From iatp@igc.apc.orgSun Nov 5 18:14:37 1995 Date: Fri, 03 Nov 1995 10:11:59 -0800 (PST) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 11-33 NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy November 3, 1995 Volume 2, Number 28 _________________________________________ Headlines: - MEXICO-U.S. AG TRADE CONFLICTS - BRAZIL: AGRARIAN REFORM PROPOSED TO END VIOLENCE - TIGHTENING THE SCREWS ON CUBA - MEXICO: PESO PLUNGES, PLAN PROPOSED - PROGRESS IN CHIAPAS TALKS - BRAZIL: REAL FALTERS MEXICO-U.S. AG TRADE CONFLICTS Avocados and tomatoes continue to create conflicts between U.S. and Mexican growers and government officials. The 80- year-old U.S. ban on Mexican avocados, scheduled to be lifted this November, probably will remain in place for at least another growing season, according to officials of the U.S. Department of Agriculture (USDA). The USDA's July proposal to lift the ban encountered heavy opposition from California growers, who produce almost all of the U.S. avocado crop, and the department now says it will need more time to evaluate more than 1,000 comments received during the 60-day comment period. USDA officials had proposed allowing Mexican avocados to be shipped to 19 northeastern states where cold winter weather was expected to kill seed weevils and other insects from Mexico that might pose a threat to U.S. avocado trees. Growers maintain that there is no effective way to contain avocados in the northeast, citing examples of avocados now shipped to Alaska that have ended up in Washington and other Pacific northwest states. Mexican growers maintain that the ban is based on economic rather than phytosanitary considerations. Florida tomato growers' demands for economic protection from cheaper Mexican winter tomato imports appear to have found a powerful advocate in U.S. Trade Representative Mickey Kantor. Kantor proposes that Mexico's imports be measured weekly rather than once for each of the year's two growing seasons, and that higher tariff rates be imposed whenever big shipments exceed the quota. U.S. Customs Service officials say they cannot monitor tomato shipments and adjust tariffs weekly. Mexican growers say that it is impossible to maintain uniform weekly tomato shipments throughout the season, and that the plan violates NAFTA's prohibition against making changes in trade laws to further restrict imports. A Mexican official sarcastically suggested that Mexico begin measuring its corn imports every 10 minutes. Despite opposition from State, Treasury, and Agriculture departments, President Clinton is considering the plan, which might win him votes next year in the key state of Florida. "This is precisely the kind of sneaky thing that China and Japan and Korea do to us," complained one administration official. Other protection proposals made by Florida growers include raising the tariff on Mexican tomatoes by the same percentage as the devaluation of the Mexican peso since last December; applying U.S. packing standards to tomato imports, which would mean a change in box size; and redefinition of "seasonal industries" provisions of NAFTA. Peter M. Tirschwell, "US Delays Lifting Ban on Mexican Avocados," JOURNAL OF COMMERCE, October 26, 1995; John Maggs, "Clinton May Put Squeeze on Mexican Tomato Import," JOURNAL OF COMMERCE, October 26, 1995; Nicole Laborde, "U.S. Tomato Growers See Red," EL FINANCIERO, October 9-15, 1995. BRAZIL: AGRARIAN REFORM PROPOSED TO END VIOLENCE President Fernando Henrique Cardoso, facing increasing violence in the countryside, ordered his cabinet to make land reform a priority and called for help from the Catholic Church and opposition political leaders. The Movimiento dos Trabalhadores Sem-Terra (MST), an organization of landless campesinos, says 4.8 million families -- 12 million people -- have no land. More than 1,000 campesinos have been assassinated in the past 10 years in the struggle for land. The August 10 police torture and execution of at least eight campesinos and a 13-year-old girl in Hacienda Santa Elena near Corumbiara in Rondonia focused national and international attention on Brazil's rural crisis. During his 1994 presidential campaign, Cardoso promised agrarian