From iatp@igc.apc.orgSat Aug 19 18:48:38 1995 Date: Fri, 18 Aug 1995 15:03:33 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 8-18 NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy August 18, 1995 Volume 2, Number 23 __________________________________________ Headlines: - MAQUILAS AND LABOR - CHILE MAY WAIT ON NAFTA - CAMPESINOS KILLED IN BRAZIL PROTESTS - FORECLOSED MEXICAN PROPERTY SET FOR AUCTION IN TEXAS - MEXICAN DROUGHT INCREASES GRAIN IMPORTS - COFFEE PRODUCERS RESTRICT EXPORTS __________________________________________ The next issue of the NAFTA & Inter-American Trade Monitor will appear on September 8. There will be no issue on September 1. __________________________________________ MAQUILAS AND LABOR Labor rights continue to be a major area of dispute in international trade discussions. Complaints to the United States Trade Representative (USTR) this year charged Guatemala and Colombia with failure to protect workers' rights, and asked the USTR to withdraw the benefits given the two countries under the generalized system of preferences (GSP). The complaints against Guatemala, filed by the AFL-CIO, cite increasing violence and recent killings of several union members. The AFL- CIO, Human Rights Watch, and the International Labor Rights and Education Research Fund (ILSRERF) all Colombia lacks freedom of association and the right to organize and bargain collectively. Despite constitutional guarantees, workers' rights are violated by widespread violence in Colombia. The AFL-CIO also complained of child labor in Colombia. In May, the Central American Parliament unanimously resolved "to take action against the interference of U.S. labor unions in the Central American maquila industry." Maquila proponents object to U.S. union pressure to raise wages and environmental standards. Some U.S. companies have responded to consumer concerns about foreign labor practices by instituting codes of conduct for contractors. J.C. Penney Company requires apparel makers to sign a code of conduct forbidding any violation of local labor law, but the agreements are routinely ignored. A maquila owner in Guatemala reports that his business has "never had any request from Penney about how we pay or treat workers -- just the quality of our production." Visits to factories supplying Penney find workers under the legal age of 14 and others paid less than the minimum wage of $2.80 per day and forced to put in unpaid overtime. Penney's Guatemalan buying office director concedes that he has never reported any supplier violation of the company code. The Guatemalan Labor Ministry's child-worker protection chief says her office does not have the personnel to investigate an estimated 300,000 illegally employed child workers. Levi Strauss employs inspectors to police working conditions in developing world factories, but concedes that they don't dig deeply for fear of offending factory owners. The director of imports for the Target chain says policing is impossible: "I don't want to sound callous, but we probably have 150 major contractors, and sometimes we don't know which factory something is coming from." Target has a code, but does not monitor compliance. The Caribbean Basin Trade Security Act (CBTSA), currently before the U.S. Congress, would end U.S. duties for exports from 24 Central American and Caribbean maquiladoras. The bill, also known as the CBI parity bill, would provide trade benefits roughly equivalent to those received by Mexico under NAFTA, but does not include equivalent workers' rights provisions. Central American countries complain that textile companies are moving to Mexico because of NAFTA. The Federation of Private Entities of Central America and Panama says that 74 companies moved from Guatemala to Mexico in the last year, leaving 20,000 Guatemalans unemployed. Overall, however, CBI textile exports continued to increase in 1994. "Maquila Industry Opposes U.S. Unions' Claims," CENTRAL AMERICA REPORT, June 23, 1995; Bob Ortega, "Broken Rules: Conduct Codes Garner Goodwill for Retailers, But Violations Go On," WALL STREET JOURNAL, July 3, 1995; "Latin Nations Charged With Failure to Protect Worker Rights, Patents," WASHINGTON REPORT ON LATIN AMERICA AND THE CARIBBEAN, July 7, 1995; "Congress Considering Millions in New Tax Breaks for Central American Maquiladoras But Ignores Need to Respect Worker Rights," US-GUATEMALA LABOR EDUCATION PROJECT, July 27, 1995; Peter Brennan, "Costa Rica Sees Textile Jobs Begin to Move to Lower-Cost Countries," JOURNAL OF COMMERCE, August 10, 1995. CHILE MAY WAIT ON NAFTA After a first round of talks between Chile and current NAFTA members in Mexico City, Chilean chief negotiator Juan Gabriel Valdés reiterated that Chile will not enter into substantive negotiations unless the United States has fast track negotiating authority in place. The U.S. Congress has not reached agreement on fast track, and will not vote until some time in October. Republicans are generally in favor of trade pacts but reluctant to give President Bill Clinton negotiating authority, while some Democrats are reluctant to see any widening of NAFTA. Even those Democrats who favor NAFTA and Chilean accession disagree with Republican demands to exclude labor and environmental provisions from a trade agreement with Chile. U.S. Representative Marcy Kaptur (D-OH) said she will introduce a bill to force renegotiation of all of NAFTA, which she has consistently opposed. "NAFTA was supposed to create