From iatp@igc.apc.orgTue Sep 12 22:52:13 1995 Date: Mon, 11 Sep 1995 07:24:44 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 9-8- NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy September 8, 1995 Volume 2, Number 24 __________________________________________ Headlines: - FREE TRADE IMPACT ON LABOR - U.S.-MEXICO AG TRADE ISSUES - PERU CHANGES AGRARIAN LAWS - BANANA WAR UPDATE - REGIONAL TRADE ALLIANCES MEET - MEXICAN NATIONAL CONSULTATION DRAWS ONE MILLION PLUS __________________________________________ FREE TRADE IMPACT ON LABOR In Mexico, industry groups and the government are pressing labor unions to make concessions, including change from a daily to an hourly wage in some industries, hiring more non- union workers, and greater management freedom in hiring and firing part-time workers. Some unions agree that a "new labor culture" is needed, while others say that the phrase is a euphemism for reducing legal protections for workers. An independent union leader in the auto sector, Benedicto Martinez, says business is taking advantage of the situation: "We can fight for better pay or we can fight to maintain jobs." Since the peso was devalued last December, at least one million of Mexico's 35 million jobs have disappeared, and Mexico's economy continues to slow, contracting by 10.5 percent in the second quarter of 1995. In the United States, skilled workers are watching as their jobs move overseas. "Information age" jobs that require computer skills can be done anywhere that computers, modems, and telephone cables are available, and white-collar jobs are moving to lower-wage sites around the globe. One example: Sea-Land, a division of the CSX Corporation, shut down offices in New Jersey and contracted the computer programming work previously done by approximately 300 U.S. workers in New Jersey to programmers in India and the Phillipines. Experienced programmers in India earn $1,200 to $1,500 monthly, compared to $4,000 and up in the United States. Blue-collar jobs in the United States remain at risk, both when companies move abroad and when they use the threat of moving to control employees. B.W. Harris Manufacturing Company recently closed a plant in West St. Paul, MN, moving its clothing manufacturing to the Caribbean. Like many other manufacturers, Harris will cut cloth in Florida, ship it to the Caribbean Basin for sewing, and sell the finished clothing in the United States. Caribbean manufacturers benefit from U.S. Caribbean Basin Initiative and Section 807 trade legislation. The number of U.S. textile and apparel industry jobs has declined from more than 1.1 million in 1985 to 969,400 in 1994, according to the U.S. Bureau of Labor Statistics. In contrast, Caribbean Basin countries have increased apparel exports to the United States by more than 25 percent to $2.45 billion during the first quarter of 1995, while Mexican apparel exports rose by 60 percent to $1.35 billion. Among U.S. workers feeling the pressure of the threat of moving abroad are workers at Leaders Manufacturing Inc. in Willmar, MN, who met this summer to begin organizing a union. One organizer has been fired and some workers report that the company's personnel director showed up at an organizing meeting and threatened to move jobs to Mexico if a union was voted in. Company officials declined to discuss the charges. Dianne Solis, "Mexico's Economic Crisis Pushes Unions to Consider Concessions," WALL STREET JOURNAL, August 25, 1995; "Mexican Recession Worse; Output Off 10% in Quarter," NEW YORK TIMES, August 17, 1995; Keith Bradsher, "Skilled Workers Watch Their Jobs Migrate Overseas," NEW YORK TIMES, August 28, 1995; Tom Fredrickson, "B.W. Harris Shifts Work to Caribbean," CITY BUSINESS, August 31, 1995; Jill Hodges, "Workers at Willmar Manufacturing Company Press On With Their Effort to Organize a Union," STAR TRIBUNE, July 15, 1995; Canute James, "Caribbean Sees Jump in Apparel Exports to US," JOURNAL OF COMMERCE, August 31, 1995. U.S.