From iatp@igc.apc.org Thu Jul 25 17:46:21 1996 Date: Thu, 25 Jul 1996 09:39:17 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 7-26- NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy Friday, July 26, 1996 Volume 3, Number 14 _________________________________________ Headlines: - NAFTA RULING FAVORS CANADA - CANADIAN GRAIN PRODUCERS REBEL - CORN SCANDAL IN MEXICO - PEASANT REBELLION OR EXCUSE FOR REPRESSION? - FARM WORKERS RIOT - HEALTH SCARE OVER BERRIES - CANADIAN FIRM TARGETED IN ANTI-CUBA MOVE - TRUCK TALKS CONTINUE NAFTA RULING FAVORS CANADA The tentative ruling of a five-member arbitration panel convened under the provisions of the North American Free Trade Agreement ruled that Canada can continue imposing tariffs on some U.S. farm products. The unanimous ruling, disclosed in press reports in mid-July, will be formally released on August 15. U.S. Secretary of Agriculture Dan Glickman called the decision "very disappointing and in my judgment not justified." U.S. dairy, poultry, egg and barley interests challenged Canadian tariffs ranging from 180 to 350 percent on their products, filing their original complaint in January, when new Canadian tariffs went into effect. The tariff rates apply to products shipped in excess of previously existing quotas. Canada had replaced quotas with tariffs, pursuant to the "tariffication" process set out by the General Agreement on Trades and Tariffs and the World Trade Organization (WTO). The NAFTA arbitration panel agreed with the argument that NAFTA does not prevent Canada from complying with WTO rules by using the tariffication process to eliminate previously existing quotas. The Coalition for Fair Trade With Canada, a U.S. industry group, says the tariffs cost U.S. dairy producers $1 billion and cost U.S. chicken producers $300 million yearly in lost sales. According to Canadian studies, the Canadian economy would lose 138,000 jobs in agriculture and food processing if the tariffs were ended. [See NAFTA & INTER-AMERICAN TRADE MONITOR, July 12, 1996.] Aaron Nathans, "NAFTA Decision Angers Farmers," ASSOCIATED PRESS, July 19, 1996; "U.S. Loses Nafta Tariff Dispute," FINANCIAL TIMES, July 17, 1996; "Canada Wins Dairy Trade Ruling," STAR TRIBUNE, July 17, 1996; Jerry Hagstrom, "Agriculture Secretary Seeks Elimination of Farm Subsidies," AGWEEK, July 22, 1996; "U.S. Sees Little Hope of Reversing NAFTA Dairy, Poultry Ruling," INSIDE U.S. TRADE, July 19, 1996. CANADIAN GRAIN PRODUCERS REBEL As Alberta grain farmers continued trucking their wheat across the border to the United States in deliberate violation of Canada's grain marketing laws, the government's Western Grain Marketing Panel unanimously recommended major changes in the Canadian Wheat Board (CWB). The nine-member panel, appointed last year by agriculture minister Ralph Goodale, recommended on July 9 that farmers be allowed to choose to remove at least 25 percent of their sales from CWB's pooling system, although sales would still be made through the CWB. Organic grain and feed barley export sales would be moved to an open market system, while malting barley would remain under the CWB. A board of directors, with a majority elected by farmers, would replace the current government-appointed CWB commission. Goodale says that grain producers have until August 31 to submit comments on the panel's proposals. The status of the CWB has been particularly controversial since grain prices in the United States are now up, well above the pooled amount paid by the CWB. The CWB was established during the Depression to pool and market western Canadian grain at guaranteed prices. Farmers recently have held public demonstrations and defied federal laws by exporting wheat and barley privately, with some ending up in court and subject to heavy fines. Bernard Simon, "Experts Urge Easing of Canada's Grain Monopolies," FINANCIAL TIMES, July 10, 1996; Aviva Freudmann, "Alberta Farmers Defy Grain Export Law," JOURNAL OF COMMERCE, July 11, 1996; Barry Wilson, "Farmers Get Last Word Before Minister's Time of Decision," WESTERN PRODUCER, July 11, 1996; Ian Elliott, "Panel Asks Canadian Government to Reduce CWB Powers," FEEDSTUFFS, July 15, 1996; Barry Wilson, "Marketing Panel Calls for Farmer-Run Wheat Board," WESTERN PRODUCER, July 11, 1996; Lisa Kassenaar, "Farmers Want Freedom," AGWEEK, June 3, 1996. . CORN SCANDAL IN MEXICO Mexico's ruling Institutional Revolutionary Party (PRI) shut down a congressional investigation that had linked President Ernesto Zedillo to