From iatp@igc.apc.org Fri May 31 17:54:12 1996 Date: Thu, 30 May 1996 12:28:30 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 5-31 NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy May 31, 1996 Volume 3, Number 11 __________________________________________ The next issue of the NAFTA & INTER-AMERICAN TRADE MONITOR will be published on June 28. __________________________________________ U.S. DAIRY FARMERS: NAFTA FAILS Citing a drop in U.S. exports to Mexico of dairy products, red meats and livestock since NAFTA's January 1, 1994 effective date, the Farmers' Union Milk Marketing Cooperative concluded that NAFTA has not lived up to its promises for U.S. dairy farmers. According to the U.S. Department of Agriculture's Foreign Agriculture Service, U.S. dairy exports to Mexico dropped 49.2 percent since NAFTA took effect, with dairy exports falling 27.6 percent in 1994 and a further 29.8 percent in 1995. The United States has also increased its imports in the dairy and meat-related categories, with Mexican dairy exports to the United States jumping from $164,000 in 1993 to $10,807,000 in 1995. Specific problems related to NAFTA include reports of U.S. milk being pulled from Mexican supermarket shelves and US. ice cream trucks being hijacked and torched, as well as unnecessarily restrictive Mexican rules for fluid milk shelf life and unequal tariff reductions. An example of the latter is a 40 percent Mexican tariff reduction on U.S. cheddar cheese, which Mexicans do not eat, but only a 20 percent reduction on soft, white cheeses favored by Mexican consumers. "NAFTA Is Big Failure on Dairy Export Promises," FUMMC MILK MATTERS, April 30, 1996. FARMER-RAILROAD CONFLICT IN CANADA Canadian grain farmers propose to buy a fleet of 13,000 round rail wagons that carry 80-90 tons of grain each. The railroads say they can more efficiently manage the cars, and that the shipper is usually the grain company and not the farmer. The cars are being sold by the Canadian Transport Ministry, as part of the gradual deregulation of transportation. The government stopped paying half the cost of transporting export grain shipments last year. The Transport Ministry says that regardless of who owns the cars they must be used "primarily for Western Canadian grain." The Transport Ministry also limited any potential new owners to charging no more than 75 cents a ton to recoup their purchase cost. This will mean a lower likely sale price for the cars, since sale at market value of C$400 million would mean the new owners would have to charge C$2 or 3/ton to recoup their purchase price. Agriculture Minister Ralph Goodale maintains that Canadian railroads have always enjoyed a privileged position, and must be watched carefully to ensure that they "can and will act in the public interest and they can and will deliver the farmers' grain on time in the most efficient and cost effective manner." Aviva Freudmann, "A Bumper Crop of Subsidies," JOURNAL OF COMMERCE, May 16, 1996; "Railways Will Have to Justify Their Privilege, Says Minister," THE WESTERN PACKER, May 16, 1996. INITIAL ITC RULING FAVORS FLORIDA The U.S. International Trade Commission, which together with the Department of Commerce determines the merits of anti- dumping petitions, ruled on May 16 that there is a "reasonable indication" that Mexican tomato imports have harmed U.S. growers. The preliminary ruling allows the anti- dumping petition filed March 29 by the Florida Department of Agriculture and tomato growers in other states to proceed. The Department of Commerce will hold a hearing on September 9 to determine whether unfair trade practices by Mexico contributed to economic harm to U.S. growers. The Department of Commerce ruling will be made in November and the final ITC determination in January. Florida is also pursuing a Section 201 petition, which the ITC will consider in June. Tracy Rosselle, "Initial ITC Ruling Favors U.S. Growers," THE PACKER, May 20, 1996. MERCOSUR, CHILE, EU AGREEMENTS NEARER Chile's request for associate membership in the Mercosur trading bloc (Argentina, Brazil, Paraguay & Uruguay) may result in an agreement as early as June 25. Mercosur representatives will meet with European Union (EU) representatives on June 11 and 12 to begin moving toward liberalizing bilateral trade in 2000, with the first accord set for signature in December. Mercosur is also negotiating with Bolivia, Ecuador, Peru and Venezuela. Brazil looks toward a "day not too far off, when Mercosur will be all of South America," according to Brazilian Foreign Minister Luiz Lampreia. Chile has requested only associate membership in Mercosur because its external tariff is lower than that of Mercosur and Chile does not want to raise its tariffs, particularly as it negotiates other agreements with Mexico and Canada and continues to look toward future membership in NAFTA. Agricultural issues between Chile and Mercosur seem to have been resolved by an agreement to give Chile 17 years to open up its wheat market. Some issues of rules of origin and comparative preferences for countries outside Mercosur remain to be resolved. Plans for signing a Chile-Mercosur accord at the end of June could also be stymied by a dispute between Brazil and Uruguay over clothing imports. Brazil has demanded that virtually all clothing imports, including those from Mercosur nations, be begun and completed within a 30-day period, making commerce in clothing