Date: Fri, 15 Dec 1995 14:00:44 -0800 (PST)
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Subject: NAFTA & Inter-Am Trade Monitor 12-15
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NAFTA & Inter-American Trade Monitor
Produced by the Institute for Agriculture and Trade Policy
December 15, 1995
Volume 2, Number 31
________________________________________________
Headlines:
- SLOW CHRISTMAS, SAD CHRISTMAS
- MEXICO CORN IMPORTS UP
- CHICKEN WARS AHEAD
- AFTER NAFTA: MOVING TOWARD FTAA?
- DOLE POSTPONES PUBLIC BANANA HEARINGS
- MEXICAN SUGAR GROWERS STRIKE
- MODEL ENVIRONMENTAL LAW APPROVED
- U.S. FARMERS FIGHT FUMIGANT PHASEOUT
- U.S. GRAPE GROWERS CHARGE DUMPING
________________________________________________

PUBLICATION SCHEDULE

This is the last issue of the NAFTA & INTER-AMERICAN TRADE 
MONITOR for 1995. We are looking forward to hearing from you 
again in 1996. 
________________________________________________

SLOW CHRISTMAS, SAD CHRISTMAS

Many U.S. merchants on the Texas-Mexico border lamented the 
prospect of slowing Christmas sales, despite an October order 
of Mexican Treasury officials increasing the duty-free 
regulations to $400 per person per month. Border merchants 
note that the Mexican economic crisis has simply left most 
people with little or no money to buy, and that devaluation 
of the peso has hit border residents, who purchase more U.S. 
goods, particularly hard. 

With 2.4 million people newly out of work this year and the 
average number of workers per family down from 3.1 in 1994 to 
one in 1995, Mexican families are preparing for a bitter and 
lean Christmas. Purchases of records, gifts and toys have 
fallen 40.4 percent below last year's levels. An estimated 
one in five Mexicans goes to bed hungry every night. 

Mexico's falling gross domestic product (slowing by 9.6 
percent in the third quarter after a 10.5 percent drop in the 
second quarter) has affected people at all levels. Even 
kidnappers have lowered ransom demands because the rich are 
less liquid now. 

Philip True, "Peso May Turn Into Grinch Along Border," SAN 
ANTONIO EXPRESS-NEWS, October 28, 1995; "Bitter Christmas for 
Most Mexican Families," MEXPAZ, November 28, 1995; Craig 
Torres and Paul B. Carroll, "Mexico Says Its Economy 
Contracted 9.6 % in Quarter," WALL STREET JOURNAL, November 
20, 1995; John Ross, "Mexico: The Gods Must Be Angry," THE 
NATION, December 18, 1995.

MEXICO CORN IMPORTS UP

Mexican corn imports through the end of October rose by 71.9 
percent over the same time period in 1994, according to the 
government-private sector Corn Import Quota Evaluation 
Committee. Mexico increased tariff-free corn import quotas 
for 1995 to 3.3 million tons, up 28.3 percent over the amount 
originally agreed under NAFTA, and corn imports through 
October 31 totaled 1.9 million tons, or 57.1 percent of the 
quota for the year. Corn import needs increased because of 
drought and hurricane damage to Mexican corn crops. Some 
import quotas will be deferred until next year, at the 
request of importers. 

Chris Aspin, "Mexican Corn Imports Up 71.9 Percent to October 
31," REUTER, December 1, 1995.

CHICKEN WARS AHEAD

In a sharp reversal of strategy, Canadian and European 
chicken producers are joining forces to oppose NAFTA and 
GATT's market openings to giant U.S. and Brazilian poultry 
companies. Canadian producers face a pending NAFTA dispute 
resolution panel hearing U.S. complaints against Canadian 
tariffs. GATT also forces Canada to open up to seven percent 
of its chicken market to imports. 

Last year, the Ontario Chicken Producers Marketing Board 
instigated a rebellion against the restricted production and 
allocation of provincial production shares by the Canadian 
Chicken Marketing Agency. Ontario, which accounts for about a 
third of Canadian production, was joined by Quebec, which 
accounts for another third. Producers and processors said 
that lower prices and higher production were necessary to 
prepare for competition that would be coming from the United 
States under the provisions of GATT and NAFTA. 

As chicken prices fell to $1.09 Canadian per kilogram live 
weight in 1995, versus $1.16 in 1993, production increased by 
10 percent. Under the new system, producers in each province 
are allowed to produce as much chicken as that province's 
processors want, at a price negotiated between producer and 
processor organizations. If the two fail to agree on a price, 
they submit their final two prices to an arbitrator, who then 
chooses one of the two offers, not a middle ground. Chicken 
consumption is increasing as chicken shortages to the 
consumer become only a memory. 

During a government-organized trip to study chicken 
production in the Netherlands and France, Canadians 
discovered that European producers blame the United States 
and GATT for current problems and are preparing to fight GATT 
restrictions on national supply management systems. Instead 
of focusing on reducing producer prices to compete with the 
giant U.S. firms, Canadian producers now plan to join the 
fight. 

