From iatp@igc.apc.org Fri Jan 3 00:57:13 1997 Date: Thu, 22 Aug 1996 09:46:52 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 8-23- NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy August 23, 1996 Volume 3, Number 16 __________________________________________ Headlines: - CANADIAN WHEAT BOARD ATTACKED, DEFENDED - FARM, BUSINESS DEBT RELIEF IN MEXICO - PRIVATIZATION, FOREIGN INVESTMENT CONTINUE IN MEXICO - NAFTA ADVISORY PANEL ON FARM GOODS PLANNED - PRIVATIZATION, FOREIGN INVESTMENT CONTINUE IN MEXICO -SEAWAY PRIVATIZATION AHEAD - MEXICO WELCOMES END OF TUNA BAN - TRUCKING NEGOTIATIONS RESUME - MEXICAN CORN IMPORTS UNCERTAIN __________________________________________ CANADIAN WHEAT BOARD ATTACKED, DEFENDED A month after the Western Grain Marketing Panel recommended major changes in the Canadian Wheat Board (CWB), supporters and opponents of the CWB are loudly lobbying for their positions. By the end of the first week in August, a flood of letters inundated the office of Agriculture Minister Ralph Goodale. Opponents of the CWB charged that the Canadian National Farmers Union was orchestrating the pro-CWB lobbying effort, while NFU executive secretary Darrin Qualman replied that "the vast majority of farmers support the board and should say so." In addition to urging members to write to Goodale, the NFU scheduled a series of pro-CWB demonstrations on so-called wheat board Wednesdays. The Wheat Growers Association expressed disappointment at the government's request for more farmer input and its failure to immediately implement the panel recommendations. While the province of Alberta challenged the CWB in court, arguing that, as a provincial government and not a private individual, it should be allowed to market grain for export, Saskatchewan prepared to intervene in the challenge on the side of the CWB. CWB communications director Bob Roehle said panel recommendations would create a de facto dual market for wheat, with the pooled price consistently looking lower than the cash price. He noted that the proposal for removing unlicensed and organic wheat from the board's jurisdiction ignores the fact that unlicensed varieties of wheat and licensed varieties look the same, as do organic wheat and non-organic wheat. Nothing would prevent licensed grain from being passed off as unlicensed and exported outside the board. The CWB and the Canadian Grain Commission joined in warning that allowing private sale of unlicensed wheat and of feed barley could result in misrepresentations that would jeopardize Canada's grain quality control system. A panel of agricultural economists from the University of Saskatchewan agreed that exemption of unlicensed wheats was a bad idea, but recommended that the government move quickly to create a new, farmer- controlled governance system for the CWB. The economists also criticized the panel for ignoring the actual operation of the market system and focusing instead on an idealistic notion of producer freedom. Montana Farmers Union executive director George Paul warned that grain from Alberta could flood into Montana if Alberta wins its case against the CWB. Such a flood, said Paul, would "really rock the boat," leading to substantial protest by Montana farmers. Alan Bergman, president of the North Dakota Farmers Union, predicted that if panel recommendations for open marketing of Canadian feed barley are implemented, either feed or malting barley from Canada will be imported and used in the United States as malting barley, taking away U.S. markets. Mark Watne, a North Dakota Farmers Union member, said that he would like to see a wheat pooling system in the United States, and complained that Export Enhancement Program grain subsidies "served to depress world prices and put money in the grain companies' pockets, not ours." Adrian Ewins, "CWB Says It is Doomed by Panel Report," WESTERN PRODUCER, July 18, 1996; Barry Wilson, "Proposals Could Stir U.S.