From iatp@igc.apc.orgSat Dec 16 10:43:42 1995 Date: Fri, 05 May 1995 09:32:37 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Monitor 5/5/95 NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy May 5, 1995 Volume 2, Number 14 __________________________________ ________ Headlines: - LABOR DAY DEMONSTRATES MEXICAN WORKERS' ANGER - NAFTA LABOR NEWS: NEGOTIATIONS, RELOCATIONS, TERMINATIONS - BRITISH COLUMBIA PROPOSES WATER EXPORT BAN - U.S. ALLIES OPPOSE CUBA TRADE RESTRICTIONS - ARGENTINE BANK BAILOUT IN PLACE - FOOD SHORTAGES FORECAST LABOR DAY DEMONSTRATES MEXICAN WORKERS' ANGER The Mexican government and the government- dominated union Confederacin de Trabajadores de Mxico (CTM) canceled the traditional May Day labor celebration this year, in an attempt by CTM not to further embarass the government of President Ernesto Zedillo. Labor had little to celebrate, with 600,000 jobs lost during the first two months of 1995 alone, and with current incomes the lowest seen since 1935. With the government's celebration canceled, throngs of angry workers flooded into the Zcalo (the central plaza in Mexico City), demanding jobs, wage increases, peace with justice for the Zapatistas, and the resignation of President Ernesto Zedillo and of regent Oscar Espinosa, who orchestrated the dismantling of Ruta 100. Ruta 100, the 4,000-bus, 14,000-driver transit service for the Federal District, was dissolved by the government on April 8. The government charged that Sutaur-100 (the Ruta 100 union) had diverted $4 million of public money to the union and had links to radical groups including the Zapatistas. On April 10, Luis Miguel Moreno Gmez, chief of Ruta 100, died in his office of two gunshot wounds. The government says that he committed suicide, but others remain suspicious of that explanation. After taking over Ruta 100, the government dismissed union drivers and began hiring replacements. Marchers expressed solidarity with Sutaur-100, and heard a message from Ricardo Barco, a jailed officer of Sutaur-100, calling for organization of unions independent of the government, and for defense of collective bargaining, the right to strike, and union autonomy. Laborers were joined in the Zcalo by farm workers, government employees, and representatives of social organizations. Speakers called for the reversal of neo-liberal government policies that they claimed benefit only bankers and speculators. They also denounced suppression of independent unions in various parts of the country. Estimates of the size of the crowd ranged from 30,000 (according to government television stations) to 70,000 (New York Times) to 100,000 (various news agencies) to 300,000 (police on the scene) to 1,500,000 (organizers of the demonstration). While politicians, including the PRD's Cuahtemoc Crdenas, attended the gathering, they were relegated to silence, by agreement of the organizers. After the crowd had gathered under the hot noonday sun, some began to attack the National Palace, throwing bottles, sticks, and stones, and breaking windows, with some even trying to set fire to the doors. Police took video and still photographs as demonstrators spray-painted anti- government slogans on the seat of government. The videos were later used to identify and arrest nineteen of the participants. Eventually, police confronted demonstrators, and some young people among the demonstrators attacked, throwing stones and bottles against the full-length acrylic shields carried by police. Police held their ground until organizers of the demonstration arrived on the scene, denouncing the presence of paid provocateurs. The rock and bottle-throwing episode lasted for less than 30 minutes and involved few of the demonstrators gathered for the nearly four-hour observance. Laurence Iliff, "Unemployment Shows Sharp Increase," EL FINANCIERO, April 24-30, 1995; Andrea Becerril, Judith Caldern, and Ciro Prez Silva, "Cambio de Poltica Econmica, Demanda Central en el Zcalo;" Blanche Petrich, "Desfile Ms Espontneo Que Bien Organizado;" Vctor Ballinas, Roberto Guardao Espinosa, Juan Manuel Venegas, and Ricardo Olayo, "De Las Mayores Movilizaciones Populares;" Vctor Ballinas, Alonso Urrutia and Ismael Romero, "Intil de Apaciguar los gnimos;" Ricardo Olayo, "Los Acusan de Daos al Palacio Nacional;" LA JORNADA, May 2, 1995; Tim Golden, "Defiant Workers in Mexico Demonstrate Over the Government's