questionable payments made to the Maseca corn-flour company during the administration of Zedillo's predecessor, President Carlos Salinas. The nine PRI members of the congressional commission investigating official malfeasance voted on July 17 to cancel the investigation, two weeks after the Zedillo link was made public by Adolfo Aguilar Zinser, an independent opposition deputy on the commission. Maseca, the dominant corn-flour producer in Mexico, benefited from a July 1990 government decision to favor corn-flour producers over the traditional method of making tortillas from corn dough. The company is owned by a close political ally, billionaire Roberto Gonza'lez Barrera, who is known in Mexico as "the king of tortillas." Maseca had sought damages from the Mexican government after a delay in payment of government subsidies in 1987-88, and a final agreement for payment of $17 million was reached in October 1988. Later Maseca sought an additional $7 million payment. Despite repeated legal opinions against Maseca, the $7 million addition was eventually approved and paid. According to the memorandum unearthed by the committee, then-Budget Minister Zedillo said he had no authority to make the decision to pay Maseca, but would find a way to make the payment if someone else authorized it. Then- Commerce Secretary Jaime Serra Puche supported the payment and it was approved by the board of the government food-distribution agency, Conasupo, then headed by Raul Salinas. Both Mr. Zedillo and Mr. Serra maintain that there was nothing illegal about the payment. "Maseca Investigation Leads to Zedillo," MEXICO UPDATE, July 10, 1996; Anthony DePalma, "Corruption Commission in Mexico Ties Zedillo to Disputed Payment," NEW YORK TIMES, July 5, 1996; Anthony DePalma, "Zedillo's Role in Payment is Defended," NEW YORK TIMES, July 6, 1996; Julia Preston, "Mexico's Ruling Party Cuts Off Investigation Involving Zedillo," NEW YORK TIMES, July 19, 1996. PEASANT REBELLION OR EXCUSE FOR REPRESSION? After a surprise debut on June 28 at a memorial service for 17 campesinos killed in the Aguas Blancas massacre last year, the Revolutionary Popular Army (EPR) seems to have vanished from sight again. While Mexican politicians ranging from Interior Minister Emilio Chuayffet to Cuauhtemoc Ca'rdenas of the opposition Democratic Revolutionary Party expressed skepticism about the credentials of the new group, others noted that the crisp uniforms, good weapons, and military bearing of the masked guerrillas indicated a well- financed organization. Mexican military and police officials responded to the EPR's appearance with major mobilizations in Guerrero and at least six other states, mostly in southern and central Mexico with large indigenous and campesino populations. Guerrero itself is a state with a long history of guerrilla organization and poverty. The army arrested several members of the militant Southern Sierra Campesino Organization (OCSS), charging them with membership in the EPR. Others arrested belong to the non-violent Organization of Villages and Communities of Guerrero (OPCG). Some prisoners were held incommunicado and tortured for days before the army acknowledged that they were in custody. On July 14, riot police broke up a campesino protest in Chilpancingo, the capital of Guerrero. Forty-nine of the demonstrators, who were demanding freedom for OCSS members jailed for alleged EPR ties, were injured by club-swinging police. The OCSS denies having any connection with the EPR. OCSS spokesperson Rocio Mesino said on July 4 that they don't know the EPR and that "it's not clear what its goals are and the repression is against us. We think it may be a group set up by the government itself to justify the repression, or it may be a group to defend the people. We don't know what's going on . . ." "Guerrillas With Clean Boots? Very Odd . . . ," REUTER, July 16, 1996; "Mexican Police Break Up Protest, 49 Hurt," REUTER, July 16, 1996; "Intensive Army Presence in South-Central Mexico," WEEKLY NEWS UPDATE ON THE AMERICAS, July 14, 1996; "Guerrero Armed Group Remains a Mystery," WEEKLY NEWS UPDATE ON THE AMERICAS, July 14, 1996; "Fear for Safety/Fear of Torture," AMNESTY INTERNATIONAL, July 18, 1996; "Guerrero Update," MEXICO UPDATE, July 17, 1996; "As New Guerrilla Emerges, Guerrero Goes to War," MEXICO BARBARO, July 7-14, 1996. FARM WORKERS RIOT On July 4, between 800 and 1,000 migrant farm workers in the San Quintin Valley of Baja California rioted, destroying four police cars and 25 local businesses