From iatp@igc.apc.org Fri Jun 28 19:57:54 1996 Date: Fri, 28 Jun 1996 11:11:21 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 6-28- NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy Friday, June 28, 1996 Volume 3, Number 12 __________________________________________ MEXICO BUYS U.S. GRAIN DROUGHT DESTROYS CROPS ALLIES ATTACK U.S. CUBA LAW TRUCKING DISPUTE LINGERS WAGES DROP IN NAFTA COUNTRIES BANANA DISPUTE MOVES FORWARD MEXICO BUYS U.S. GRAIN As people and animals starve, Mexico is preparing to buy nearly $2 billion of U.S. grain, an estimated 10 million metric tons of corn, wheat, sorghum, soy, and pinto beans and other grains. Mexico is also applying for letters of credit to purchase 13 million pounds of milk powder through the USDA's Dairy Export Incentive Program and for a USDA loan guarantee of $160 million to purchase approximately 200,000 metric tons of dry beans from Michigan farmers. With U.S. grain reserves depleted, mixed grain prices have risen from a normal high of about $150 per ton to more than $200 in recent months. Mexico is also investigating the possibility of buying white maize from South Africa. Mexican officials at Conasupo, the government agency in charge of food imports, denied charges that it has imported substandard yellow corn from the United States. Officials say that Mexico buys US-2 grade corn, and denied reports that low-grade US-4 corn has been imported from Africa. Ninety percent of Mexican corn production is white corn, traditionally used in making tortillas, while yellow corn is considered animal food and may be mixed with white corn to make tortillas. The Reforma daily newspaper charged that yellow corn is lower in protein and nutrients and produces a "stiff, dirty" tortilla. According to the government of the northern state of Chihuahua, 77 people died of malnutrition, dehydration and other diseases caused by poverty in the Sierra Tarahumara between January and April. The U.N. Food and Agriculture Organization estimates that per capita consumption of corn, beans and wheat in Mexico dropped an average of more than 35 percent over the past decade. "I'm not sure that we are looking at famine in states like Chihuahua this year, but if the drought keeps up, by 1997 or 1998, we could see it," says Revolutionary Democratic Party Deputy Eric Villanueva. On May 30, about 300 impoverished Mexicans held up a corn train in the northern state of Nuevo Leon, making off with up to 40 tons of maize. The maize belonged to tortilla-making giant, Maseca. On June 23, hundreds of residents of the colonias of Flores Magon and El Consuelo in Durango held up a Mexican National Railroad train loaded with wheat, carrying away tons of wheat in pickups, barrels, and sacks. Less than a week earlier, Durango residents had sacked a train carrying corn. "Mexico to Buy Scarce U.S. Grain," AGRI-NEWS, June 13, 1996; "Barcia Urges USDA to Guarantee Mexican Purchase of Michigan Dry Beans, THUMB FARM NEWS, May 27, 1996; "Mexico Can't Afford U.S. Beans, Milk Powder," THE MILKWEED, May 1996; Diego Cevallos, "Dying of Thirst Next to the Fountain," INTERPRESS SERVICE, May 27, 1996; ""Mexico Denies Importing Substandard Corn," FWN/UPI, June 21, 1996; "Mexico Keen on S. African Maize, But No Deal Yet," REUTERS, June 20, 1996; Drought + Economic Crisis = Starvation in Chihuahua," MEXICO UPDATE, June 19, 1996; "Mexican Slum Dwellers Sack Corn Laden Train," REUTER, May 30, 1996; Uriel Martinez, "Saquean Habitantes de Dos Colonias un Tren Cargado de Trigo," LA JORNADA, June 24, 1996. DROUGHT DESTROYS CROPS Northern Mexico's continuing drought, the worst in 50 years, has cost farmers 10 million tons of grain and the death or forced sale at low prices of three million heads of cattle since 1992, according to the Confederation of Rural Landowners. Water reservoir levels have plunged to below 15 percent. Imports of grain and milk have increased, with agricultural imports currently totaling $5 billion yearly. The northern 80 percent of Mexico receives only 20 percent of available water, while the central and south use 80 percent. An estimated 50 percent of water that goes to cities is lost through leaks and