jobs in the United States. It has done exactly the opposite." said Kaptur. She also faulted NAFTA for increasing illegal immigration, increasing uncertainty in currency markets, and creating what is projected to be the largest-ever U.S. trade deficit this year. Rep. Charles Rangel (D-NY) said in early August that drug interdiction should also be part of trade negotiations, and that trade agreements should leave open the possibility of using tariffs to punish countries that tolerate drug production and trafficking. House Trade Subcommittee chair Rep. Phil Crane (R-IL) flatly rejected Rangel's proposal, saying it would "open a Pandora's box" of non-trade issues and protectionism. Valdés said that Chile will evaluate the situation in late September. Meanwhile, negotiations for Chilean association with Mercosur, the Southern Common Market of Argentina, Brazil, Paraguay, and Uruguay, will continue in Uruguay on August 21 with discussion of lists of exceptions to the common external tariff. Chile and Mercosur have agreed to speed up the negotiations, hoping to reach an agreement by the end of this year. Chile's possible entry into NAFTA complicates the talks, as Mercosur wants the same preferential tariffs that Chile will offer NAFTA. The Chilean business and agricultural sectors are reluctant to see this concession. Kevin G. Hall, "Chile Will Wait Until September to Decide on Substantive Nafta Talks," JOURNAL OF COMMERCE, July 27, 1995; John Maggs, "GOP Bill on Chile, Nafta Derailed," JOURNAL OF COMMERCE, August 2, 1995; Kevin G. Hall, "US: Nafta Negotiations Too Slow; Chile: Talks Are Learning Experience," JOURNAL OF COMMERCE, August 2, 1995; David Bennett, SAN ANTONIO EXPRESS-NEWS, July 26, 1995; John Maggs, "Key House Democrat Wants to Add Drug Interdiction to Nafta Talks," JOURNAL OF COMMERCE, August 3, 1995; Gustavo Gutierrez, "Mercosur: Chile Races Against the Clock Towards Association Pact," INTERPRESS SERVICE, August 9, 1995; Gustavo Gutierrez, "Will Asuncion Meet Chile's Needs?" INTERPRESS SERVICE, August 3, 1995. BRAZIL: AGRARIAN PROTESTS TURN BLOODY On August 9, at least 32 people were killed when 200 heavily-armed anti-riot police troops violently evicted hundreds of campesinos from farmland they had been occupying in the northern Brazilian state of Rondonia. At least 53 more people were arrested, 11 police officers were injured, and 355 people were arrested in a nearby town, according to government spokespersons. Non-governmental sources such as the Rondonia Rural Workers Federation, the Landless Peasant Movement and the Catholic Church's Pastoral Land Commission said the number of people killed is more likely to be around 70. The squatters were armed with machetes, sticks, and knives when police came to burn their houses and drive them out of the absentee-owned, 40,000-acre Santa Helena farm. On July 25, more than 5,000 campesinos had gathered at the third annual congress of the Landless Peasant Movement (MST) in Brasilia. The MST advocated continued land occupations until Brazil implements agrarian reform, and its members have taken over at least 87 farms. The MST says that only 60 million hectares of 400 million suitable for farming are currently cultivated, and that 56 million of the cultivated acres belong to just 2,000 owners while 4.8 million families are landless. During the past decade, 100,000 families have been given land rights, 700 campesinos working for land reform have been murdered, 370 have been tortured, 13 cases have been tried, and four people have been found guilty. Brazilian law provides that the government can appropriate unproductive land and distribute it to landless campesinos. President Fernando Henrique Cardoso promised to settle 40,000 families this year and a total of 280,000 during his four-year term. His agriculture minister, Jose Andrade Vieira, himself a large landowner, has tried to lower the targets announced by Cardoso during the presidential campaign. On July 19, farmers from 16 Brazilian states blocked traffic in Brasilia with a caravan of 1,000 trucks and tractors, demanding that the government stop adjusting their debts under the monetary index (TR) that measures inflation, and give farmers a 10-year period to pay their debts. Farmers who are in default on their debts cannot obtain new loans. Farm protesters said that the agricultural sector's old debts total more than $4.5 billion, more than one billion of which is due to the TR surcharge. The surcharge has raised agricultural debt by 1,200 percent over the past 18 months, with corn and soy prices going up by only 407 percent and 289 percent. Protesters also pointed to competition from Mercosur imports and to the government's failure to guarantee minimum prices while over-valuing the national currency as causes of their difficulties. Despite a grain harvest expected to be six million tons greater than last year's, farm income will drop by $5.6 billion this year. Agriculture Minister Vieira said that the TR index is used for all other industries, and it would not be possible to stop its use for past agricultural debts. President Cardoso has promised lower interest rates for future production loans for basic products. "Landless Peasants Massacred in Brazil," WEEKLY NEWS UPDATE ON THE AMERICAS, 8/13/95; "Brazilian Peasants Committed to Land Takeovers," WEEKLY NEWS UPDATE ON THE AMERICAS, 7/30/95; Mario Osava, "Brasilia Awakens to Protesters' Horns," INTERPRESS SERVICE, July 19, 1995; "Farmers Protest