Economic Policies," NEW YORK TIMES, May 2, 1995; Brendan M. Case, "City Bus-ts Union," EL FINANCIERO, April 17-23, 1995; "Ruta 100," LA JORNADA, April 14, 1995; Leslie Crawford, "Mexican Unions Shun May Day March," FINANCIAL TIMES, 4/27/95; Diego Cevallos, "Unions in Crisis," INTERPRESS SERVICE, April 25, 1995. NAFTA LABOR NEWS: NEGOTIATIONS, RELOCATIONS, TERMINATIONS For the first time since NAFTA took effect, the U.S. government has asked the Mexican government to look into alleged labor law violations. The request involves a complaint against Magnticos de Mxico, a subsidiary of Sony that is located in Nuevo Laredo. Sony is accused of interfering with free union organizing, including police suppression of a protest against an internal union election organized by pro-company union officials. The pro-company union officials from the Confederation of Mexican Workers (CTM) were installed after Sony fired six union delegates who opposed a new seven-day work week imposed by the company. The U.S. National Administrative Office (NAO) said it will investigate charges that Sony workers were fired because they tried to affiliate with the independent Authentic Workers Front (FAT) union. The NAO previously dismissed similar complaints against General Electric and Honeywell. Halo Lighting of Illinois recently announced that it will move 200 of 600 assembly jobs from its Chicago-area plant to Mexico, taking advantage of the decline in value of the peso. Halo's cost per hour will drop from an average of $11.67 in its Illinois plant to 70 cents per hour in Mexico. Halo's move follows that of a Quasar television plant in Illinois, which shut down last year when Matsushita shifted all 295 jobs to Tijuana, Mexico. Business consultants and executives report that more companies are moving or buying Mexican companies at bargain prices. In early April, Motorola Inc. announced plans for a new pager-assembly plant and headquarters in Chihuahua, Mexico. In late March and early April, Industrias Kirkwood in Mexico City (a U.S. owned auto parts company) fired six union leaders from the independent STIMAHCS union. The union leaders had led protests over working conditions, including ramshackle bathrooms, physical searches of women workers by company police, sexual harassment by a production manager, and arbitrary work shift changes. STIMAHCS is affiliated with the Authentic Workers Front. Kirkwood employs approximately 250 workers, who are currently represented by the government- dominated COCEM and CTM unions. After firing STIMAHCS workers, Kirkwood hired dozens of workers from COCEM. Tim Shorrock, "US Seeks Mexican Talks on Labor Complaint," JOURNAL OF COMMERCE, April 12, 1995; Stephen Franklin, "Cheap Peso Attracting U.S. Companies," CHICAGO TRIBUNE, April 5, 1995; "Cleveland-Based Company Fires Six Mexican Union Organizers," LABOR NOTES, April 6, 1995. BRITISH COLUMBIA PROPOSES WATER EXPORT BAN The government of British Columbia (B.C.) will introduce legislation aimed at banning bulk water exports from the province, asserting B.C.'s sovereignty over its ground and surface water. The proposed legislation would leave existing agreements intact, but would ban any new diversion of water from one watershed to another and any removal of water in containers larger than 20 liters. B.C. Environmental Minister Moe Sihota said the legislation is needed to preserve water for diminishing salmon stocks and for the province's rapidly growing human population. B.C. previously imposed a series of temporary moratoria that has prevented any increase in bulk water exports since 1991. As a partner with the United States in the Columbia River Treaty, B.C. allows the use of several rivers for power generation in the U.S. Current water licenses are grandfathered into the legislation, which is opposed by Multinational Resources Inc., a Vancouver company seeking to sell one million acre feet of Thompson River Water to the U.S. annually. When Canada's Liberal government took office, NAFTA signatories joined in a statement that NAFTA does not force any country to export water if it chooses not to do so. The federal government has said that bulk water sales will not be allowed under NAFTA, but may oppose B.C's legislation as an encroachment on its authority to regulate trade. Craig McInnes, "B.C. to Formalize Bulk-Water Export Ban," GLOBE AND MAIL, March 23, 1995; David