From iatp@igc.apc.orgThu Apr 4 20:09:21 1996 Date: Thu, 04 Apr 1996 14:30:05 -0800 (PST) From: IATP To: Recipients of conference Subject: NAFTA & Inter-American Trade Monitor NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy April 5, 1996 Volume 3, Number 7 _________________________________________ Headlines: - CARTAGENA: LOOKING TOWARD THE FREE TRADE AREA OF THE AMERICAS - DEVELOPING LATIN AMERICAN INTEGRATION - FARMERS, FOOD AND FREE TRADE - CALIFORNIA GROWERS KEEP METHYL BROMIDE - BRITISH BEEF BROUHAHA AFFECTS THE AMERICAS _________________________________________ CARTAGENA: LOOKING TOWARD THE FREE TRADE AREA OF THE AMERICAS As business executives and trade ministers of 34 American nations met in Cartagena, Colombia on March 21, diplomatic maneuvering escalated to include a shouting match over intellectual property rights that ended only with the intervention of armed security guards. Hot button issues ranged from intellectual property rights to labor and environmental concerns, and included basic disagreements on how and how fast to move toward the agreed goal of establishing the Free Trade Area of the Americas by or before 2005. The most explosive verbal fireworks came at the Americas Business Forum, a parallel meeting of 1,500 private business representatives from various countries of the hemisphere, held immediately before the official ministerial meeting. When an argument over intellectual property rights escalated to a shouting match with Argentine charges of U.S. imperialism, security guards were called to quell the disturbance. The Business Forum reached agreement on calls for movement toward FTAA, decreased protectionism, and benchmarking and quality standards for government performance. The Business Forum also recommended that the United States adopt the metric system and repeal the Helms-Burton restrictions on trade with Cuba, saying that the latter "could render the free trade agreements and the expansion of their liberalisation ineffective." The United States is the only country in the hemisphere that does not use the metric system, complicating movement toward common standards. Heated discussions at the official trade ministerial meeting included an argument between U.S. Trade Representative Mickey Kantor and Mexican Commerce Secretary Herminio Blanco over U.S. insistence that a new working group on government procurement include an analysis of the impact of corruption on international trade. Ministers went into closed door sessions to hammer out the language of the final declaration. In the end, the trade ministers agreed to establish four new working groups on government procurement, intellectual property rights, services, and free competition. Terms of reference (the description of the tasks assigned) for the working groups on government procurement and intellectual property rights ended up substantially weaker than the language proposed by the United States. The original seven working groups, established at the first trade ministers meeting in Denver in 1995, focus on market access, rules of origin and customs procedures, investment, technical regulations and barriers to trade, sanitary and phytosanitary rules, subsidies and anti-dumping, and small economies. A twelfth working group on dispute resolution will be formed in 1997. The ministers rejected proposals to establish study groups on labor and environmental concerns. In a move of particular significance to agriculture, Chile and Colombia won language expanding the focus of the anti-dumping work group to examine how subsidies may have indirect anti-competitive effects on international commodities trade. The United States agreed to allow the working group to identify and make recommendations on domestic agricultural supports, in addition to farm export subsidies. The trade ministers' final declaration also welcomed the contribution of the Americas Business Forum, specifically recognizing "the importance of the role of the private sector and its participation in the FTAA process." Hemispheric labor ministers, led by Argentina's Caro Figueroa, asked that the FTAA "incorporate a social dimension that guarantees, at a minimum, respect for fundamental labor standards, including collective organization and bargaining, prohibition of child labor and forced labor, and non-discrimination in the workplace," advocated establishing a dialogue between government, business and labor to facilitate this goal. United States proposals for labor and environmental working groups or, at the very least, study groups, were not accepted. The final declaration expressed appreciation for the declaration received from the Tenth Inter-American Conference of Ministers of Labor, but conceded only that the ministers "recognize the importance of the further observance and promotion of worker rights and the need to consider appropriate processes in this area, through our respective governments." In a compromise reached after intensive negotiations, the FTAA vice ministers will consider establishing a study group on environmental issues only after they receive a report from the World Trade Organization's Committee on Trade and Environment in December 1996. The United States and Brazil represented opposing viewpoints on the pace and path of movement toward FTAA, as they have since the beginning of the process. As the largest country of the South and a partner in the Mercosur trade alliance, Brazil has advocated movement toward FTAA through alliances between regional trading blocs, gathering strength in the South to confront the NAFTA alliance and the United States. The United