waste, with the population of Mexico City using an average of 360 liters per person daily, a rate twice as much as the world average. The National Water Commission estimates that 76 percent of the country's surface water is contaminated, 15 million of the country's 91 million residents lack potable water, and 30 million have no sewer services. Diego Cevallos, "Dying of Thirst Next to the Fountain," INTERPRESS SERVICE, May 27, 1996; "Drought + Economic Crisis = Starvation in Chihuahua," MEXICO UPDATE, June 19, 1996. ALLIES ATTACK U.S. CUBA LAW By a vote of 23-1, with 9 abstentions, the Organization of American States (OAS) decided on June 4 to instruct the Inter-American Juridical Committee to determine whether the U.S. Helms-Burton law tightening sanctions against Cuba is valid under international law. U.S. State Department spokesperson Nicholas Burns said that the U.S. does not recognize the juridical body of the OAS as having jurisdiction over the issue. Canada and Mexico continue to strongly oppose the Helms- Burton law, and Mexican companies have been pressuring their government for concrete action since CEMEX (Cementos Mexicanos) announced that it would withdraw from a cement-plant operation in Cuba due to the law. Canadian Sherritt, which operates joint ventures in Cuba in nickel mining, refining, and energy projects, refused to give in to U.S. pressure. Cuban Foreign Minister Roberto Robaina announced on June 1 that his government will no longer disclose which foreign firms have investments in Cuba. Mexican officials are planning a "Helms-Burton antidote bill," which would prohibit Mexican companies from providing information to U.S. courts about their operations and impose sanctions on Mexican companies that comply with the Helms-Burton law. Canada passed a similar law in 1992 in response to an earlier U.S. law that prohibited foreign subsidiaries of U.S. firms from trading with Cuba. The Canadian law calls for penalties on Canadian- based companies that follow instructions from a foreign government on trade with Cuba. Canadian trade minister Arthur Eggleton said in mid-June that Canadian companies will also be allowed to countersue against damages awarded by a U.S. court and to target assets held in Canada by those bringing complaints in U.S. courts under Helms-Burton. European and U.S. negotiators began consultations on the U.S. Cuba sanctions law in early June, under threat of an EU request for a World Trade Organization dispute settlement panel. The EU seeks a waiver from the sanctions imposed on companies that trade with Cuba, citing a U.S. waiver granted to AT&T that allows the U.S. company to increase its service between the U.S. and Cuba. President Clinton has until July 15 to waive the application of sanctions for a six month period, by reporting to Congress that the suspension is "necessary to the national interests of the United States and will expedite a transition to democracy in Cuba." On June 12, following a U.S.-EU summit, President Clinton and EU Commission President Jacques Santer publicly clashed over the U.S. legislation. At the end of June, the U.S. State Department will issue notices ordering foreign companies investing in nationalized U.S. businesses in Cuba to either halt their Cuba activities or close their businesses inside the United States. At least one Spanish firm, the hotel group Sol Melia, said it would leave the United States if a choice between Cuba and the United States were forced on it. Spanish government sources say that WTO action and sanctions against the United States, both by the EU and by individual countries, are among possible responses to application of Helms-Burton. Michael Ranneberger, Coordinator for Cuban Affairs at the U.S. State Department, said in late June that the U.S. would invoke the national security exemption to reply to WTO challenges to the Cuba sanctions law. "Official Says U.S. Will Invoke WTO Security Exemption for Cuba Law," INSIDE U.S. TRADE, June 21, 1996; "EU Seeks More Talks on Cuba Sanctions Under Threat of WTO Panel," INSIDE U.S. TRADE, June 7, 1996; "Clinton, Santer Clash Over Helms-Burton at U.S.