From iatp@igc.apc.org Wed Sep 4 18:29:31 1996 Date: Wed, 04 Sep 1996 11:34:14 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 9-6-9 NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy September 6, 1996 Volume 3, Number 17 __________________________________________ - DAIRY DECISION DELAYED - FOCUS ON PHYTOSANITARY REGULATIONS - HOG DUTIES CHALLENGED - BROOMS, PAPER, SHOES AT ISSUE - MEXICAN FEED COMPANY SOLD - JAPAN COURTS MEXICO, LATIN AMERICA - NAFTA LABOR ISSUES RE-EMERGE - CROSS-BORDER TRANSPORTATION PROMOTED, DELAYED __________________________________________ DAIRY, TOMATO DECISIONS DELAYED The panel set up to decide the NAFTA complaint by the U.S. government against Canadian poultry, dairy, egg and barley tariffs has delayed its final report from August 15 to September 15. The reason for the delay is not clear. In its initial report, released to the governments on July 15, the panel unanimously sided with the Canadian position, finding that the U.S. challenge contradicted U.S. agreements during NAFTA negotiations and the General Agreement on Tariffs and Trade. U.S. and Canadian officials submitted further arguments, but no change in the panel's ruling was expected. Since then, the United States and Canada have been rumored to be negotiating a resolution to their dispute, although officials in both governments deny the rumors. The U.S. Department of Commerce delayed its preliminary decision on Florida's tomato-dumping case against Mexico until October 7. The department's International Trade Administration will decide whether Mexican tomatoes were sold in the United States at prices below the cost of production or prices lower than in Mexico. If dumping is found, the United States may impose dumping duties on future Mexican tomato exports. Florida lost a similar case under Section 201 of the Trade Act before the International Trade Commission on July 2, but the standard for showing injury from imports in an anti-dumping case is less stringent. U.S. embassy officials in Mexico warned against pending legislation that would ease the way for Florida tomato growers to get future Section 201 relief against Mexico, saying that it could open a "Pandora's box" or retaliation against U.S. farm exports, including soybeans, corn, wheat, rice, dairy, beef, pork and poultry. Ian Elliott, "NAFTA Dairy and Poultry Panel Delays Final Report," FEEDSTUFFS, August 19, 1996; Barry Wilson, "Trade Ruling Firm in Rejecting U.S. NAFTA Challenge," WESTERN PRODUCER, August 15, 1996; "Officials Delay Ruling on Dumping Charges," THE PACKER, August 12, 1996; "U.S. Ambassador to Mexico Calls for Less Controversial Tomato Bill," INSIDE U.S. TRADE, August 23, 1996. FOCUS ON PHYTOSANITARY REGULATIONS Government and industry experts at the United Fresh Fruit and Vegetable Association's Washington Public Policy Conference on September 11-12 will focus on micro-biological hazards in fruits and vegetables and on a new NAFTA initiative to develop a trilateral commercial dispute resolution system for private disputes over agricultural goods. Concerns about food safety and about transmission of pests and/or diseases through agricultural exports remain at issue in disputes over sanitary/phytosanitary regulations affecting international trade. Among the ongoing disputes: * U.S, cherry growers in the Pacific Northwest, banned from exporting to Mexico since 1991 because of concerns about pest infestation, say that their product is being kept out of Mexico in retaliation for a U.S., ban on Mexican avocados, also based on concerns about pest infestation. But in July Mexican Ambassador to the U.S. Jesus Silva Herzog said that access for U.S. cherries was "very near." Arizona and Florida citrus fruits, also barred from Mexico for phytosanitary reasons, are also the subject of reconsideration, with Sunkist Growers pushing the U.S. Trade Representative to pressure Mexico to lift the ban on Arizona oranges. * The U.S. Department of Agriculture announced in August that it will continue the ban on Mexican avocados for at least