more difficult. The EU is Mercosur's biggest foreign investor, and has moved to strengthen ties with Mexico as well. Foreign ministers of the Latin American Rio Group and the EU met in Bolivia in April. Mutual responsibility of consumer and producer countries for the illegal drug trade, and a strong emphasis on trade and investment were among the provisions of the 40- point Cochabamba Declaration issued at the end of their meeting. Mexico and the EU are also in the process of negotiating a trade agreement. Mexico-EU trade has doubled since 1989, reaching $11 billion in 1995. The Mexican National Foreign Trade Bank predicted that a free trade zone with the EU would increase Mexico's exports by 20 percent. Kevin G. Hall, "Key Issues May Delay Chile Mercosur Accord," JOURNAL OF COMMERCE, May 22, 1996; Raul Ronzoni, "Integration Halted by Friction Over Clothes Imports," INTERPRESS SERVICE, May 15, 1996; Marcela Valente, "Mercosur: the Genesis of a Future South American Bloc," INTERPRESS SERVICE, April 10, 1996; Juan Carlos Rocha, "Latin America Closer to Europe than to the U.S.A.," INTERPRESS SERVICE, April 16, 1996; Timna Tanners, "EU Agrees to Freer Trade," THE NEWS, May 14, 1996; "Gurria Pressing for EU Accord,' MEXICO UPDATE, May 22, 1996. U.S., ALLIES CONTINUE DISPUTE OVER CUBA U.S. Secretary of State Warren Christopher defended more stringent U.S. laws banning trade with Cuba during a May 7 visit to Mexico, and tried to reassure Mexican businesses that new sanctions would be prospective only and would not be applied to businesses and business owners who had invested in Cuba prior to the enactment of the Helms-Burton legislation this year. The European Union has asked for World Trade Organization consultations on the Helms Burton bill, which has also been denounced by other U.S. allies. One provision of the Helms-Burton legislation allows U.S. nationals to bring federal suits against anyone who "traffics" in property confiscated from US citizens after Cuba's 1959 revolution and another provision says the secretary of state "shall exclude" from the United States anyone subject to such a claim, including corporate officers, shareholders with controlling interests, and their immediate families. Among 200 companies already identified by the U.S. government as "trafficking" in confiscated properties through joint ventures with Cuba are Mexico's giant Cemex cement company and Canada's Sheritt mining company. Cuban officials say the pace of foreign investment has slowed since last year. Some observers blame Cuba for slowness in opening to foreign capital. Canada's ambassador to Cuba, Mark Entwhistle, believes Helms- Burton plays a significant role. "No foreign investor interested in Cuba can afford to ignore the famous or infamous Helms-Burton law and in the case of Canada, it has clearly already had a significant chilling effect on investment decisions," Entwhistle told a foreign investment workshop in Havana. Guy de Jonquie'res, "U.S. Accuses Allies Over Cuba," FINANCIAL TIMES, May 21, 1996; Pascal Fletcher, "Cuba Still Shy of Investment," FINANCIAL TIMES, May 22, 1996; "Helms-Burton Act: No Disneyland for Queen Elizabeth?" WEEKLY NEWS UPDATE ON THE AMERICAS, May 26, 1996; Bruce Clark and Nancy Dunne, "Cuba Sanctions Threaten to Sour US-EU Relations," FINANCIAL TIMES, May 24, 1996. U.S. BANS BRAZILIAN, HONDURAN LOBSTERS The U.S. State Department ruled that Brazilian and Honduran lobster production methods violate laws protecting sea turtles, and acted in May to ban export of their sea lobsters to the United States. New guidelines require that drag nets for lobsters be required to have turtle "excluders." The ban applies only to lobsters fished from the sea, not to those raised on fish farms. Honduran lobster exports were $73 million in 1995 and Brazilian exports to the United States are estimated at $30 million annually. In another move for environmental protection, Central American Greenpeace charged that the Gulf of Fonseca is being damaged by shrimp fishing. Greenpeace said inappropriate technologies including vaccines, chemicals and fertilizers destroy the area's coastal species and damage the mangrove swamps that serve as a filter between land and sea. A study by the United Nations Peace University found that the area occupied by shrimp farms in Central America rose from 1,000 hectares to 11,500 hectares over the past ten years, while mangrove swamp area continues to decline. Shrimp are Honduras' third-largest export, generating $80 million in annual income. Ricardo Miranda, "U.S. Bans Brazilian and Honduran Lobsters," INTERPRESS SERVICE, May 3, 1996; Thelma Meji'a, "Greenpeace Blasts Central American Shrimp Industry,' TICO TIMES, April 19, 1996. NAFTA ENVIRONMENTAL UPDATE The Border Environment Cooperation Commission (BECC), created under NAFTA, approved its seventh project in an April 30 public meeting, but alienated many non-governmental organizations by denying public comment on a wide range of questions when Mexican "public" representative and BECC chair Jorge Bustamante adjourned the meeting an hour ahead of schedule. Bustamante has also been criticized by Mexican environmental and non-governmental organizations, which charge that he has shown no interest in public participation and has not met with NGOs. Many of the speakers who had signed up to make statements at the BECC meeting wanted to advocate BECC restrictions on certification of