-EU Summit," "U.S. Defies OAS Decision to Review Cuba Sanctions Act," INSIDE U.S. TRADE, June 14, 1996; Stephen Dale, "Zedillo, Chretien Agree on Helms-Burton Bill," INTERPRESS SERVICE, June 11, 1996; "Cuba: U.S. Allies Strongly Oppose Helms-Burton Act," NOTISUR, June 7, 1996; "Helms-Burton: Cuba's Investors Talk the Talk & Walk Away," WEEKLY NEWS UPDATE ON THE AMERICAS, June 9, 1996; Arthur Gottschalk, "US Puts Embargo Ultimatum in the Mail," JOURNAL OF COMMERCE, June 13, 1996; Bernard Simon, "Canada to Retaliate Against US Over Cuba Trade Act," FINANCIAL TIMES, June 13, 1996. TRUCKING DISPUTE LINGERS Talks between U.S. Transportation Secretary Federico Pena and Mexican Secretary for Communications and Transportation Ruiz failed to resolve the dispute between the two nations over implementation of the trucking provisions of NAFTA. Last December, the United States refused to implement NAFTA provisions for allowing Mexican truckers to haul loads into U.S. border states, citing safety and security concerns. Mexico has not processed applications submitted by U.S. truckers for border state hauling, saying that it has received no complete applications. The U.S. trucking industry wants the border opened, but the Teamsters Union, representing U.S. drivers, opposes border opening. Mexico now wants the United States to publicly acknowledge that it is violating NAFTA, but the United States refuses to do so. While about six percent of U.S. truck drivers are pulled off the road annually in random inspections, Mexican truck drivers are pulled at a much higher rate. From December 19, 1995-May 3, 1996, 26.3 percent of Mexican truck drivers entering at McAllen, Texas, 18.4 percent of those entering at Laredo, 18.2 percent of those entering at Brownsville, and 16.3 percent of those entering at El Paso were pulled and denied entry. In contrast, at California's two border crossings, far fewer drivers were ordered off the road only 5.6 percent at Calexico and 2.8 percent at Otay Mesa. Violations range from false or outdated commercial drivers licenses to failure to meet age requirements and medical fitness requirements. "U.S., Mexico Fail to Bridge Gap on Trucking at Binational Meetings," INSIDE U.S. TRADE, May 17, 1996; Kevin G. Hall, "US Puts Clamps on Mexican Truckers," JOURNAL OF COMMERCE, June 20, 1996; WAGES DROP IN NAFTA COUNTRIES According to an official report of the tri-national Commission for Labor Cooperation established by NAFTA, real wages for workers in the United States, Canada, and Mexico have all fallen, while the number of self- employed and temporary workers has risen in all three countries. U.S. workers saw a drop in real wages of 8.5 percent from 1984-1995, while Canadian wages fell 0.4 percent and Mexican wages have gone up and down and are now about five percent below 1984 levels. In Mexico, 57.3 percent of total employment is full- time, compared to 84.1 percent in Canada and 91.2 percent in the United States. Agricultural employment accounts for almost a quarter of total employment in Mexico, compared to about four percent in the United States and Canada. In Canada and the United States, 98 percent of the increase in employment from 1984-1995 took place in service industries, primarily finance, real estate and personal services. In Mexico growth in service industries, primarily in retail, was 81 percent of the total increase during the same time period. Tim Shorrock, "Drop Seen in Real Wages in All Three Nafta Countries," JOURNAL OF COMMERCE, May 29, 1996. BANANA DISPUTE MOVES FORWARD The WTO Director-General named a three-member panel to settle the U.S.