another year in order to evaluate new evidence about risk from avocado-attacking insects entering the United States. * Chile remains closed to U.S. wheat for the remainder of 1996, due to continuing concerns over a wheat fungus in the southwestern United States. * The U.S., Mexico and Canada will review whether the NAFTA Sanitary/Phytosanitary Committee should be the venue for discussion of regulation of genetically-modified crops, including corn and cotton. Mexico is concerned about the spread of genetically altered corn and cotton grown in U.S. border states to Mexico. One U.S. official noted Mexico's sensitivity to anything that could alter its corn farming, saying that in Mexico, "Corn is like motherhood and apple pie." "NAFTA, Food Safety Top Forum's Agenda," THE PACKER, August 19, 1996; "U.S. Cherry Growers are Optimistic After Meeting Mexican Envoy," INSIDE NAFTA, July 24, 1996; William DiBenedetto, "U.S. Cherries May Find Cordial Mexican Market, JOURNAL OF COMMERCE, August 16, 1996; "Chile to Remain Closed to Imports of U.S. Wheat," JOURNAL OF COMMERCE, August 15, 1996; "NAFTA S/PS Forum to Weigh Option of Covering Biotechnology Issues," INSIDE NAFTA, August 7, 1996; Peter Tirschwell, "USDA Move Spells Relief for California Avocado Sector," JOURNAL OF COMMERCE, 8/30/96. HOG DUTIES CHALLENGED Canadian hog producers want to eliminate the duty deposits they currently pay on live exports to the United States, saying that they receive no trade-distorting subsidies. The U.S. Commerce Department will not review the duty levels for 1996-97 until 1999, due to a backlog in its system. Canadian hog exporters could receive refunds then, based on reductions in Canadian government programs, but the Canadian hog exporters do not want to wait three years for their money. U.S. hog producers want the duty to stay on the books as insurance against restoration of Canadian subsidies. Courtney Tower, "Canadian Swine Exporters Seek End to U.S. Border Fees," THE WESTERN PRODUCER, August 1, 1996. BROOMS, PAPER, SHOES AT ISSUE With Mexican exports of straw brooms to the United States tripled since NAFTA's enactment, the tiny U.S. straw broom industry has asked for reinstatement of the 32 percent tariff that formerly protected them. NAFTA provides for import of 1.2 million Mexican brooms without tariff, and imposition of a 22.5 percent tariff on any over that volume. Last year Mexico exported 4.6 million straw brooms, worth $7 million, to the United States. Libman, O'Cedar-Vining and Kellogg, which represent a little more than half of U.S. straw broom vendors, have petitioned the International Trade Commission for protection and the ITC has recommended that President Clinton raise the broom tariff to between 40 and 46 percent, reducing it gradually to between 16 and 25.5 percent over the next four years. Mexico threatens that it will retaliate by raising tariffs on wine, beer, flat glass and brandy. The chair of the U.S. Corn Broom Task Force, John Claassen, said that the U.S. corn broom industry provides "well-paid, highly skilled job opportunities for handicapped workers and former prison inmates," including more than 100 blind workers. The Mexican government rescinded a newsprint tariff hike in August, after U.S. government officials and industry executives challenged the increased duty imposed in late June. Maureen Smith, vice president of the American Forest & Paper Association, said the group hopes to persuade Mexico to end wood and paper tariffs earlier than the 10 year phaseout scheduled under NAFTA. U.S. shoe distributors had less luck in challenging the Mexican continuation of steep penalties against Chinese-made shoes. The compensatory 165-1,105 percent duties on Chinese footwear were imposed on December 30, 1993. U.S. footwear distributors and retailers make many of their shoes in China for export to the United States and re-export to other markets, including Mexico. Secofi, the commerce ministry, issued a preliminary ruling in late August, maintaining the current tariffs. John Maggs, "U.S., Mexico