States, on the other hand, seems to favor a strategy of gradual accretion of nations and blocs to NAFTA. The Organization of American States official with special responsibility for FTAA matters, Miguel Rodriguez Mendoza, a Venezuelan, advocated a third path that would involve a hemisphere-wide round of negotiations similar to the Uruguay Round talks that culminated in the creation of the World Trade Organization. Brazil generally advocates a slow approach to the FTAA, while the United States representatives pushed for more rapid progress toward hemispheric trade integration, despite internal U.S. political opposition to free trade and the Clinton administration's inability to obtain the fast-track negotiating authority necessary to allow it to negotiate accession of Chile to NAFTA. The final declaration of the ministerial meeting directed vice ministers to "make an assessment of when and how to launch the FTAA negotiations and to make recommendations to us on these issues before the 1997 Trade Ministerial Meeting." Adoption of this language represented a rejection of U.S. proposals that would have committed the trade ministers to "decide at the next trade ministerial meeting when and how to launch comprehensive FTAA negotiations," and would have directed vice ministers to make specific recommendations on "the most appropriate 'paths' [to] facilitate construction of the FTAA." Smaller countries complained that Brazil and the United States have effectively hijacked the FTAA process. Compromises on some U.S.-Brazilian differences were worked out during a bi-lateral meeting in Brazil just prior to the conference, and the subsequent five and one-half hour flight to the trade ministerial meeting. With the support of the United States, Belo Horizonte, Brazil was selected as the site for the 1997 trade ministerial meeting. "Final Cartagena Declaration on FTAA," INSIDE U.S. TRADE, March 22, 1996; "U.S.-Proposed Revision of Cartagena Ministerial Declaration," INSIDE U.S. TRADE, February 23, 1996; "Hemispheric Trade Ministers Reach Agreement on FTAA Declaration," INSIDE U.S. TRADE, March 22, 1996; Jay Mazur, "Free Traders Still Aren't Listening," JOURNAL OF COMMERCE, March 20, 1996; Kevin G. Hall, "OAS Official Says Poverty Must Be Addressed in Hemispheric Trade Talks," JOURNAL OF COMMERCE, March 27, 1996; Estrella Gutierrez, "The Third Route to the FTAA," INTERPRESS SERVICE, March 15, 1996; Yadira Ferrer and Humberto Marquez, "Business Forceful in Backing Integration," INTERPRESS SERVICE, March 20, 1996; Humberto Marquez, "Four New Working Groups to Design the FTAA," INTERPRESS SERVICE, March 21, 1996; Tom Brown, "Latins and U.S. Renew Commitment to Hemispheric Free Trade," REUTER, March 22, 1996; Kevin G. Hall, "Mexico May Lead Way for Hemispheric Trade Bloc," JOURNAL OF COMMERCE, March 26, 1996; Kevin G. Hall, "Hemisphere's businesses Press for Basic Reforms," JOURNAL OF COMMERCE, March 21, 1996; Kevin G. Hall, "Trade Leaders Take Off Their Gloves in Cartagena," JOURNAL OF COMMERCE, March 22, 1996. DEVELOPING LATIN AMERICAN INTEGRATION Chile will sign an agreement to become an associate member of Mercosur, the South American customs union of Argentina, Brazil, Paraguay and Uruguay, on June 25. After two years of tough negotiations, foreign ministers of the two countries reached an agreement at meetings in Cartagena, Colombia in late March. Chile is also continuing negotiations with Canada on a bilateral free trade agreement, since negotiations on NAFTA accession for Chile have stalled over the U.S. failure to obtain Congressional approval of fast-track negotiating authority. Chile and Canada agreed in February to negotiate side agreements on the environment and labor similar to the agreements created with NAFTA. The Chile-Mercosur agreement will take effect on July 1, and a Chilean-Canadian agreement is predicted by year's end. Caribbean Community (Caricom) members, 14 English- speaking nations and Suriname, are creating a single market and customs union, and have also concluded treaties with Colombia and Venezuela to allow preferential entry to those markets. According to Ralph Maraj, foreign minister of Trinidad and Tobago, Caricom is seeking bilateral free-trade agreements with several Latin American states, planning the agreements as "building blocks" for the Free Trade Area of the Americas. He said that the agreements will be flexible in making allowances for smaller and weaker economies of Caricom. The bankrupt and nearly moribund 26-year-old Andean Pact gave way to a new Andean Community made up of Bolivia, Colombia, Ecuador, Peru and Venezuela in March. The presidents of the five countries said the Andean Community will resemble the European Union, and will begin negotiations with other trade blocs in Europe and Asia. Plans call for a new secretariat, based in Lima, and for a parliament directly elected by the Andean Community's 100 million-plus inhabitants within five years. Although trade between the countries accounts for only about 10 percent of their overall international trade, it has grown steadily over the past three years, increasing from $1.8 billion in 1991 to $4.6 billion in 1995. David Pilling and Stephen Fidler, "Chile Makes Progress Toward Free Trade Pacts," FINANCIAL TIMES, March 25, 1996; Raul Ronzoni, "Accord With Chile Expands the Horizons of Mercosur," INTERPRESS SERVICE, March 26, 1996; "Chile to Sign Trade Deal With Mercosur on June 25," REUTER, March 22, 1996; Canute James, "Caricom Seeks to Expand Treaties to Latin America," JOURNAL OF COMMERCE, March 22, 1996; "Latin American Leaders OK Andean Community," JOURNAL