From iatp@igc.apc.org Sat May 18 08:22:01 1996 Date: Fri, 17 May 1996 10:06:47 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 5-17- NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy May 17, 1996 Volume 3, Number 10 __________________________________________ - INTELLECTUAL PROPERTY: POTATOES TO PATENTS - MEXICO TO IMPORT 33 PERCENT OF FOOD - EXPORTING PRODUCE TO MEXICO - CARIBBEAN SUGAR PRODUCERS FEAR NAFTA IMPACT - LATIN AMERICAN PESTICIDE MARKET GROWS - ADM MOVES TO BUY MEXICAN FLOUR FIRM __________________________________________ INTELLECTUAL PROPERTY: POTATOES TO PATENTS In late April, delegates from more than 100 countries met in Rome at the Second Extraordinary Session of the Food and Agriculture Organization (FAO) Commission on Plant Genetic Resources. The Session considered a Global Plan of Action (GPA) for the Conservation and Sustainable Utilization of Plant Genetic Resources for Food and Agriculture, planned to be adopted at the Fourth International Technical Conference on Plant Genetic Resources, meeting in Leipzig, Germany in June. Much of the text of the GPA remains bracketed, marked as still in controversy rather than recommended for adoption. Major points of controversy in the Global Plan of Action include requirements for new funding for implementation and recognition of traditional conservation methods practiced by the world's farmers, coupled with recommended support for on-farm development of plant genetic resources. Developing countries pushed for assurances of commitment of financial resources to implement the GPA, while industrialized countries wanted to delay discussion of financing and implementation. Colombia spoke for the Latin American and Caribbean group to insist on recognition of the sovereignty of states over their genetic resources, the importance of farmers' rights, and developing countries' need to share equitably in the benefits from industrialized countries' use of their biological resources. The United States emphasized the importance of unrestricted access to Plant Genetic Resources and said that farmers' rights should not include intellectual property rights. Differences on the GPA will be negotiated at the Leipzig meeting in June. The FAO Commission will hold a Third Extraordinary Session in December to continue work on the text of a non-binding International Undertaking on Plant Genetic Resources. A meeting on the Convention on Biological Diversity in Argentina in November will also address issues of protection of Plant Genetic Resources. An example of developing countries' contribution to genetic resources is Peru's International Center of the Potato, which maintains a genetic bank of 3,800 potato varieties from the Andes and 1,500 samples from about 100 wild species. The Center has provided farmers with more than 100 improved potato varieties. Potatoes, now one of the four most-consumed foods in the world, have undergone genetic engineering in Europe and the United States to produce a "super-potato" with thin skin and uniform size. These potatoes may, however, be more vulnerable to disease. While developing countries push for a share in the benefits derived from genetic resources, industrialized countries claim rights to protection of intellectual property through patents and copyrights. U.S. pharmaceutical companies claim that they are losing $540 million yearly in unpaid fees from foreign drug producers. More than half of the $3 billion a year Argentine pharmaceutical industry is made up of national factories that copy and sell foreign formulas. While U.S. Trade Representative Charlene Barshefsky has pushed for sanctions against Argentina because of its copyright and patent piracy, Latin American specialists in the State Department and other Clinton administration officials have successfully urged that no trade sanctions be applied to Argentina. Argentina, under strong pressure from the U.S. government, in March approved a patent law that will require pharmaceutical companies to begin paying royalties for foreign patents in five years. Brazil is considering an even stronger bill, which would protect drugs, chemical products, and microorganisms and will also provide protection for products in the development pipeline. Despite the Minister of Economy's urging that the law take effect immediately, the Argentine Congress insisted on a five year waiting period to protect domestic industries. The World Trade Organization allows developing countries until 2005 to implement complete protection of intellectual property. Pamela Chasek, Ian Fry and Desire'e McGraw, "Report of the Second Extraordinary Session of the FAO Commission on Genetic Resources for Food and Agriculture 22-27 April 1996," EARTH NEGOTIATIONS BULLETIN, April 29, 1996; John Maggs, "Argentina Seen Escaping Copyright Sanctions," JOURNAL OF COMMERCE, April 25, 1996; Angeline Oyog, "North-South Divide Over Plant Diversity Looms Again," INTERPRESS SERVICE, April 23, 1996; Abraham Lama, "Potato's Future Questioned," INTERPRESS SERVICE, May 7, 1996; George Meek, "Argentina Patents," VOICE OF AMERICA, March 21, 1996; Marcela Valente, "Pharmaceutical Patenting Mars Idyll," INTERPRESS SERVICE, February 29, 1996. MEXICO TO IMPORT 33 PERCENT OF FOOD In 1996, Mexico will import one-third of its food needs, according to a report from the National Union of Autonomous Regional Campesino Organizations (UNORCA). Per capita consumption