Jim Romahn, "A Bold New Strategy," MEAT & POULTRY, November, 
1995; "It's Official! Chicken Shortages are a Thing of the 
Past," ONTARIO CHICKEN, October, 1995.

AFTER NAFTA: MOVING TOWARD FTAA?

Despite continuing opposition to NAFTA within all three 
member countries, the Clinton administration reiterated its 
commitment to moving toward a hemispheric free trade area by 
sending Treasury Secretary Robert Rubin to Argentina and 
Brazil in early December. Rubin said his visit will reassure 
trading partners that, despite Congress' recent inclination 
to "look inwards," President Clinton remains firmly committed 
to economic integration in the Americas. Rubin termed failure 
to enact fast-track trade negotiating authority "very 
disappointing." 

NAFTA opponents cite a variety of problems that they say are 
either caused by or suspiciously coincident with the accord. 
Promised job creation in the United States hasn't happened, 
but job losses have, while real hourly wages for the 77 
million production workers in the U.S. dropped three percent 
during NAFTA's first year. In Mexico, the collapse of the 
peso was accompanied by an economic crisis that cost jobs and 
reduced wages. U.S. companies have found investment 
opportunities in cash-starved Mexican companies, and U.S. 
agribusiness giant Archers Daniel Midland calls Mexico a 
"great market for basic foods." Mexican small-scale producers 
have been devastated by the country's economic crisis and 
competition from abroad, leading to increases in malnutrition 
and malnutrition-related deaths of children. 

Last year's Summit of the Americas in Miami set a goal of 
achieving a hemispheric trading bloc by 2005. One year later, 
Venezuela and Mexico are in economic crisis with effects in 
Argentina and Brazil. U.S. Senate Majority Leader and 
Republican presidential candidate Bob Dole is urging a 
moratorium on trade pacts. 

Chile has all but given up hope of joining NAFTA until at 
least 1997, and has run into problems with Mercosur, the 
Southern Cone Common Market that includes Argentina, Brazil, 
Paraguay and Uruguay, and with European Union negotiations as 
well. Some of the problems stem from trying to join more than 
one trade grouping. For example, NAFTA and Mercosur rules of 
origin conflict, raising obstacles to Chilean membership in 
Mercosur. Chile also wants to exclude agriculture from the 
trade agreement that it is trying to negotiate with Mercosur, 
while Mercosur wants everything on the table. 

Nonetheless, movement toward integration is evident in Latin 
America. Bolivia just signed a framework agreement to create 
a free trade zone with Mercosur. The European Union is 
aggressively moving to forge ties with various Latin American 
nations and will sign a formal pact with Mercosur providing 
possible trading preferences and may negotiate similar pacts 
with Chile and Mexico. 

At the annual Miami Conference on the Caribbean and Latin 
America in early December, financial analysts insisted that 
hemispheic integration must include financial integration and 
harmonization of currently differing laws and regulations 
governing banks and financial markets. The state of Florida 
announced plans to make Miami the "central finance and 
information clearinghouse" for all of Latin America through a 
plan called Cyberport Miami, which would link all Latin 
American stock exchanges.

Richard Lawrence, "Financial Integration Seen as Vital to 
Hemispheric Trade," JOURNAL OF COMMERCE, December 8, 1995; 
Richard Lawrence, "Rubin Trip Will Pursue Hemispheric Free 
Trade Goal," JOURNAL OF COMMERCE, December 1, 1995; Kevin G. 
Hall & Richard Lawrence, "Hemispheric Trade Pact Faces US 
Obstacles," JOURNAL OF COMMERCE, December 4, 1995; Richard 
Lawrence & Kevin G. Hall, "Bilateral Deals Could Keep Chile's 
Nafta Talks Alive," JOURNAL OF COMMERCE, December 6, 1995; 
"Bolivia Signs Agreement With Mercosur," UPI, December 7, 
1995; Kevin G. Hall, "Chile, Mercosur Extend Trade Talks 90 
Days," JOURNAL OF COMMERCE, December 8, 1995; Imogen Mark, 
"Chile Hits Snags in Pacts Quest," FINANCIAL TIMES, December 
8, 1995; "NAFTA: The Second Year," WEEKLY NEWS UPDATE ON THE 
AMERICAS, December 2, 1995. 

DOLE POSTPONES PUBLIC BANANA HEARINGS

After running into substantial Congressional opposition to 
his proposal for sanctions on Costa Rica and Colombia, 
Republican Senator Bob Dole got "too busy" for public 
hearings on the question. Dole has tried for months to push 
through the trade sanctions, which are a priority for 
Chiquita Banana and banana baron Carl Linder, a heavy 
contributor to political campaigns who provides free travel 
for Senator Dole's presidential campaign on his corporate 
jet. Longtime good government crusader 

Dole was unsuccessful in getting his legislation attached to 
various spending bills. When Senate Finance committee Chair 
Bill Roth offered to hold public hearings, in which Chiquita 
opponents would also testify, Dole aides said the senator 
would be too busy for hearings for the foreseeable future. 
Fred Wertheimer, former president of Common Cause, noted that 
both Linder and Dole would "be crazy to seek publicity for 
this. It smells bad." 