-MEXICO AG TRADE ISSUES California growers, last year enthusiastic about increased exports to Mexico under NAFTA, have seen those exports fall dramatically in the wake of Mexico's economic crisis. Tomato sales to Mexico, which grew from 600,000 25-pound cartons in 1992 to 2.25 million in 1994, have been cut by 95 percent this year. California wine exports to Mexico, which went from $2.3 million in 1990 to $6.8 million in 1994, totaled only $547,000 in the first half of 1995. California growers blame both the Mexican economic crisis and border crossing problems that never have been resolved. If border officials hold up a shipment for paperwork, perishable produce loses value. The USDA's Animal Plant Health Inspection Service (APHIS) scheduled hearings on its proposal to partially lift a ban on Hass avocados from Mexico, allowing their entry to 19 northeastern U.S. states each year from November through February. According to APHIS, cold weather would kill the pests that have been the reason for the 81-year-old U.S. ban on Mexican avocado imports. California's $1 billion avocado crop, 90 percent of U.S. avocado production, is sold almost entirely in the U.S. at prices two to three times higher than prices for Mexican avocados. More than one thousand California avocado farmers packed a USDA hearing in Escondido, insisting that their opposition was based on fear of pests, not fear of competition. Outraged voices on the Internet also protest avocado import proposals: "The Mexican Avocados have been banned because of insects for years because of the bugs down there that we don't have here. ... I don't think bringing in avocados that may have worse bugs will help us control bugs. ... Can someone tell me why bringing in these avocados will help avocado farmers here in the good old U.S.A. How can they quarantine our fruit and not let us sell it yet welcome the Mexican fruit that may well destroy our market?" USDA officials are also considering ways to transport Mexican mangoes, possibly carrying fruit flies, larvae, or pupae, through the United States to Canada. Shippers and exporters want to simply ship through the U.S. in sealed containers, but the USDA points out that larvae and pupae could fall out of the containers when they are being hauled back to Mexico, and that there are no controls on where the containers or trailers go after the mangoes are unloaded in Canada. Mangoes exported to the United States must have a U.S.- supervised hot water bath to kill fruit flies before entry into the country. Montieth Illingworth, "Mexican Slump Nips Farm Trade in Bud," JOURNAL OF COMMERCE, August 21, 1995; Kevin G. Hall, "USDA Aims to Block Mexico-Canada Flyway," JOURNAL OF COMMERCE, August 25, 1995; sals@coyote.rain.org, INTERNET POSTING, August 15, 1995; Bill Mongelluzzo, "Growers Emphatic in Support of Ban on Mexican Avocados," JOURNAL OF COMMERCE, September 1, 1995. PERU CHANGES AGRARIAN LAWS In mid-July, 27 years after Peru's land reform law was instituted by General Juan Velasco's left-wing military regime, all limits on landholding were abolished. Proponents said that larger agro-industrial operations are necessary to produce efficiently for export. Investors and agri-business are expected to buy up thousands of hectares along the Peruvian coast from cooperatives that have administered the tracts since the Velasco reform. Opposition leaders argued unsuccessfully that the abolition of limits on landholding will bring a return of latifundios - - large estates farmed with semi-feudal labor. The neo- liberal majority in Congress sees large estates as desirable, and is preparing companion legislation to change irrigation and water laws and set market prices for water. Both the land and water legislation have been strongly advocated by the World Bank and the Inter-American Development Bank, which have pledged a billion dollars in loans over the next three years to rehabilitate drainage and irrigation infrastructure. Sally Bowen, "Peru Set to Sweep Away 27-Year-Old 'Land Reform' Laws," FINANCIAL TIMES, July 18, 1995. BANANA WAR UPDATE Throughout 1995, the United States has threatened retaliatory trade sanctions under its Section 301 trade law to penalize the European Union (EU) for its banana regime. The most recent U.S. deadline for EU changes is October 17. Colombia and Costa Rica are also potential targets of the Section 301 sanctions. [See NAFTA & Inter-American Trade Monitor, April 28, 1995.] In August, the U.S. also said that it will initiate a complaint against the EU policy before the World Trade Organization. The EU banana regime uses a combination of quotas, tariffs, and