-Canada Tensions," WESTERN PRODUCER, July 18, 1996; Michael Raine, "U.S. Farmer Speaks Kindly of Board," WESTERN PRODUCER, July 18, 1996; Karen Briere, "Saskatchewan May Take CWB Side in Court Battle," WESTERN PRODUCER, August 1, 1996; Mary MacArthur and Karen Briere, "U.S. Farm Group Warns of Border Tensions," WESTERN PRODUCER, August 1, 1996; Adrian Ewins, "Wheat Board Factions Vie for Goodale's Ear," WESTERN PRODUCER, August 8, 1996; Barry Wilson, "Marketing Panel Letters Turning to Flood," WESTERN PRODUCER, August 8, 1996; Adrian Ewins, "Let Elected CWB Decide on Future Rules: Study," WESTERN PRODUCER, August 8, 1996; Adrian Ewins, "Unlicensed Wheats Should Remain Under CWB: Grain Commission," WESTERN PRODUCER, Augsut 15, 1996. FARM, BUSINESS DEBT RELIEF IN MEXICO In late July, the Mexican government announced a debt relief program for farmers, which is similar to earlier programs for credit card and income tax debt forgiveness. The $3.8 billion plan will provide a 40- percent discount on monthly loan payments for debtors who owe up to $65,000 and lower discounts for the 11 percent of farmers with larger debts. Agriculture represents 17 percent of the banking sector's overdue loans, about $8.7 billion. Banks that participate in the plan must also pledge to lend more to farmers. Another government plan will benefit some 369,000 companies by providing discount capital and interest rates and by extending repayment schedules over a 10- year period. A recent study by the Mexican Private Sector Studies Center showed that four out of five company executives feel the government debtor support plans were too little and too late. El Barzo'n, a national debtors movement, called on the government to cancel debts instead of restructuring them. El Barzo'n held a convention in July at the headquarters of the Zapatista National Liberation Army in La Realidad, and the two groups announced an "alliance" and "sibling relationship" for mutual defense. The International Monetary Fund approved a six-month extension of Mexico's line of credit to February 1997, at the request of the Mexican government. Mexico has used $12.78 billion of the $17.64 billion approved by the IMF as part of the IMF-U.S. Treasury bailout in February 1995. A total of $98.17 billion in Mexican public and private foreign debt will come due by the year 2000. The Bank of Mexico predicts an exchange rate of slightly more than 8 pesos to the dollar by the end of 1996, with the year with 25 percent inflation and gross domestic product (GDP) growth of three percent for the year. A recent Standard and Poors study showed the total cost of the Mexican bank bailout at $26 billion, the equivalent of 12 percent of Mexico's 1995 GDP. Kevin G. Hall, "Mexican Farmers to Get Debt Forgiveness," JOURNAL OF COMMERCE, July 24, 1996; "Mexico Offers Relief for Its Indebted Farmers," FARM AND RANCH NEWS, August 2, 1996; Diego Cevallos, "New Debtor Support Plan Criticized," INTERPRESS SERVICE, August 15, 1996; "New Leaders and Alliances on the Mexican Left," WEEKLY NEWS UPDATE ON THE AMERICAS, August 4, 1996; "IMF Extends Credit Period," MEXICO UPDATE, August 9, 1996; "Costs of Banking Bailout Grow and Grow," MEXICO UPDATE, August 9, 1996. NAFTA ADVISORY PANEL ON FARM GOODS PLANNED A ten-member, tri-lateral advisory committee will focus on establishing systems to resolve private commercial disputes for agricultural goods, particularly perishable fruits and vegetables. The committee, to be established under Article 707 of NAFTA, may be operational by autumn. This committee will operate separately from the broad-ranging advisory committee on private commercial disputes, which is already preparing recommendations for the next NAFTA Commission meeting. "NAFTA Advisory Panel on Private Disputes on Farm Goods to be Set Up," INSIDE U.S. TRADE, July 10, 1996. PRIVATIZATION, FOREIGN INVESTMENT CONTINUE IN MEXICO On August 11, Mexico opened long-distance and international telephone service to competition by long- distance providers on their own networks, with interconnection to the former Telmex network to follow early next year. The government also announced creation of a new Federal Telecommunications Commission in August to oversee the opening of long-distance and international service to the private sector. The Communications Ministry still maintains direct control over concessions and permits, as well as responsibility for setting telecommunications policy and regulating investment in satellite technologies. Privatization of the national railroad and of ports began in May. A leading rail bidder is a partnership between Transportacisn Maritima Mexicana (TMM), Mexico's largest steamship line, and Kansas City Southern Industries. TMM is also a major player in the port privatization bidding. Petrochemical privatization, opposed by many Mexicans as sale of the national heritage, is on hold. Pemex has symbolized Mexican sovereignty since 1938, when the government seized British and U.S.