in the town of La'zaro Ca'rdenas. The workers began a protest over the failure of the Santa Anita ranch to pay them for three weeks. After police suppressed the riot, arresting at least 65 workers and beating others, Mexican army troops were also sent to the area. Governor Hector Teran said the ranch had had problems with its bank, and suggested that radical group may have stirred up the workers. Many of the farm workers are Mixtec Indians from the state of Oaxaca, and about 35 percent are under 14 years of age. Legal protections often are ignored by employers. The 3.6 million migrant farm workers in Mexico typically earn 22 pesos, less than three dollars, per day, compared to an average of $32 per day for migrant farm workers in the United States. About 40 percent of the farm workers are indigenous. "Farm Laborers Protest Becomes Riot in San Quintin Valley, Baja California," MEXICAN LABOR NEWS AND ANALYSIS, July 16, 1996; Matilde Pe'rez, "Marginacio'n Juri'dica de Jornaleros por Intereses Creados, Dice Pronasol," LA JORNADA, July 22, 1996. HEALTH SCARE OVER BERRIES Outbreaks of intestinal illness that sickened about 1,000 people in 20 U.S. states, the District of Columbia, and Ontario, Canada during May and June were blamed first on California strawberries and then on Guatemalan raspberries. The illness was caused by a microscopic parasite, cyclospora, which is believed to enter the food supply through tainted water used for irrigation. Identifying the source of the parasite is difficult because it takes a week or more for a person to become sick and investigators must rely on patients' recollection of what they ate at least a week earlier. In July, the U.S. Centers for Disease Control and Prevention said U.S. investigators traced 21 cases or clusters of cases of cyclospora back to Guatemalan raspberries. Guatemalan berry growers said they have tested berries and have not found any evidence of cyclospora. Since June 22, all Guatemalan raspberry shipments to the United States have been cleared by the U.S. Food and Drug Administration before entry. Guatemalan growers send 1.8 million pounds of fresh berries a year to the United States, Canada and Europe. According to the California Strawberry Commission, California strawberry growers, who produce 80 percent of the strawberries consumed in the United States, lost more than $20 million when Texas health officials blamed California strawberries for the outbreak. The Texas Department of Health warning, issued on June 8 and lifted on June 23, is blamed for a nationwide 15 percent drop in strawberry sales during June. Canadian officials also warned against consumption of U.S. berries. Fiona Ortiz, "Guatemala Growers Hope TV Will Allay Berry Fears," REUTER, July 12, 1996; "Guatemala Defends Its Berries," REUTER, July 19, 1996; "Strawberry Warning Costs Growers Millions," NEW YORK TIMES, July 21, 1996; Aviva Freudmann, "Canadian Health Officials Are Warning Consumers to Avoid U.S. Berry Imports," JOURNAL OF COMMERCE, July 2, 1996. CANADIAN FIRM TARGETED IN ANTI-CUBA MOVE On July 10, the U.S. State Department announced sanctions against Toronto-based Sherritt International Corporation under Title IV of the Helms-Burton law that further strengthens the U.S. trade embargo against Cuba. The top nine executives of Sherritt and their immediate families were barred from entering the United States, in retaliation for Sherritt's two-year-old nickel mining joint venture in Cuba, which involves a state-owned nickel mine expropriated from New Orleans-based Moa Bay after the 1959 Cuban Revolution. Sherritt characterized the law as "very offensive" and said it would continue to do business with Cuba. The Clinton administration did concede some ground to its allies, agreeing to suspend application of the law's controversial Title III, which allows U.S. citizens to sue foreign investors in U.S. courts for using nationalized properties in Cuba. More than 5,911 U.S. claimants have been certified by the U.S. government, but only about the top 1,000, with claims in excess of $50,000, would be eligible to sue. The suspension of Title III will last until February 1, 1997, falling far short of the complete waiver of Title III sought by U.S. allies, U.S. business groups, and Clinton administration foreign policy and trade advisers. One senior Clinton administration official said that the president has chosen to use the Helms-Burton law as a "lever -- not a sledgehammer." Cuban Foreign Ministry official Carlos de Cossio said that