of corn, wheat, fruits and vegetables has dropped by 29 percent over the past six years, and annual per capita protein consumption is less than 20 kilograms, one-third of the amount recommended by the National Nutrition Commission (Comisio'n Nacional de Alimentacio'n.) UNORCA blames NAFTA for endangering 80 percent of agricultural producers -- more than 3 million ejidatarios and 2.5 million small landholders -- and claims that NAFTA has meant the end of national food self-sufficiency in Mexico. Mexican government policies, such as the reduction of subsidies and access to credit, privatization of development banks, and foreclosure on land and property of producers, have also worsened the agricultural situation. In April, Agrarian Way, an international organization that includes producer and landless farmers' groups from 45 countries, met at its second world conference in Mexico. Representatives called for creation of "a rural economy based on respect for ourselves and for the land by means of food sovereignty and a just system of world trade." Director Rafael Alegri'a defined food sovereignty as "the right of the peasantry in dependent countries to produce food," and criticized "the large food industry transnationals" that are taking over land and food production. In the 1995 spring-summer production cycle, Mexican production of rice, beans, corn and wheat fell 13 percent below the same period in 1994. World wide cereal crop production will recover somewhat in 1996, according to the U.N. Food and Agriculture Organization(FAO), with approximately a five percent increase in output. Because increased output will still leave stocks well below safe levels, satisfying world food needs for 1996-97 will depend on a good harvest in 1996. Matilde Pirez, "Importara' el Pai's 33% de Alimentos Este An~o," LA JORNADA, May 6, 1996; Eduardo Molina y Vedia, "New Proposals for Food Summit Agenda," INTERPRESS SERVICE, April 26, 1996; "World Cereal Production Up But Stock Levels Still Unsafe," INTERPRESS SERVICE, May 2, 1996. EXPORTING PRODUCE TO MEXICO With tree fruit production up in California this year, U.S. fruit and vegetable exporters, hope for a better export season in 1996. In 1991, California exported 1.2 million boxes of tree fruit to Mexico, but the total fell to 130,000 boxes in 1995. Much of the decline is attributed to Mexico's economic crisis. Delays in Mexican approval of phytosanitary rules also hampered U.S. fruit exporters last year, causing uncertainty and delay in bringing produce to Mexican markets. This year phytosanitary rules are in place already, although California growers are negotiating with Mexican officials for an alternative to methyl bromide fumigation, now required by Mexico for peaches and nectarines. Responding to Texas Senator Phil Gramm's warning that Mexico might limit agricultural imports from the United States, the U.S. Senate Finance Committee defeated an amendment to restrict Mexican tomato imports sought by both President Clinton and leading Republican presidential candidate Senator Bob Dole in early May. While legal exports of U.S. fruit to Mexico comply with extensive inspection and certification rules and pay duties at the border, a large "gray market" offers fruit shipped across the border without inspection. Some of the illegally shipped produce is cheaper, lower-quality product, but other product is simply smuggled in before the allowed shipping date or without paying export costs, other than a bribe to customs officials. In other export-related federal action, U.S. Agriculture Secretary Dan Glickman cut export promotion funding under the Market Access Program (MAP) by 18 percent, compared to 1995. Most MAP funds go to cotton, meat, and forest products groups, but fruit and vegetable commodity groups also receive MAP funding to promote their products overseas. Tom Karst, "Funding Continues to Fade," THE PACKER, May 13, 1996; Peter M. Tirschwell, "Illicit Shipments of US Fruit Entering Mexico," JOURNAL OF COMMERCE, March 26, 1996; Tom Karst, "Exports to Mexico Expected to Rebound," THE PACKER, May 13, 1996; Anne Gonzalez, "Shippers Wait to Hear Mexican Restrictions," THE PACKER, May 6, 1996; John Maggs, "Senate Panel OKs Trade Bills, Kills Tomato Import Measure," JOURNAL OF COMMERCE, May 9, 1996. CARIBBEAN SUGAR PRODUCERS FEAR NAFTA IMPACT Caribbean sugar producers face threats from several directions: increased competition from Mexico under NAFTA, greater use of artificial sweeteners, and pressure to end the guaranteed market they enjoy under the Lome Convention agreement with the European Union. The sugar industry employs nearly one of five agricultural workers in Guyana and Jamaica, and half a million workers throughout the African, Caribbean and Pacific (ACP) nations. At the meeting of ACP government ministers in Jamaica in early May, Rashid Melville of the Caribbean Community (Caricom) secretariat warned: "If Mexico is allowed to export freely into the U.S. under NAFTA, it could conceivably supply any amount of sugar demanded by the U.S. and totally eliminate other quota suppliers." NAFTA's sugar trade provisions allow for Mexican exports of 250,000 tons to the U.S., beginning in the year 2000. The six major Caribbean sugar-exporting countries produce a combined total of 800,000 tons annually. Dr. Peter Baron, executive director of the International Sugar Organization, says that world production of