Meanwhile, the U.S. has apparently decided to make another 
effort to negotiate a solution to the banana dispute, and 
will hold off on challenging the European Union's banana 
regime in a dispute settlement panel of the World Trade 
Organization. 

John Maggs, "Dole Cancels Hearings on Bill to Aid Banana 
Firm," JOURNAL OF COMMERCE, November 30, 1995; "U.S. Holds 
Off on WTO Banana Panel, Seeks New Talks With EU," INSIDE 
U.S. TRADE, December 1, 1995.

MEXICAN SUGAR GROWERS  STRIKE

Mexican sugar growers struck in early December against mil 
owners, refusing to cut or sell cane unless they receive a 40 
percent price increase. The highest offer from mill owners 
has been a 28.5 percent hike. Mill owners have just agreed to 
a 25 percent pay hike for sugar workers. 

Mexico's 61 sugar mills were privatized four years ago, and 
mill owners claim their debt burden will not allow the price 
increase. "Instead of buying sugar mills, these people should 
have bought circuses, because they are acting like clowns," 
said a frustrated grower. Before the strike, producers hoped 
for a record 4.4 million ton harvest. 

Caribbean sugar producers employ about half a million people, 
sell about 800,000 tons annually, and have seen rising prices 
and stable export markets in the European Union, Portugal, 
and the United States.

Chris Aspin, "Mexico Sugar Growers Continue Strike, Talks, 
Tuesday," REUTER, December 5, 1995; Chris Aspin, "Mexico 
Sugar Growers in Day Seven of No Sales," REUTER, December 7, 
1995; Bert Wilkinson, "Sugar Producers Rise to New 
Challenge," INTERPRESS SERVICE, November 13, 1995.

MODEL ENVIRONMENTAL LAW APPROVED

Two commissions of the Latin American Parliament (PARLATINO) 
approved a model law that requires environmental impact 
studies to be carried out prior to approval of any 
undertaking that has risks for the environment or quality of 
life. Meeting in Havana, members of the PARLATINO commissions 
on Health and the Environment said that the profit motive 
must give way to a recognition that economic progress, health 
and environmental conservation are not mutually 
contradictory. 

Impact studies are required from 25 listed activities, 
including nuclear power and chemical plants, iron and steel 
works, dams, mining installations and toxic waste management. 
The model law will be effective only when and if it is 
enacted by the government of each country, but its 
recommendation by PARLATINO adds weight to national 
initiatives.

Dalia Acosta, "Latin American Parliament Approves Model Law," 
INTERPRESS SERVICE, December 2, 1995.

GRAPE GROWERS CHARGE DUMPING

Stung by an increase in Mexican grape exports to the United 
States from 3.9 million 22-pound boxes in 1994 to 7.9 million 
boxes in 1995, U.S. table grape growers are threatening to 
pursue anti-dumping charges against Mexico. Mexican growers, 
faced with a disappearing market at home due to the economic 
crisis, began selling grapes on a consignment basis, 
essentially sending grapes north for whatever price they 
could get, instead of continuing the traditional firm sale 
arrangement based on a pre-agreed price. Last month the 
Florida Fruit & Vegetable Association requested that U.S. 
Agriculture secretary Dan Glickman take action to curb surges 
in bean, cabbage, sweet corn, pepper, radish, tomato and 
cucumber imports, adding their voice to the long-standing 
complaint of Florida tomato growers about Mexican imports. 

Peter M. Tirschwell, "US Growers Threaten Action Against 
Mexican Table Grapes," JOURNAL OF COMMERCE, December 11, 
1995.

U.S. FARMERS FIGHT FUMIGANT PHASEOUT

Led by California strawberry growers, U.S. farm groups are 
fighting to ban methyl bromide use worldwide by January 1, 
2001, the date when the U.S. Clean Air Act requires its 
phaseout inside the United States.  The question of worldwide 
limits on methyl bromide use was considered at the Montreal 
Protocol meeting in Vienna in early December. The Montreal 
Protocol is an international body that governs ozone-
depleting substances. 

Methyl bromide is used to eradicate pests prior to planting 
and after harvest, but it has also been cited as a cause of 
ozone depletion. California strawberry producers say yields 
will be reduced by 40-50 percent without methyl bromide, and 
the Methyl Bromide Working Group, a coalition of some 2,000 
farm groups, says that even a freeze in use during the first 
year of a phaseout will cost $401 million. 

Neither European nor developing nations support a worldwide 
methyl bromide ban. Japan and some other Asian countries 
require some crops to be fumigated with methyl bromide prior 
to export. Since U.S. farmers are unlikely to achieve a 
worldwide ban, they are also lobbying to lift the U.S. ban 
and stop the phaseout schedule until an affordable 
alternative to methyl bromide is found or an international 
uniform phaseout date is reached.

Peter M. Tirschwell, "Fumigant Phaseout Faces Stiff Fight," 
JOURNAL OF COMMERCE, December 7, 1995.

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____________________________________________
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