in Brazil," WEEKLY NEWS UPDATE ON THE AMERICAS, 7/23/95; Angus Foster, "Land Battle Turns Bloody in Brazil," FINANCIAL TIMES, August 12, 1995. FORECLOSED MEXICAN PROPERTY AUCTION IN TEXAS Homes, residential and industrial properties, hotels and condominiums, and commercial centers from nine Mexican states will be auctioned in San Antonio, Texas by Lasalle Partners. The properties to be auctioned in Texas have been seized by Banamex, Serfin, Zaverlat, Banorte and Bancentro for non-payment of loans. The auction, originally scheduled for August 11 but now postponed until the end of the month, has been met with angry opposition within Mexico, where debtor organizations refuse to pay what they call usurious interest rates. "Mexican Properties to be Auctioned Off in Texas," Statement of Victor Quintana, Federal Representative from Chihuahua, July, 1995. MEXICAN DROUGHT INCREASES GRAIN IMPORTS In northern Mexico, one of the worst droughts in history has reduced yields and forced small farmers off their land. Fall planting may not be possible in Chihuahua, Durango, Nuevo Leon and Tamaulipas, where rainfalls as of April 30 were 40 percent below normal. Wheat harvests are expected to fall from four million metric tons last year to 2.5 million metric tons in 1995-96. The Mexican agriculture ministry estimates that grain imports will be at least nine million tons this year, two million higher than anticipated. The Confederacion Nacional de Propietarios Rurales estimates that grain imports will reach 17 million tons. Mexican water reservoirs have dropped so far that irrigation has been stopped in the northern agricultural region, in order to conserve water for domestic use. Dropping water volumes have increased salt content, making water unsuitable for consumption or irrigation. The International Boundary and Water Commission, which governs water allocations from the Rio Bravo/Rio Grande and several of its tributaries, reported that on July 1 Mexico had only 6.77 percent of stored water capacity available, while Texas had 47.11 percent of its stored water capacity available. Under the terms of a 1944 treaty, Texas can use all the flow from tributaries on the U.S. side of the river, while Mexico has to share the flow from its tributaries with Texas. Texas Governor George Bush and the U.S. State Department earlier this year denied a Mexican request for water for irrigation, but may consider giving Mexico water for human consumption. Marcelo Morichi and Jan Gilbreath, ³Drought Brings Severe Crop Reductions and Cattle Losses in Northern Mexico,² U.S.-MEXICAN POLICY STUDIES PROGRAM, July 21, 1995; Kim Archer, "Big Drop Forecast for Production of Mexican Wheat as Plantings Fall," JOURNAL OF COMMERCE, August 14, 1995. COFFEE PRODUCERS RESTRICT EXPORTS Meeting in Bogota, Colombia in early July, representatives from Brazil, Colombia, Costa Rica, El Salvador, Honduras, and Nicaragua agreed to strictly limit coffee exports in order to bolster falling international prices for coffee. The agreement reached by the six countries sets quarterly quotas for each country for the next year, consistent with the Association of Coffee Producing Countries (ACPC) agreement reached in London in March. The ACPC plan calls for worldwide exports of 60.376 million 132-pound bags during the next year, down from an expected 69 million bags. Coffee prices have dropped drastically from $1.80 per pound to $1.22 per pound since the beginning of 1995. The Mexican National Coordinator of Coffee Organizations (CNOC), which represents more than 60,000 producers, supports the agreements to limit exports and has petitioned the Mexican government to join the ACPC. Mexico is the only leading coffee producer to remain outside the ACPC plan. Colombia's National Coffee Union held a 24-hour strike on July 19, demanding government aid to increase prices, to replace disease-killed plants and to forgive $200 million in coffee-growers' debts. "Coffee Retention Agreement Reached," U.S. STATE DEPARTMENT REPORT, July 12, 1995; Erin Brummett, "Costa Rica/Coffee," VOICE OF AMERICA, July 6, 1995; "Coffee Growers Strike in Colombia," WEEKLY NEWS UPDATE ON THE AMERICAS, July 23, 1995; "Mexico Supports Latam Coffee Export Limits," REUTERS, July 14, 1995; "Coffee Prices Retreat as Doubts Rise Concerning Export Limits," NEW YORK TIMES, July 28, 1995; "Mexico Alone as Guatemala Joins Coffee Export Plan," REUTERS, August 7, 1995. RESOURCES/EVENTS LATIN AMERICAN LABOR NEWS, a publication of the Center for Labor Research and Studies, Florida International University. Journal includes reporting on Latin American trade unions and their struggles, news on inter-American labor solidarity, academic research, calls for papers. (Articles are published in original languages of English, Spanish, Portuguese in 1994 double issue.) Back issues available for $7.50-$30 include 1992, 1993, 1994, and 1995 issues focusing on labor and free trade. Published once or twice annually. Subscription is $15 individual, $30 institutional. Zoned for Slavery: The Child Behind the Label, a video report on maquila manufacturing produced by the National Labor Committee in Support of Worker and Human Rights in Central America. $12. This 23-minute video focuses on the conditions of maquila workers in Honduras. National Labor Committee, 15 Union Square, New York, NY 10033. Telephone 212/242-0700, fax 212/255-7230. ___________________________________________ 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