Swept Up in Trade Rift," JOURNAL OF COMMERCE, August 21, 1996; John Claassen, Letter to the Editor, JOURNAL OF COMMERCE, August 28, 1996; Kevin G. Hall, "U.S. Shoe Distributors Knock Mexican Penalties on China," JOURNAL OF COMMERCE, August 29, 1996; "Paper Industry to Press Mexico on Tariff Cuts," JOURNAL OF COMMERCE, August 27, 1996. MEXICAN FEED COMPANY SOLD Indiana-based Countrymark Cooperative, Inc. and Illinois- based Growmark, Inc. jointly purchased Malta Clayton, a leading producer of livestock feed in Mexico, from Unilever U.S. The purchase may result in expanded markets for U.S. grain in Mexico. Malta Clayton produces about 600,000 tons of livestock feed, 12.5 percent of the Mexican commercial livestock feed market. Countrymark has also recently formed a 50/50 joint venture with Archer Daniels Midland. Michael Howe, "Countrymark, Growmark Buy Mexican Firm," FEEDSTUFFS, August 26, 1996. JAPAN COURTS MEXICO, LATIN AMERICA Japanese Prime Minister Ryutaro Hashimoto visited Mexico, Chile, Brazil, Peru and Costa Rica in August, in a trip aimed at boosting trade and increasing business links. In 1995, Japan exported $19.7 billion worth of products to Latin America, showing a trade surplus of $7.8 billion. Japan has doubled investment in the region between 1990 and 1995 to $1.14 billion. Japanese businesspersons see opportunities in Mexico, since they could manufacture products there and export them duty-free to the United States. Japanese exports to Mexico were $3.6 billion last year. Japan granted Mexico credits worth $960 million for environmental and trade projects during Hashimoto's visit. "Among the countries in the Group of 7, Japan is the one that exports more capital than it takes in," noted Mexican President Ernesto Zedillo. Japan is Mexico's third-largest trading partner. Central American countries, encouraged by the first-ever visit by a Japanese prime minister, hope to increase technical cooperation, tourism, investment, and trade. "Japan Courts Mexico, REUTERS, August 23, 1996; Kevin G. Hall, "Zedillo, Hashimoto to Meet in Mexico," August 21, 1996; Coco Kubota, "Japan Firms See Opportunities in Latin Tour," JOURNAL OF COMMERCE, August 8, 1996; Maricel Sequeira, "The Pacific Rim Knocks on the Door," INTERPRESS SERVICE, August 26, 1996. NAFTA LABOR ISSUES RE-EMERGE In June, three U.S. and Mexican groups filed petitions with the U.S. National Administrative Office (NAO), a NAFTA tribunal, charging that Mexico's Federal Conciliation and Arbitration Tribunal has blocked free association rights of the former Fishing Ministry's union, SUSTP. SUSTP, which formerly represented fishery ministry workers, was replaced by a union loyal to the ruling Institutional Revolutionary Party in March 1995. The alleged violations stem from the Mexican government's reorganization of several ministries and an alleged conflict of interest in Mexico's Federal Conciliation and Arbitration Tribunal, which adversely affects independent unions. Mexico's Law of Federal Employees limits workers to creating one union in any single government entity. According to the petition by the U.S. based Human Rights Watch and International Labor Rights Fund and the Mexico-based National Association of Democratic Lawyers, the International Labor Organization has found this law in violation of international treaty obligations. If the petition is accepted by the NAO, it will go to the North American Agreement on Labor Cooperation council, which is made up of the labor ministers of the United States, Canada and Mexico. The Mexican NAO is currently considering a petition from Mexico's largest telecommunications union against U.S.