reform and after his inauguration he proposed distributing 11,000 hectares of land to 280,000 families by 1998. To date, 17,000 families have received land. On September 28, Cardoso replaced the head of the government's National Institute of Colonization and Agrarian Reform (INCRA) with his personal secretary, Francisco Grazziano, who said in 1994 that "agrarian reform is a thing of the past, it belongs to the 1960s." The former head of INCRA, Brazilio de Araujo Neto, was a powerful landowner. The MST calls the government plan inadequate and proposes that the government call in past-due debts of 1,276 major debts of the state-owned Bank of Brazil, claiming that most large debtors are large landowners who produce nothing on their land but use it to obtain rural credits that are never paid back. Rural landowners have organized to prevent enforcement of the provision in the 1988 Constitution that allows expropriation of unproductive lands. Meanwhile, the Justice Ministry has ordered investigation of reports that landholders in Paranapanema in western Sao Paulo state are arming themselves with automatic weapons. The National Confederation of Agriculture created a Commission for the Defense of Property in September, calling for resistance by landowners to threats of occupation of their property. MST has pledged to continue land occupations, in which about 85,000 families are currently involved. About 2,100 families occupy the disputed land in Paranapanema. The government owns the land, but large landholders have occupied it for decades. According to a labor-based research institute, DIEESE, the richest half of Brazil's population controls 88 percent of national income, making Brazil first in the world in concentration of wealth. In rural Brazil, 10 percent of the farmers own 80 percent of arable land. But neither land distribution inequities nor rural violence are limited to Brazil. Mining and oil drilling have driven native peoples from their lands in Sierra de la Perija in Venezuela, leading to killings of Indians by military and police. The Maroons of Suriname-- descendants of African slaves who escaped their colonial masters 350 years ago -- have been shot at by security officials for the Canadian-owned Golden Star mining company in recent months, according to local human rights organizations. In Paraguay, where 80 percent of the land is owned by five percent of the population, at least one person died in clashes between police and campesinos occupying land. The Paraguayan parliament responded by passing a new proposal for expropriation and distribution of land. In Honduras, where land occupations and clashes with police are on-going, three campesinos were killed by police in October and a campesino leader was assassinated by unknown persons. Mario Osava, "Fear of Social Unrest Revives Land Reform," INTERPRESS SERVICE, September 28, 1995; President Fernando Henrique Cardoso Makes Agrarian Reform a Priority to Stem Tide of Violence in Countryside," NOTISUR, October 6, 1995; "Brazil President Pledges Land Reform," WEEKLY NEWS UPDATE ON THE AMERICAS, October 8, 1995; "Brazilian Landowners Prepare to Fight Squatters," WEEKLY NEWS UPDATE ON THE AMERICAS, October 8, 1995; Pratap Chatterjee, "Battles Over Land Spread Across Amazon Basin," INTERPRESS SERVICE, October 7, 1995; Cristhian Torres, "Paraguay-Agriculture: Demands for Agrarian Reform," INTERPRESS SERVICE, September 15, 1995; "Three Killed in Honduran Land Clash," WEEKLY NEWS UPDATE ON THE AMERICAS, October 29, 1995. TIGHTENING THE SCREWS ON CUBA By a vote of 74-24, the U.S. Senate approved the Helms- Burton bill to tighten the U.S. embargo against Cuba. The legislation commits the United States to seeking a worldwide embargo against Cuba at the United Nations, despite the U.N. General Assembly's consistent and repeated condemnation of the U.S. embargo. It also forbids import of sugar or molasses from countries that buy those products from Cuba and cuts aid to Russia by $200 million in retaliation for Russia's payment of rent to Cuba for an electronic intelligence-gathering base. The anti-Cuba legislation passed after it was stripped of an even more stringent provision that