Hogsen, "Sihota Closing Taps on Exports of Large Volumes of B.C. Water," VANCOUVER SUN, April 28, 1995; Denise Helm, "Water Export Ban Won't Stop Bottler Slaking U.S. Thirst," TIMES COLONIST, April 28, 1995. U.S. ALLIES OPPOSE CUBA TRADE RESTRICTIONS Cuba was on the agenda of a meeting of Canadian and Mexican ministerial talks in April, with both countries agreeing to mount a strong joint lobbying effort against proposed U.S. legislation widening the U.S. embargo against Cuba. Canada and Mexico are Cuba's two largest trading partners. The European Union also opposes the anti- Cuba legislation pending before the U.S. Congress, agreeing with Canada and Mexico that the U.S. embargo violates rules of the World Trade Organization. The legislation would prohibit countries importing Cuban sugar from selling sugar or sugar products to the U.S. and would ban entry into the U.S. of any foreigner whose company buys or rents Cuban property expropriated from a U.S. citizen since 1959. Canadian Ambassador to the U.S. Raymond Chretien sent a letter to U.S. lawmakers noting that passage of the bill would ban sugar, syrup and molasses exports to the U.S. (37,000 metric tons from Canada in 1993) and that Canada would retaliate by banning similar U.S. exports to Canada (141,000 tons in 1993). The 14-nation Caribbean Community (Caricom) recently increased economic ties with Cuba, including cooperation in development of regional sugar cane, livestock, and fisheries industries. Cuba is also a founding member of the new Association of Caribbean States and a member of the Caribbean Tourism Organization. The Caribbean countries depend heavily on trade with the U.S., and fear that they will be targets of any new trade ban. A Jamaican foreign ministry official asked rhetorically, "Do Mr. [Sen. Jesse] Helms and his ultra-conservative colleagues intend to bar Canadian and Mexican companies from doing business with the United States, or will this be another case of Washington's big stick attacking small countries?" Leo Ryan, "Canada, Mexico Hope to Stem Push in US to Widen Embargo on Cuba," JOURNAL OF COMMERCE, May 1, 1995; Leo Ryan, "Ottawa Escalates Ongoing Dispute Over Cuban Embargo," JOURNAL OF COMMERCE, April 25, 1995; Canute James, "Caribbean Nations Gird for Attacks Over Economic Ties With Cuba," JOURNAL OF COMMERCE, April 20, 1995. ARGENTINE BANK BAILOUT IN PLACE Since the Mexican devaluation in December, eight Argentine banks have been suspended, three have collapsed, with another six temporarily shut down in mid-April and 20 others implementing severe restrictions on withdrawals. Funds for an $11 billion-plus bank bailout continued to arrive on schedule in late April, with placement of a $1 billion "patriotic" bond and the imminent approval of an initial $500 billion from the World Bank as a first installment on a $3.8 billion loan package. Additional funds from the Inter-American Development Bank and private foreign banks will go to a trust fund that will pay off part of the debts of 15 of Argentina's 17 provincial banks and make severance payments to terminated bank employees, allowing the provinces to sell the banks to private investors. Shaky private banks will be taken over by stronger ones, with the help of additional bailout funds, resulting in a reduction of the number of Argentine banks from 160 to about 110 over the next two years. The bailout comes just before the May 14 presidential election, in which Argentine President Carlos Menem is running for a second term. David Pilling, "Argentine Bank Suspended," FINANCIAL TIMES, April 19, 1995; "Argentine Banks Face Merger Pressure," FINANCIAL TIMES, April 13, 1995; David Pilling, "Argentina to Receive $1bn From Bond," April 28, 1995; Paul Lewis, "World Bank Likely to Vote ArgentineAid," NEW YORK TIMES, May 4, 1995. FOOD SHORTAGES FORECAST In late April, the United Nations Food and Agriculture Organization (FAO) expressed concern about the world food supply, saying that nine Latin American countries -- Bolivia, Colombia, the Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, and Nicaragua -- are among low income countries with food shortages. In addition to the Latin American countries, 45 African nations, 17 Asian nations, six Pacific nations, and 12 nations from Europe and the co9mmunity of Independent States. FAO Director Jacques Diouf said that global food production grew two percent