Another option would be a free trade agreement between the EU and the Group of Three -- Mexico, Colombia, and Venezuela. The EU also plans negotiations with Mercosur. "The central idea is to work in a realistic and pragmatic way towards a common free trade zone," says Celso Amorim, Brazil's foreign minister. The EU has been the largest trading partner for Mercosur since 1986, and the southern cone nations are still the fastest-growing market for European exports. Source: Debra Percival, "EU Weighs Up Options for Upgrading Mexican Relations," IPS, 11/30/94; David Gardner and Stephen Fidler, "EU Plans Trade Zone with S Americans," FINANCIAL TIMES, 11/25/94; Nathaniel Nash, Europe Seeks Latin Free-Trade Ties," NEW YORK TIMES, 12/7/94. - - - - - - - - - - - - - - - - - - AGRICULTURAL EXPORTS: FISH, FORESTS, WINE, CRANBERRIES, BANANAS % Chilean seafood sales, already representing 12 percent of the country's total export income, is projected to reach a new high of $1.3 billion export dollars in 1994. The increase represents increased catches in the species used to produce fishmeal and in salmon, though prices for both have dropped this year. % Uruguayan forestry, employing about 14,000 people, pays workers better and realizes higher profits than the more traditional livestock production sector, according to Rosario Pou, of the Forestry Office of the Ministry of Livestock, Agriculture and Fishing. Pou maintains that forestry is revolutionizing rural living conditions and stemming the rural exodus to the cities. About 40,000 hectares of trees destined for lumber are planted each year. Exports include paper, peeled trunks for cellulose, and sawed wood for cargo pallets, carpentry and panels. Foreign investors, including Shell, Kymene, The Spanish National Cellulose Company, and other Spanish, Brazilian and Chilean firms, have been drawn by tax exemptions on the importation of machinery and on land used, and by government subsidies and credits. % After succeeding on the world market by virtue of low prices, Chilean exporters are now looking to expand into higher-quality varieties. About half of the market is dominated by large producers, including Concha y Toro, which produces one-fifth of Chile's wine exports and has its stock traded as American Depository Receipts on the New York Stock Exchange. Because of limited shelf space in liquor stores, established producers have an advantage in export sales. % US investors, aided by a Wisconsin cranberry expert and former Peace Corps worker, have invested in cranberry bogs in Chile and plan to produce massive amounts of large Chilean cranberries for the world market, beginning in 1996. Chile will become the world's third-largest cranberry producer, following the United States and Canada. The cranberry market has expanded with the wide use of cranberry juice in mixed-juice drinks. The Chilean bogs, constructed near the German settlement of Valdivia in the central valley, are expected to benefit from the highest per-acre production in the world. % With world banana prices stagnant and transportation costs rising, the Ecuadoran government imposed a ban on expansion of banana plantations. A ban on participation in the export market by producers who fail to meet productivity and quality standards is also being considered. Ecuador currently has 118,000 hectares planted in bananas with exports of three million tons expected in 1994. Salomon Larrea, head of the largest banana exporting company, said that Ecuador must target Russia and China and the countries of Mercosur in order to increase its exports. % Caribbean banana producers are defending their industry against claims from US producers that the European Union's (EU) quotas are unfair trade practices. The charges have been made by Chiquita Brands International and the Hawaiian Banana Industry Association under Section 301 of the US trade law. The EU has applied to GATT for a waiver of its provisions for the Lome IV Convention, which benefits Caribbean countries, among others. Source: "Unprecedented Rise in Seafood Exports," IPS, 11/23/94; Marcelo Jelen, "Forestry Sector "Revolutionises" Rural Area," IPS, 11/2/94; Calvin Sims, "Making the Affordable Chilean Wines Even Finer," NEW YORK TIMES, 11/25/94; Laurie Goering, "Cran Chile: New Flavor for Berry," CHICAGO TRIBUNE, 11/24/94; "New Markets Needed for Ecuadorian Bananas," IPS, 11/21/94; "Banana Crop Restrictions Not Permanent," IPS, 11/24/94; Canute James, "Caribbeans Defend EU Banana Regime Against US Criticism," FINANCIAL TIMES, 11/25/1994; Region Confident of GATT Waiver for Lome IV," IPS, 11/30/94. - - - - - - - - - - - - - - - - - - RESOURCES/EVENTS "Trade and Migration: NAFTA and Agriculture" by Philip L. Martin. Institute for International Economics, October, 1993. 158 pp. Credit card orders: telephone 202/328-9000; fax 202/328-5432. $15. Examines impact of NAFTA on Mexican migration to the United States, concludes that NAFTA will increase migration by as many as 100,000 persons annually, citing displacement of up to a million people a year from the land in Mexico. "Labor Law Enforcement in Mexico and the Role of the Federal and State Conciliation and Arbitration Boards," National Law Center for Inter-American Free Trade, 255 W. Alameda, P.O. Box 27210, Tucson, AZ 85726-7210. Telephone 602/622-1200 or 800/529-3463; fax 602/622-0957; email natlaw@ccit.arizona.edu. $50. Source of information for businesses, attorneys, and students on current labor law and practice in Mexico. - - - - - - - - - - - - - - - - - - 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