OF COMMERCE, March 12, 1996; Sally Bowen, "New 'Andean Community' to be Modelled on EU," FINANCIAL TIMES, March 12, 1996; Abraham Lama, "Andean Pact Limps to Meeting Tired and Out of Pocket," INTERPRESS SERVICE, March 7, 1996. FARMERS OPPOSE FREE TRADE Despite regional movement toward free trade agreements, farmers' resistance continues. In Paraguay, thousands of peasant farmers descended on the capital, Asuncisn, on March 15 demanding withdrawal of Paraguay from the Mercosur trade pact, as well as better prices, land, and other benefits. Government and opposition political figures agreed that the farmers' demands were not likely to be met. Angry Chilean farmers blocked highways with trucks and tractors on March 28, protesting Chile's agreement to associate with Mercosur. The farmers charge that cheap Argentine and Brazilian crops will kill Chilean agriculture. At one barricade, protesters carried a black coffin filled with cabbages, carrots and other vegetables. Opposition to the agreement is strongest among grain and livestock farmers, with some export- oriented sectors like wine and fresh fruit supporting the plan because they anticipate access to the large Argentine and Brazilian markets. Chilean farmers are now protected by an 11 percent tariff on all goods entering the country, which would be phased out over 18 years under the Chile-Mercosur agreement. Chilean government officials say the decision to associate with Mercosur is irreversible. "Campesinos Protest in Paraguay," WEEKLY NEWS UPDATE ON THE AMERICAS, March 24, 1996; "Paraguayan Peasants Mass to Demand Land Reform," REUTER, March 15, 1996; Jose Agurto, "Chilean Farmers Block Roads to Protest Trade Deal," REUTER, March28, 1996. CALIFORNIA GROWERS KEEP METHYL BROMIDE Responding to growers' insistence that a ban on methyl bromide would handicap their ability to compete in the export market, California Governor Pete Wilson signed legislation that repeals a previously-imposed two-year suspension of sales of the fumigant. A federal methyl bromide phaseout, scheduled to begin January 1, 2001, is the next target of growers. A worldwide ban, possibly by 2010, targets methyl bromide because of its ozone- depleting effects. California's agricultural exports were more than $11.8 billion in 1994, up 10 percent from 1993. Methyl bromide is used to fumigate the soil for more than 60 crops, including strawberries, cherries, and grapes, as well as to fumigate shipping warehouses. The chemical is highly toxic, but growers say it is not dangerous if used properly and that no economically viable alternative exists. Use of methyl bromide in California increased 67 percent from 1984 to 1993, compared to the previous decade. Ralph Lightstone of the California Legal Assistance Foundation criticized the state's action as "a symptom of this administration being unwilling to inconvenience agriculture in favor of public health." "California Growers Win Use Through 1997," THE PACKER, March 4, 1996. BRITISH BEEF BROUHAHA AFFECTS THE AMERICAS As the European Union (EU) banned export of British beef, due to the potential human health hazards from mad cow disease (bovine spongiform encephalopathy or BSE), the U.S. and Argentine beef industries hoped to pick up market share. Although no evidence of the disease has been found in the United States, U.S. beef exports to the EU have been restricted because of U.S. use of growth hormones. The Argentine industry promotes its beef as grass-fed and healthy, emphasizing that use of hormones and fertilizers is far less prevalent in Argentina than in Europe or the United States. Meat exporters in both countries fear that consumers may simply turn to chicken rather than beef, and that there may even be a move away from beef in domestic markets because of domestic consumers' fear. Germany and the United Kingdom are the two largest importers of Argentine beef, which has an EU quota of 28,000 tons of chilled quality beef a year. Argentina may also export 20,000 tons of fresh beef to the United States. "U.S. Cattle Raisers Hope for More Access to EU Markets," JOURNAL OF COMMERCE, March 27, 1996; "Argentina Sends Team to Promote Its Beef," FINANCIAL TIMES, March 28, 1996. RESOURCES/EVENTS The Reality of Aid 1995, copyright 1995 by ActionAid, published by Earthscan Publications Limited, 120 Pentonville Road, London N19JN. 120 pp. Order from Island Press, Box 7, Covelo, CA 95428; telephone 707/983-6432 or Earthscan, 120 Pentonville Road, London N19JN, UK; telephone +44=171/278 1142; fax +44-171/278 1142. Cost: 12.95 pounds. As international foreign aid falls, the third edition of The Reality of Aid examines official aid from 22 major donors. This report, published by Earthscan in conjunction with ActionAid, the International Coalition of Voluntary Agencies, and EUROSTEP, includes articles on "The Reality of Aid in 1995," "Multilaterals and Accountability," and "A People Centred Alternative;" profiles of donor countries; and facts and figures on distribution of aid with particular attention to health, education, women in development, and public support for aid. ____________________________________________ NAFTA & Inter-American Trade Monitor is produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. 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. For information on subscribing to this and other IATP news bulletins, send e-mail to: iatp-info@iatp.org. IATP provides contract research services to a wide range of corporate and not-for-profit organizations. For more information, contact Dale Wiehoff at 612-379-5980, or send email to: dwiehoff@iatp.org.