-owned oil wells and facilities and created a state petrochemical monopoly. But sovereignty is not the only issue. Miguel Machorro, spokesperson for the National Oil Movement, charges that privatization of Mexico's 61 petrochemical plants will result in the laying off of 30,000 workers. Pemex has already slashed its payroll from 210,000 in 1987 to about 106,000 today. The Mexican government estimates the value of the plants at $2 billion, while the opposition says they are worth $10 billion. Mexico sold 24 public enterprises between 1985 and 1994, taking in $20.4 billion. The International Monetary Fund and the United States are demanding continuing privatization in exchange for the billions of dollars in credit extended to Mexico during the 1994-95 peso crisis. Kevin G. Hall, "Mexico Forms Telecom Regulatory Panel," JOURNAL OF COMMERCE, August 12, 1996; Kevin G. Hall, "Mexico Turns a Page in Telecom History," JOURNAL OF COMMERCE, August 9, 1996; Kevin G. Hall, "Mexico Edges Toward Port Privatization," JOURNAL OF COMMERCE, May 31, 1996; Kevin G. Hall, "Rail Privatization Begins in Mexico," JOURNAL OF COMMERCE, June 11, 1996; Diego Cevallos, "Privatization Drive Stuck in Low Gear," INTERPRESS SERVICE, June 16, 1996; Nick Anderson, "Mexican Oil Privatization is Sensitive Issue," ASSOCIATED PRESS, June 19, 1996; "Pemex Overhaul Sparks Uproar in Company Towns in Mexico," LOS ANGELES TIMES, May 5, 1996. SEAWAY PRIVATIZATION AHEAD The Canadian Transport Ministry said in July that a non- profit corporation formed by Canadian users of the 2,400 mile St. Lawrence Seaway will take over the daily management of the system's 13 Canadian-owned locks. The government will retain ownership of the assets and responsibility for major repairs and upgrades for the present. The U.S. government runs the Seaway's two U.S.-owned locks, and U.S. Saint Lawrence Seaway Development Corporation administrator David Sanders expressed apprehension about the Canadian changes. He said that U.S. ports, shippers and labor unions worry about the Canadian group "advantaging one type of trade or commodity movement or ship over another." The United States wants to establish a binational government agency to run the seaway. In August, the United States and Canada created a working group to "explore a more integrated and cooperative approach" to Seaway management. Aviva Freudmann, "Canada Moves Closer to Privatizing Seaway," JOURNAL OF COMMERCE, July 26, 1996; Barry Wilson, "Canada, U.S. Explore Joint Seaway Management," WESTERN PRODUCER, July 4, 1996; Paul F. Conley, "Binational Study Set on Seaway Future," JOURNAL OF COMMERCE, August16, 1996. MEXICO WELCOMES END OF TUNA BAN A year after twelve nations, including the United States, agreed to reforms designed to keep dolphins from being killed in the circular, mile-long nets used to catch tuna, the U.S. House of Representatives approved lifting the six-year embargo on tuna fish imports. Some environmental groups still oppose the lifting of the embargo, but Greenpeace and the National Wildlife Federation agreed to the change, though 85 other environmental groups still opposed it. The United States had banned use of the circular nets by U.S. fishers and banned tuna imports from countries that used the nets. An estimated 130,000 dolphins were killed each year prior to the ban, but the number of deaths is now below 5,000, according to the U.S. Commerce Department. Under the new legislation, canneries can use the "dolphin safe" label as long as independent observers on fishing boats certify that no dolphins were killed in the catch. The embargo cost 27,000 jobs in Mexico and reduced tuna catches by more