the suspension "will not change the economic effects of the legislation nor its future repercussions on the country," but also noted that the Helms-Burton law will not stop Cuba's current economic recovery. After a fall in all economic indicators from 1990-1993, the Gross National produce rose by 0.7 percent in 1994 and 2.5 percent in 1995, and increased by seven percent in the first quarter of 1996, compared to the same time period in 1995. President Clinton told U.S. allies that the suspension will be lifted unless they work harder to punish Cuba. Dutch banking and insurance company ING Group said it will not renew a $30 million credit to the Cuban sugar industry, and U.S. officials said another bank and a sugar broker may stop lending to the Cuban sugar industry. The European Union, however, is considering four options to retaliate against the United States for its Cuban sanctions: challenging the sanctions before the World Trade Organization; restricting visas or work permits for U.S. executives; allowing countersuits against U.S. firms' European subsidiaries by European firms hit by U.S. sanctions; and establishing a watch list of U.S. firms filing actions against European firms in Cuba. Jim Lobe, "Clinton Delays Lawsuit Provisions in Helms- Burton," INTERPRESS SERVICE, July 16, 1996; Richard Lawrence, "Clinton Waters Down Cuba Sanctions," JOURNAL OF COMMERCE, July 17, 1996; Dalia Acosta, "Clinton's Postponement Makes No Change, Says Government," INTERPRESS SERVICE, July 17, 1996; "U.S. Bars Canadian Firm Under Helms-Burton Act," WEEKLY NEWS UPDATE ON THE AMERICAS, July 14, 1996; Carla Anne Robbins and Josi de Cordoba, "Clinton Puts Cuba Lawsuits on Hold," WALL STREET JOURNAL, July 17, 1996; Bruce Barnard, "EU Maps Retaliation Against U.S. Over Cuba," JOURNAL OF COMMERCE, July 16, 1996; Arthur Gottschalk, "In Cuba, A Tricky Question of Ownership," JOURNAL OF COMMERCE, July 15, 1996. TRUCK TALKS CONTINUE As talks between U.S. law enforcement agencies and representatives of Mexican truckers continued, Mexican truckers agreed not to resume the strike begun on June 24, averting a threatened stoppage at the Pharr-Reynosa international bridge, a key agricultural transport point. U.S. federal, state and local law enforcement agencies agreed not to return cargo to Mexico because of a truck's safety violation, to set up a repair lot at the Pharr location, and to limit inspections so that trucks would not be subject to multiple inspections by different agencies on the same day. Meanwhile, public and private sectors in Canada, Mexico and the United States are discussing ways to speed clearance of vehicles moving across NAFTA borders. The North American Trade Automation Prototype or NATAP is set for testing beginning on September 9, using electronic data interchange and other technologies to allow pre-clearance of transborder traffic, thereby reducing financial and environmental costs of trucks idling in line while waiting for border clearance. While NATAP would benefit shippers of auto parts and inputs needed in manufacturing, it would not help agricultural produce warehousing and distribution centers in cities such as Nogales, Arizona and Hidalgo- McAllen, Texas. Mexican customs brokers on the U.S. side of the border actually would lose business, since trucks would not need their inspection and transshipping services. Kevin G. Hall, "Traders See Hopeful Signals in Talks With Mexican Truckers," JOURNAL OF COMMERCE, July 15, 1996; "Mexican Truckers Halt Strike," THE PACKER, July 8, 1996; Kevin G. Hall, "Public, Private Sectors Brainstorm on Border Crossing Plan," JOURNAL OF COMMERCE, July 12, 1996; Kevin G. Hall, "Public, Private Sectors Brainstorm on Border Crossing Plan," JOURNAL OF COMMERCE, July 12, 1996; Kevin G. Hall, "Nafta Traders Gear Up for Electronic Clearance," JOURNAL OF COMMERCE, June 27, 1996. RESOURCES/EVENTS Reforming Mexico's Agrarian Reform, edited by Laura Randall. Columbia University Seminars series. Spring 1996. 320 pages. Order from M.E. Sharpe, Inc., 80 Business Park Drive, Armonk, NY 10504. Telephone 800/541-6563 or fax 914-273-2106. Hardcover $69.95; paper $24.95. Twenty-five U.S. and Mexican scholars survey and analyze Mexico's agrarian reform, including history, economic consequences of land reform, agrarian organizations, politics, land use and environmental issues, and migration. ____________________________________________ 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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