sugar has slowed from a growth rate of 3-4 percent a year during the 1980s to a mere 1.2 percent per year for the past five years. Sugar imports to the United States from ACP states fell by 40 percent between 1980 and 1990, as use of artificial sweeteners increased. Diet drinks now account for 13 percent of the carbonated drink market and artificial sweeteners are used in 63 percent of chewing gum produced. While the Lome Convention guarantees a market and preferential prices with the European Union, World Trade Organization rules require that quotas be replaced by tariffs by the year 2000. The Lome Convention, renewed every five years since 1975, will expire in 2000. Misha Lobban, "More Obstacles on the Horizon for ACP Sugar," INTERPRESS SERVICE, May 3, 1996; "Misha Lobban, "Move Over Sugar, Make Way for Artificial Sweeteners," INTERPRESS SERVICE, May 2, 1996; Misha Lobban, "What's Ahead for Region's Sugar?" INTERPRESS SERVICE, May 7, 1996. LATIN AMERICAN PESTICIDE MARKET GROWS Latin America (including Mexico and South and Central America) accounts for 9 percent of world agrochemical sales or approximately $2.6 billion, according to "Crop Protection in Latin America," a January 1996 report by Agrow Reports. The report also predicts swift increases in sales, particularly for pesticides used on maize, soybeans, fruit and vegetables. Brazil now buys 55 percent of pesticides ($1.4 billion in 1994) sold in Latin America, with herbicides leading the market because of switches to low-tillage practices to counter soil erosion and deteriorating soil structure. Argentina ($521.5 million in 1994), Mexico ($320.9 million), Colombia ($316.2 million), Ecuador ($93.3 million), Peru ($84.3 million) and Costa Rica ($81 million) are other major Latin American markets. The Ciba corporation leads in Latin American sales, particularly with triazole fungicides for the banana pesticide market. Widespread fungicide resistance has made necessary as many as 40 triazole applications per year. Latin America produces 40 percent of the world's bananas, 60 percent of the world's coffee, 25 percent of the world's beans, and 20 percent of the world's cocoa. In Peru, environmentalist groups used World Earth Day as the occasion to demand enforcement of bans on pesticides including toxaphene, chlordane and heptachlor. Banned pesticides continue to be freely sold, according to the Peruvian non-governmental Action Network for Alternatives to the Use of Agrochemicals. A study by the Institute for the Defense of the Environment focused on women along the Peruvian coast and southern Andes who apply pesticides. The study found 130 cases of pesticide intoxication in 1995, including one death of respiratory paralysis, and some level of intoxication among 72 percent of the women, with 2.7 percent reporting children with deformities or sensory disabilities. Women are generally in charge of handling pesticides in this area. "Latin American Pesticide Market Growth," PESTICIDE ACTION NETWORK NORTH AMERICA UPDATES SERVICE, April 16, 1996; Abraham Lama, "Banned Pesticides Cause Deformities," INTERPRESS SERVICE, April 22, 1996. ADM MOVES TO BUY MEXICAN FLOUR FIRM Decatur, Illinois-based Archer Daniels Midland (ADM) is waiting for U.S. government approval to acquire a 20 percent stake in Gruma (Grupo Industrial Maseca), Mexico's largest corn flour and tortilla maker. ADM has focused on international expansion. Gruma has posted 20 percent average annual sales growth in the United States since it began operating there in 1982. Gruma owns corn flour mills in Texas and California, as well as almost a dozen tortilla plants in the southwest and a fourth of the booming U.S. tortilla market. Gruma's major competitor, Grupo Industrial Bimbo, is also focusing on the United States in a battle for control of the $5 billion world tortilla market. While Mexicans eat 10 times as many tortillas per capita as people in the United States, the Mexican market is dominated by small "tortillerias." The packaged tortilla market accounts for only 5 percent of the Mexican tortilla market. Inside Mexico, Gruma's main product is corn flour and Bimbo's is bread. Both companies expect that the end of tortilla subsidies in Mexico will transform the Mexican market, giving an advantage to U.S.-style marketing of plastic-bagged tortillas in supermarkets. "ADM Seeks Stake in Mexican Flour Firm," CHICAGO TRIBUNE, April 27, 1996; Joel Millman, "Mexican Tortilla Firms Stage U.S. Bake-Off," WALL STREET JOURNAL, May 10, 1996. __________________________________________ RESOURCES/EVENTS __________________________________________ The Environment and NAFTA: Understanding and Implementing the New Continental Law by Pierre Marc Johnson and Andre Beaulieu. Island Press, Washington: 1996. 432 pp. Order from Island Press, 1718 Connecticut Avenue N.W., Suite 300, Washington, DC 20009; telephone 202/232-7933; fax 202-234-1328. $50 cloth/$30 paper. Reviews role of environmental concerns and nongovernmental organizations in negotiation of NAFTA, origins and legal structures of the North American Agreement on Environmental Cooperation, implementation and enforcement since ratification of NAFTA and NAAEC, and place of NAFTA environmental agreement as part of the "social agenda" of trade. ____________________________________________ 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. 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