would have allowed Cuban exiles and U.S. companies whose property was expropriated by the government of President Fidel Castro to use U.S. courts to sue foreign firms and individuals who "trafficked" in those properties. The U.S. House of Representatives included the more punitive provisions in the version of the bill that it passed in September. Jim Lobe, "Senate Clears Weakened Sanctions Bill," INTERPRESS SERVICE, October 19, 1995; "'Gutted' Bill to Strengthen Cuba Sanctions Passes U.S. Senate," WEEKLY NEWS UPDATE ON THE AMERICAS, October 22, 1995. MEXICO: PESO PLUNGES, PLAN PROPOSED After the peso fell dramatically to an seven-month low of 7.23 to the dollar (about 14 cents, compared to 29 cents one year ago), the Mexican government, business, and unions signed a new pact, the Alliance for Economic Recuperation, on October 29. No exchange rates were set, but the government offered various incentives and tax breaks for businesses and set a goal of three percent economic growth and 20 percent inflation in 1996. More pessimistic private economists forecast five percent economic contraction and 50 percent inflation. The latest economic figures show inflation at 1.1 percent for the first two weeks of October (about 30 percent annually). Foreign reserves fell by $1.034 billion to $13.758 billion from October 6 to October 13. Up to 95 percent of the reserves is borrowed money. The Alliance for Economic Recuperation raises some minimum wage categories by 20 percent to about $3 per day, and increases gasoline and electricity rates by seven percent in December and 1.2 percent each month in 1996, except for a six percent rise in April. Business agreed to moderate price increases, and the government agreed to eliminate sales taxes on new cars, which have had a 70 percent drop in domestic sales during 1995. The government also pledged to reduce the budget but increase spending on investment in energy production, education, and health. Carlos Heredia, "Peso Plunge Once Again Underscores Lack of Strategy for Recovery," EQUIPO PUEBLO, October 27, 1995; "Behind the Latest Mexican Crisis," WEEKLY NEWS UPDATE ON THE AMERICAS, October 29, 1995; Craig Torres, "Mexico Reaches Wage and Price Accord But Some Economists Are Wary of Goals," WALL STREET JOURNAL, October 30, 1995; Anthony DePalma, "Mexicans Reach New Pact on the Economy," NEW YORK TIMES, October 30, 1995; Anthony DePalma, "Mexican Markets Applaud Economic Plan," NEW YORK TIMES, October 31, 1995. PROGRESS IN CHIAPAS TALKS As a 6.3 magnitude earthquake shook Chiapas on October 20, government and Zapatista National Liberation Army (EZLN) talks continued. Six concurrent working groups met in two cities to discuss indigenous rights and autonomy, with both sides characterizing the talks as successful. "The document under discussion was so good we made the earth shake," joked an EZLN adviser. Then, on October 21, police in Mexico City arrested Fernando Yanez Munoz, whom they alleged to be Commandante German, the "maximum leader" of the EZLN. Yanez and two companions were arrested in what police tried to pass off as a routine traffic stop, and charged with possession of weapons. Police accounts of the stop and arrest were contradicted by eye- witnesses. Yanez says he is not Commandante German and has no links to the EZLN, "though it would be an honor for me," but was part of the guerrilla Liberation Armed Forces (FLN) in the 1970s. In response to the arrest, the EZLN went on "red alert," and charged that the government had broken a special March 11 amnesty suspending arrest warrants against rebels during the peace talks. On October 27, the government dropped all charges and released Yanez. In elections held in Chiapas in mid-October, the governing Institutional Revolutionary Party (PRI) maintained control of the state congress and won a majority of disputed municipal elections. Voter turnout was the lowest in ten years, 44 percent according to official figures, and violence during the pre-election period included 30 murders and four disappearances, according to human rights organizations. The PRI won 48.5 percent of the vote, with 31.5 percent going to the Democratic Revolutionary Party (PRD), and 