-EU dispute over the EU banana regime after the United States, Ecuador, Mexico, Honduras, and Guatemala notified the World Trade Organization that the two sides were unable to agree on a panel. The move will speed up the banana dispute settlement proceedings, possible bringing a final decision in December. Ecuador insists that the EU end the arrangement allocating Category B licenses to marketing companies that traditionally sell bananas from the former colonies of EU member states in Africa, the Caribbean and the Pacific, and that the EU allocate a 33 percent quota of its banana imports to Ecuador. Unlike the United States and the other Latin American producers, Ecuador currently sells a substantial amount of bananas to the EU about 40 percent of the total EU quota, according to Ecuadoran officials. "U.S., Latins Move to Speed Up WTO Dispute Panel on EU Banana Regime," INSIDE U.S. TRADE, May 31, 1996. __________________________________________ RESOURCES/EVENTS __________________________________________ "El Planeta Platica" newsletter. Reviews ecotourism throughout the Americas. The May issue focuses on Central America, and upcoming issues will look at coastal issues and South America. $25/year. Online at http://www.planeta.com/. For information contact Ron Mader, 12345 SW 18th Street #417, Miami, FL 33175. Email: ron@txinfinet.com. "A Cautionary Tale: Failed U.S. Development Policy in Central America" by Michael Conroy, Douglas Murray and Peter Rosset May, 1996, Food First Development Studies, Lynne Rienner Publishers. Cloth, $45.00 + $4 s&h. Order from Subterranean Co., Box 160, 265 South 5th Street, Monroe, OR 97456. Telephone 800/274-7826. This book dissects the varied impacts of a decade of the central AID development policy based on nontraditional agricultural exports, considering impacts on the environment, on the livelihoods of thousands of small farmers, and on the sovereignty of elected governments. "Free Trade: Neither Free Nor About Trade" by Christopher D. Merrett. Black Rose Books, Montreal and New York: 1996. 230 pp. Order from University of Toronto Press, 340 Nagel Drive, Cheektowaga, New York 14225; fax 716/683-4547. $19.99 paper; $48.99 cloth. Merrett argues that free trade agreements have meant that institutions based on the nation-state have less power and that workers are being forced to work harder for less pay. Looking specifically at Canada and the U.S.-Canada Free Trade Agreement, he focuses on the FTA impact on the Canadian economy, on labor, and on the welfare state. "Decentralization and Rural Development in Mexico: Community Participation in Mexico's Municipal Funds Program" by Jonathan Fox & Josefina Aranda. Center for U.S.-Mexican Studies/UCSD, 1996. 74 pp. $11.95 + $3.50 s&h. Order from U.C. Regents to Order Dept., Center for U.S.-Mexican Studies/UCSD, 9500 Gilman Drive / Dept. 0510, La Jolla, CA 92093-0510. Credit card orders by phone 619/534-1160, fax 619/534-6447. Beginning in 1990, the Mexican government created Municipal Solidarity Funds for small-scale, participatory rural public works, with $350 million in World Bank funding for the four poorest states, including Oaxaca, with its largely indigenous population. This volume documents the community decision-making processes and the development impact of this program in a representative sample of municipalities in Oaxaca. "Mexico's Financial Crisis: Origins, Awareness, Assistance and Initial Efforts to Recover." General Accounting Office Report to the Chairman, Committee on Banking and Financial Services, House of Representatives: February, 1996. 167 pp. Report examines origins of Mexican financial crisis, U.S. and IMF advice and response to that crisis, use of Exchange Stabilization fund to fund U.S. assistance, and initial efforts of Mexico to recover from the crisis. * "Commercial Trucking: Safety and Infrastructure Issues Under the North American Free Trade Agreement." General Accounting Office report to Congressional Recipients: February, 1996. 52 pp. Report on differences between U.S. and Mexican trucking regulations and operating practices that may affect highway safety and infrastructure and U.S. readiness to ensure that trucks from Mexico comply with U.S. trucking regulations, as well as NAFTA provisions for opening U.S.-Mexican border to increased commercial truck traffic within the border states of each nation. * Order either GAO report from U.S. General Accounting Office, P.O. Box 6015, Gaithersburg, MD 20884-6015; telephone 202/512-6000; fax 301/258-4066. For internet access, send e-mail with "info" in the body to info@www.gao.gov. $2. ____________________________________________ 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. 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