export licenses to favor imports from former colonies in Africa, the Caribbean and the Pacific. Complicating matters, four Latin American banana producers -- Colombia, Costa Rica, Nicaragua, and Venezuela -- signed the so-called "banana framework agreement" with the EU, agreeing to shelve challenges under the World Trade Organization (WTO) rules in exchange for somewhat-improved country quotas. Ecuador -- the world's largest banana producer -- and other Latin American countries objected to the framework agreement. On the request of the Hawaii Banana Industry Association and Chiquita Brands International, the world's largest banana trader, the U.S. Trade Representative (USTR) began an investigation of the EU preferences for Caribbean bananas. Latin America produces about 75 percent of the world's bananas, and Chiquita Brands controls 65 percent of the market. The U.S.-based companies object to preferences for Caribbean producers and to provisions of the EU banana regime that give Latin American countries greater authority to allocate export licenses to companies. Caribbean countries attending a Washington meeting of hemispheric defense ministers in early August sought to refocus discussions on hemispheric security toward what they see as a United States war on their banana producers. Speaking for the Caribbean countries, which have small armies or none at all, Jamaican Ambassador Richard Bernal said that "the key is economic development." Antigua and Bermuda's Ambassador Patrick Lewis agreed, telling reporters, "I think the enemy is ourselves unless we can work together." In July, EU farm ministers rejected a call by the European Commission, the EU executive agency, to increase Latin American import quotas by 350,000 tons. France, Britain and Spain insist that they will not accept changes in the EU banana regime. Germany, Belgium, the Netherlands, Luxembourg, Austria, Finland, and Sweden want to increase the Latin American quota and change the distribution and allocation of export licenses. The European Commission will report in September on proposed modifications to the EU banana regime. Yvette Collymore, "Caribbean-Trade: New 'Enemies' Pose as Friends," INTERPRESS SERVICE, August 9, 1995; Debra Percival, "U.S. Demands May Lead to Modification of EU Regime," INTERPRESS SERVICE, July 25, 1995; Canute James, "Caribbean Banana Exporters Hit US Stance on EU Regime," JOURNAL OF COMMERCE, July 13, 1995; Bruce Barnard, "European Commission May Seek OK to Talk Bananas With Washington," JOURNAL OF COMMERCE, July 24, 1995; Debra Percival, "EU May Change Regime in Bid to Please Washington," INTERPRESS SERVICE, June 7, 1995; Silvio Hernandez, "Banana War Looms," INTERPRESS SERVICE, May 16, 1995; Bill Rodgers, "U-S/Latam Bananas," VOICE OF AMERICA, May 24, 1995; Tom Karst, "Trade Debate Arises as Market Ascends," THE PACKER, May 22, 1995; "U.S. Plans Trade Appeal in Europe Banana Case," NEW YORK TIMES, August 19, 1995. REGIONAL TRADE ALLIANCES MEET When Mercosur member nations (Argentina, Brazil, Paraguay, Uruguay) met in Paraguay this summer, the world's fourth- largest trading bloc agreed to expand, beginning talks to admit Chile and Bolivia. Moving beyond the common external tariff that was implemented on January 1, the summit included discussion of cultural, currency, and other integration. Argentine President Carlos Menem called for progress toward a common currency, but called eradication of poverty and unemployment the greatest challenge facing Mercosur members. The Bolivian and Chilean presidents called for progress on physical infrastructure links, such as highways, railroads, and ports. Both Chile and Bolivia are negotiating with Mercosur, with Chile expecting to reach an agreement by the end of the year, and Bolivia's president predicting an agreement with Mercosur by the end of June. Cultural officials of Mercosur countries and Bolivia signed an agreement to promote cultural cooperation, including a regional calendar of cultural events, joint publication of a basic collection of works by Mercosur authors, and linkage of national libraries and data centers. Disagreements among member nations included the dispute between Brazil and its Mercosur partners over import quotas imposed by Brazil on motor vehicles and other items. Brazil exempted other