from 1993 to 1994, but that most of the increase occurred in developed countries and that international prices of wheat and rice rose. Responding to domestic pressure for budget cuts, in early April the United States government announced a 50 percent cut in overseas food aid. U.S. officials said that surplus grain stocks are nearly exhausted because of farm subsidy cuts. International aid experts said the U.S. reduction will leave aid agencies far short of the needed 10 million tons of food aid needed each year. In Mexico, the Agriculture Ministry reported a 41 percent reduction in production of the country's 10 basic grains for the fall 1994/winter 1995 growing season, with harvests expected to be 6.6 million tons, compared to 11.23 million tons last year. The Agriculture Ministry also forecast a reduction in planting due to increased prices for credit and agricultural inputs. Four million producers of basic grains may leave up to ten million hectares unplanted during the crucial spring-summer agricultural cycle. Commercial producers are expected to stop planting corn and beans, switching to more profitable products while still trying to reduce the use of agri-chemicals and machinery. Mexican consumers and landless workers will be most affected by the increase in the price of food and reduction in salaries. Corn tortilla prices rose 26 percent in the Mexico City metropolitan area, to about 15 cents per kilo in early April, a price increase set by the Commerce Ministry (Secofi). Prices outside Mexico City are higher. According to Secofi, two million Mexican households receive free tortillas as part of the Solidarity anti-poverty program. Secofi says the price increase will keep 40,000 small tortilla mills, which employ 250,000 people, from going out of business. The Mexican tortilla industry is split between the 40,000 plus "nixtamaleros" or small neighborhood producers, and a handful of flour- milling industrialists, such as the Maseca Foods tortilla producers. Maseca controls 65 percent of the industry through its 20 plants, and benefited by the assignment of large stocks of subsidized grain under the Salinas administration. Roberto Gonzalez Barrera, "Don Maseco," is a close friend of Raul Salinas and of former agriculture secretary and multi-millionaire Carlos Hank Gonzalez. Maseca now has branches throughout Central America and its U.S. Mission brand is estimated to produce 35 percent of Grupo Industrial Maseca's income. If Mexican corn production falls drastically, more imported corn will be purchased. Under NAFTA, Mexico is obliged to permit the tariff-free import of 2.5 million tons of corn from the U.S. and 100,000 tons from Canada in 1995. Any additional amount is subject to a high tariff, which may be waived by the Mexican government in the event of a corn shortage. On April 24, eight agricultural organizations representing 80 percent of the five million agricultural workers met to create a consensus platform to present to the nation. The agricultural sector is in the most severe crisis of the past 30 years, according to Armando Bartra of the Maya Institute, who called on the federal government to recognize the importance of the sector instead of dismissing it as "premodern." "FAO Concerned About State of Global Food Supply," INTERPRESS SERVICE, April 25, 1995; Steven Greenhouse, "U.S. to Cut Overseas Food Aid by Nearly Half," NEW YORK TIMES, 4/2/95; Matilde Prez, "Podran Dejar de Cultivarse 10 Millones de Hectareas a Partir de Esta Ciclo, Indica Agricultura," LA JORNADA, April 24, 1995; "Basic Grain Output to Fall 41%;" "Corn Tortilla Prices Rise 26%," LA JORNADA, April 17-23, 1995; John Ross, "The Politics of Greed Poison Mexico's Daily Diet: Tortillas of Blood," ANDERSON VALLEY ADVERTISER, April 5, 1995. __________________________________ _____________ Produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. Edited by Mary C. Turck. The NAFTA & Inter- American Trade Monitor is available free of charge to Econet and IATPNet subscribers. For information about fax or mail subscriptions, or other IATP publications, contact: The Institute for Agriculture and Trade Policy, 1313 5th Street SE, Suite 303, Minneapolis, MN 55414. Phone: 612-379-5980; fax: 612-379-5982; e-mail: iatp@iatp.org. For information about IATP's contract research services, contact Dale Wiehoff at 612-379-5980, or e-mail: dwiehoff@iatp.org