13 percent to the conservative National Action Party (PAN). Voting was postponed in Ocosingo, due to the possibility of violence, and the local PRI leaders in the Tzotzil municipality of San Juan Chamula delivered only 100 percent of the vote to the PRI, down from a high of 110 percent of registered voters in Ocosingo who voted for the PRI in 1988. "Mexico: Peso Plunges as 'Rebel Leader' Arrested," WEEKLY NEWS UPDATE ON THE AMERICAS, October 29, 1995; "PRI Holds Chiapas, Although Opposition Gains Ground," INTERPRESS SERVICE, October 16, 1995; "Final Vote Count in Elections," MEXICO UPDATE, October 24, 1995; "Communique from the Indigenous Revolutionary Clandestine Committee General Command of the EZLN," October 21, 1995; Elio Henriquez and Herman Bellinghausen, "Alerta Roja," LA JORNADA, October 26, 1995; "This Week in Mexico," EL FINANCIERO, October 23-29, 1995. BRAZIL: REAL FALTERS After rapid economic growth of about 10 percent on an annualized basis during the first quarter of 1995, Brazil's economy has slowed dramatically. The government Planning Ministry now predicts annual growth of about five percent, down slightly from 1994's rate of 5.8 percent. While 1995's 25 percent inflation is low compared to previous years, it is expected to continue in double digits for the foreseeable future. After Brazil's "Plan Real" currency and economic stabilization plan was implemented in July 1994, Brazil's balance of trade went from monthly deficits in the billion dollar range to eight months of trade surpluses ranging from $183 million in November 1994 to more than $2 billion in March 1995 to $775 million in June 1995. Trade deficits reappeared, with $2 million in July 1995 and $328 million in August. Both exports and imports have increased since the implementation of the Plan Real. The bond debt of the central government grew by 41.7 percent during the third quarter of 1995 alone, to a total of more than $100 billion or 98.4 billion Reals, according to Central Bank figures. The debt has increased by 65.4 percent since the Plan Real took effect in July 1994. State bond debts rose by 88.6 percent to $37.3 billion since July 1994. In response, the government proposes to eliminate job security for Brazil's public employees through a constitutional amendment. Most state payrolls exceed 60 percent of state budgets, and grow by more than 25 percent per year. Bill Tomson, "Brazil Economic Slowdown to Extend Into 1996," KNIGHT-RIDDER FINANCIAL SERVICE, October 24, 1995; Mario Osava, "Public Finances Threatened by Soaring Debt and Payrolls," INTERPRESS SERVICE, October 23, 1995; James Bruce, "Stretched to the Limit," JOURNAL OF COMMERCE, October 25, 1995. RESOURCES/EVENTS Decision at Midnight: Inside the Canada-US Free-Trade Negotiations, by Michael Hart, Bill Dymond, and Colin Robertson. UBC Press, Vancouver, BC: 1994. 448 pp. $35 cloth/$24.95 paper. Order from UBC Press, 6344 Memorial Road, Vancouver BC Canada V6T 1Z2. Telephone 604/822-4546, fax 604/822-6083. Three officers in Canada's Department of Foreign Affairs outlines preparation for and conduct of negotiations between United States and Canada on 1988 free trade agreement from a Canadian insider perspective. Mexican Insights: Mexican Civil Society Speaks to the United States, Washington Office on Latin America, Washington, DC: 1995. 51 pp. Order from Washington Office on Latin America, 400 C Street NE, Washington, DC 20002. Telephone 202/544- 8045, fax 202/546-5288, email: wola@igc.apc.org. Compilation of presentations given by Mexican participants in roundtables sponsored by WOLA and the Mexican Academy for Human Rights in 1995, focusing on Chiapas and prospects for peace, on prospects for democratization under Zedillo, and on drug trafficking in Mexico and international implications. ____________________________________________ NAFTA & Inter-American Trade Monitor is produced by the Institute for Agriculture and Trade Policy and edited by Mary C. Turck. Electronic mail versions are available free of charge for subscribers. For information about fax subscriptions contact: IATP, 1313 Fifth Street SE, Suite 303, Minneapolis, MN 55414. 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