Mercosur countries from its limits on vehicle imports, defusing the biggest conflict at the meeting. Trade among Mercosur member nations has tripled during the past four years. Central American countries lack a strong trade pact, though trade within the region has grown from $750 million in 1990 to more than $1.4 billion in 1994. While several bilateral pacts, such as agreements between Costa Rica and Mexico or Nicaragua and Mexico, are pending or in place, severe national economic problems remain the main preoccupation of Central American nations. The Central American nations are included in the world's newest trade bloc, the Association of Caribbean States (ACS), together with members of the 14-nation Caribbean Community (Caricom), the Group of Three (Colombia, Mexico and Venezuela), Cuba, the Dominican Republic, and Haiti, and 15 dependent territories in the region. Citing NAFTA to the north and Mercosur to the south, a Venezuelan delegate to the August ACS meeting warned that, "We in this region are likely to be either squeezed, or left out, or both, and we cannot allow this to happen." Caricom already has a common external tariff and is moving toward lower tariffs and a common currency. The ACS has the potential to be one of the world's largest trade blocs, but it has just begun work on significant regional issues: trade, transportation, and tourism in the region. George Meek, "Mercosur," VOICE OF AMERICA, August 3, 5, 7 1995; Mario Osava, "Trade Bloc Fraught With Constant Bickering," INTERPRESS SERVICE, August 4, 1995; Marcela Valente, "Argentina Calls for Realism, Flexibility and Goodwill," INTERPRESS SERVICE, August 5, 1995; Maricel Sequiera, "Central America: Regional Pacts Need Updating," INTERPRESS SERVICE, July 5, 1995; Maricel Sequiera, "Central America: Towards Integration, With Eyes Wide Open," INTERPRESS SERVICE, June 26, 1995; Wesley Gibbings, "Caribbean Meets on Tourism, Trade and Transportation," INTERPRESS SERVICE, August 11, 1995; Scott West, "Caribbean: Regional Grouping Moves Slowly Towards Common Market," INTERPRESS SERVICE, July 24, 1995; Canute James, "Beachhead Against Shifting Trade," "Caribbean Leaders Meet to Forge Trade Bloc," FINANCIAL TIMES, August 17, 1995; Ian Elliott, "U.S., EU Watch as Mercosur Gains Market Strength," FEEDSTUFFS, August 21, 1995. MEXICAN NATIONAL CONSULTATION DRAWS ONE MILLION PLUS The August 27 National Consultation for Peace and Democracy, an unofficial plebiscite sponsored by the rebel Zapatista National Liberation Army (EZLN), won the participation of 1.2 million Mexicans. The number of voters was about three percent of the turnout for the 1994 national elections, with heaviest participation in southern states and Mexico City. The number was far greater than the 330,000 who voted in a plebiscite on home rule for Mexico City in 1993 or the 631,193 who voted in a plebiscite on national policy last February. Early returns showed 97.4 percent of participants supporting EZLN demands for land, justice, democracy, education, and social development and 92.5 percent backing the idea of a "broadbased opposition front" to work for their goals, with 94.3 percent calling for "profound political reform" in Mexico. More than half of the voters -- 53.2 percent -- voted for the EZLN to become a "new, independent political force," while 48.1 percent voted in favor of coalition with other organizations. The grassroots plebiscite was administered by the Civic Alliance, a non-governmental election monitoring group, and financed by individual donations and fundraising concerts and dances. Voters came to 10,032 tables around the country, and 55,000 votes from outside the country, including more than 9,000 from the US, were registered. Voters produced identification and had their hands stamped with indelible ink when they voted. The government generally honored its pledge of non- interference, though some unidentified persons videotaped or photographed voters, and government officials prevented tables from being set up in two towns in Oaxaca and some parts of Mexico City. "Mexicans Vote for Rebels to Form Independent Political Force," WEEKLY NEWS UPDATE ON THE AMERICAS, September 3, 1995; "National Consultation for Peace and Democracy," MEXPAZ, August 29, 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