-based Sprint. The petition alleges that Sprint closed a San Francisco subsidiary, La Conexio'n Familiar, in July 1994 to avoid a unionizing effort by 235 Sprint employees. Peter Zirnite, "Groups Using NAFTA to Challenge Mexican Labour Law," INTERPRESS SERVICE, June 15, 1996; "U.S. Officials Scrutinize New Charges Against Mexico's Labor Laws," INSIDE NAFTA, June 26, 1996. CROSS-BORDER TRANSPORTATION PROMOTED, DELAYED The former I-35 Corridor Coalition, now called North America's Superhighway Coalition, met in Monterrey, Mexico, in early August to promote designation of Interstate 35, which runs 1,500 miles from Duluth, Minnesota to Laredo, Texas, as the North American Free Trade Agreement's principal trade corridor. Texas, Kansas, Missouri, Oklahoma and Iowa back the designation, and a marketing drive to locate or relocate companies along the superhighway is expected. Craig Schoenfeld, a research analyst for Iowa House Republicans, called the coalition "a marketing tool for industry and business," which could bring lower-cost assembly business to Iowa. U.S. Assistant Deputy Secretary of the Treasury John Simpson, speaking to the I-35 coalition in Monterrey, harshly criticized the Mexican system of licensed customs brokers, saying that they warehouse and delay shipments for several days. Simpson urged Mexico to make full use of the North American Trade Automation Prototype (NATAP), which will provide electronic pre-clearance for cargo, drivers, payment of duties and verification of transport requirements, beginning on a trial basis in September. The Northern Plains I-29 Coalition is pushing for a network of fiber optic cables along this highway to track trucks and clear up congestion at U.S. borders with both Canada and Mexico. The I-29 corridor group says that I-29, which meets I-35 in Kansas City, MO, has seen 25 percent higher truck traffic since passage of NAFTA. I-29 is one of four interstate crossing points into Canada. Mexican truckers protesting alleged U.S. Customs delays in inspecting their cargo blockaded the busy Laredo crossing in mid-August in their third protest of the summer. "I'm sick of the problems, but people here are just sick of being pushed around," said Mexican trucking executive Roberto Quintanilla. U.S. Customs wants to move some traffic to an underused bridge 18 miles west of the Laredo crossing, but Mexican truckers say the roads to that bridge are bad. Many customs brokers are licensed in Tamaulipas, where the downtown bridge connects Mexico and Laredo, but not in the state of Nuevo Lesn, where the other bridge is. Mexican truckers are also angry about Operation Hard Line, a U.S. drug interdiction program, saying its increased inspections slow traffic unreasonably. Kevin G. Hall, "Superhighway Coalition Blazes Noticeable Trail," JOURNAL OF COMMERCE, August 7, 1996; "Interstate 29 Could Be International Trade Corridor," FARM & RANCH, August 2, 1996; Kevin G. Hall, "U.S. Slams Mexican Customs System," JOURNAL OF COMMERCE, August 7, 1996; Peter Fritsch and David D. Kirkpatrick, "Free Trade Hits Blockade on Texas Bridge," WALL STREET JOURNAL, August 23, 1996; Gregory S. Johnson, "Mexican Truckers Blockade Crossing," JOURNAL OF COMMERCE, August 16, 1996. RESOURCES/EVENTS A Cautionary Tale: Failed U.S. Development Policy in Central America, by Michael Conroy, Douglas Murray and Peter Rosset. Food First Development Studies, Lynne Riemer Publishers. 1996. Order from Subterranean Company, Box 160/265 S. 5th Street, Monroe, OR 97456. $45 + $4 S&H. Documents how USAID pushes Central American farmers into competing for niche markets with non-traditional agricultural exports such as passion fruit, broccoli and macadamia nuts, thereby destabilizing production of food crops for local consumption and intensifying inequities between small farmers and large landholders. Mexico: Labor Rights and NAFTA, Human Rights Watch/Americas. August, 1996. 30 pp. Order from Human Rights Watch, 485 Fifth Avenue, New York, NY 10017-6104. Telephone 212/972-8400; fax 212/972-0905. Email: hrwnyc@hrw.org. Includes overview of labor rights side agreement of NAFTA and complaint to the U.S. National Administrative Office on alleged Mexican government violations of the side agreement. Text of complaint submitted in Single Trade Union of Workers of the Fishing Ministry (SUSTP) case is appended to overview. ____________________________________________ 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.