privately sponsored projects. While BECC has approved seven projects, all of which focus on water supply and treatment, the North American Development Bank (NADBank) has so far failed to fund any of the projects. In April, U.S. and Mexican officials dedicated a publicly funded waste water treatment plant in Nuevo Laredo, Mexico. predicting that it will greatly improve water quality in the Rio Grande. In May, officials of the two countries signed the Border XXI Environmental Program, a comprehensive plan for environmental infrastructure and other projects along the border through the year 2000. The 250-page plan, with provisions for water, air, toxic waste, law enforcement, preventive actions, emergency response capacity, natural resources, and public information, will be published at the end of May. Mexican and U.S. environmentalists were joined by some Mexican government officials in May in criticizing U.S. plans for construction of toxic and radioactive waste dumps in the southern United States. The dumps are planned for Sierra Blanca, Ruidoso and Carlsbad, with the three points forming a triangle covering 250 sq. km. and located only 27 km. from Mexico. Both nations signed a 1983 commitment not to locate such centers within a 200 km strip along the border. The Mexican Senate Ecology and Environment Committee said it is totally opposed to the projects, and Greenpeace claims the plans are dangerous because the area planned to hold toxins is over subterranean water reserves that run into the already-contaminated Rio Bravo/Rio Grande river, which supplies water for 3.5 million people. "Border XXI Environmental Program Signed; Air Quality Project for Border Cities Initiated," BNA INTERNATIONAL ENVIRONMENTAL REPORTER, May 15, 1996; Diego Cevallos, "Toxic Dumps Cause New Conflict," INTERPRESS SERVICE, May 15, 1996; "BECC Snatches Controversy From the Jaws of Acclaim," BORDERLINKS, May, 1996; "New Waste Water Treatment Plant on Border to Help Clean Rio Grande," BNA INTERNATIONAL ENVIRONMENTAL REPORTER, May 1, 1996. CORRUPTION THREATENS TRADE U.S. and Canadian executives involved in trade disputes in Mexico report at least four recent cases of bribed police, arrest warrants or criminal suits used by Mexican executives to harass and intimidate them. Crime exploded in Mexico with last year's economic crisis, rising nearly 35 percent in Mexico City. Police corruption, long familiar to Mexicans and foreign residents, has also been aggravated by the economic crisis. In the Mexican legal system, the burden is on the accused to prove innocence. Judges are often reluctant to free foreigners on bond before trial, fearing that they will flee the country. In one case, a dispute between a fired employee and Eastman Kodak's president in Mexico was apparently connected to presence of large numbers of police in front of the Kodak president's office and home. The executive fled to Miami until the situation was resolved. U.S. corporations have been named in several high-profile Latin American corruption scandals, including Archers Daniel Midland executives dismissed in September and October 1995 for alleged embezzlement of $9 million in Mexico. Top executives in IBM's Argentine subsidiary, along with the entire board of directors of Argentine state-owned Banco Nacisn, were charged in April with defrauding the government. At the conclusion of an OAS conference attended by 34 countries in March, 21 Latin American and Caribbean countries signed the Inter-American Convention against Corruption. Under the terms of the convention, signatory countries will establish norms for preventing, combatting and penalising corruption among public officials and also agree not to invoke bank secrecy laws when another government requests information regarding corruption cases. Kevin G. Hall, "US Battles Strong-Arm Tactics in Mexico," JOURNAL OF COMMERCE, May 7, 1996; "$50 Billion Missing in Latin American Financial Scandals," WEEKLY NEWS UPDATE ON THE AMERICAS SUPPLEMENT, May 12, 1996; Humberto Marquez, "21 Countries Sign Anti-Corruption Convention," INTERPRESS SERVICE, March 29, 1996. MEXICAN FARMERS KILLED Two farmers associated with the opposition Democratic Revolutionary Party (PRD) were shot and killed as they walked to their cornfields near the community of Usipa in the municipality of Tila, Chiapas on Friday morning, May 24. Friends and relatives of Sebastian Lopez Lopez and Sebastian Sanchez Lopez said they were killed by paramilitary squads linked to the ruling Institutional Revolutionary Party (PRI). Witnesses said two of the attackers were members of a paramilitary group called "Peace and Justice," which opposes the PRD. Elio Henri'quez, "Acusan al Grupo Paz y Justicia de Haber Matado a Dos Campesinos," LA JORNADA, May 25, 1996. __________________________________________ RESOURCES/EVENTS __________________________________________ An Expert Panel on Trade and Sustainable Development, funded by the WWF, will be charged with development of policies that can harness trade to the objective of sustainable development. Nominations for panelists, including trade, environmental and development specialists, should be submitted by June 14 to Charles Arden-Clarke, WWF International, 1196 Gland, Switzerland. Telephone: 00 41 22 3649513; fax 00 41 22 3645829; or e-mail cac@lan.wwf.ch, and ddd@lan.wwf.ch ____________________________________________ 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.