than 45 percent. Mexico won a case against the U.S. ban brought under the General Agreement on Tariffs and Trade. Mexican Fishery subsecretary Carlos Camacho predicted an increase in tuna fishing revenue from $70-90 million and immediate reinstatement of 6,000 workers. Nancy Dunne, "U.S. Close to Lifting Ban on Tuna Imports," FINANCIAL TIMES, August 2, 1996; Diego Cevallos, "Mexico Welcomes Imminent End of U.S. Tuna Ban," INTERPRESS SERVICE, August 1, 1996; "House Passes Bill to Lift Tuna Embargo, Change 'Dolphin Safe' Label," INSIDE NAFTA, August 7, 1996. TRUCKING NEGOTIATIONS RESUME U.S. Secretary of Commerce Mickey Kantor and Mexican Secretary of Commerce Herminio Blanco, meeting in San Antonio in early August, announced the resumption of negotiations on the problem of Mexican trucks crossing the northern border and predicted a prompt resolution. The U.S. Teamsters Union resumed its campaign against Mexican trucks, accusing Mexican trucking firms of sending poorly-maintained vehicles and untrained drivers across the border, and calling for renegotiation of the sections of NAFTA that allow cross-border trucking. Mexican truckers accuse Texas law enforcement of racism and rough treatment. U.S. safety inspectors have increased inspections of truckers at U.S. border cities, cracking down on drayage haulers, which are generally owned by customs brokers or independent owner-operators. The trucks that would gain access under the NAFTA provisions are largely big trucking companies involved in Mexico's long-haul market and headed for cities such as Dallas or Houston. Mexico argues that these trucks are substantially more modern than the drayage haulers. Alva Sensek, "Still No Trucks," EL FINANCIERO, August 12-16, 1996; Kevin G. Hall, "Truck Policy Discord Disrupts Border," JOURNAL OF COMMERCE, July 30, 1996. MEXICAN CORN IMPORTS UNCERTAIN Mexican Agriculture Minister Francisco Labastida said in early August that corn imports will be cut so that domestically-grown grains can be more easily sold. While giving no details on cuts in the existing 8.2 million tons of 1996 allocated corn import quotas, Labastida said that the Conasupo, a government agency that buys grain, would not exercise 600,000 tons allocated to the second half of 1996. Northern Mexico producers have 550,000 tons of sorghum in warehouses and are having difficulty selling it because of the record volume of feed corn imports. Gary Krug, President of the Corn Marketing Program of Michigan, told Michigan farmers in July that corn exports to Mexico have increased by 50 percent since the beginning of NAFTA and predicted continued growth in the market. Norval Francis, Jr., Minister-Counselor for Agricultural Affairs at the U.S. Embassy in Mexico, called Mexican agriculture "weak compared to the United States," and encouraged U.S. producers to plan on selling more to Mexico. Chris Aspin, "Mexico's Labastida Says to Cut Corn Import Quotas," REUTER, August 5, 1996; "Mexico Wants Michigan Crops," THUMB FARM NEWS, July 29, 1996. RESOURCES/EVENTS "Better Neighbors: A Blueprint for Just U.S. Relations With Latin America and the Caribbean," edited by Lisa Haugaard. June, 1996, Latin America Working Group. 46 pp. Order from Latin America Working Group, 110 Maryland Avenue NE, Box 15, Washington, DC 20002. Phone 202/546- 7010; fax 202/543-7647. E-mail: lawg@igc.apc.org. $6.00. Coalition of human rights, religious, grassroots, policy and development organizations offers model for partnership in peaceful, equitable development to replace the corporate approach focused almost exclusively on free trade. "Doing Business With the Dictators: A Political History of United Fruit in Guatemala, 1899-1944," by Paul J. Dosal. Scholarly Resources Inc., 1993. 256 pp. Order from Scholarly Resources Inc., 104 Greenhill Avenue, Wilmington, DE 19805-1897. $45 cloth/$16.95 paper. Based on research among company documents acquired from the Justice Department under the Freedom of Information Act, this book looks at how United Fruit Company became Guatemala's largest private landowner and biggest employer by 1944. ____________________________________________ 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.