From iatp@igc.apc.org Wed Sep 18 18:39:50 1996 Date: Wed, 18 Sep 1996 11:58:14 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 9-20- NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy Friday, September 20, 1996 Volume 3, Number 18 ________________________________________ Headlines: - NEW DAIRY/POULTRY TRADE INITIATIVES - USDA PROMOTES AG SALES TO MEXICO - FTAA ISSUES BECOMING CLEARER - NAFTA/ENVIRONMENTAL ISSUES RE-EMERGE - CUBA SANCTIONS STILL AT ISSUE - BANANAS, NAFTA, FTAA ON CARIBBEAN AGENDA ________________________________________ NEW DAIRY/POULTRY TRADE INITIATIVES After the binational panel considering whether Canadian dairy and poultry tariffs comply with NAFTA had issued a preliminary ruling upholding the tariffs, the United States made comments to the panel that included new charges against Canada. The new U.S. allegations are that Canada placed some poultry and dairy items, including frozen whole chicken, fluid milk, ice cream, ice milk and yogurt on its list of supply-managed goods after the adoption of NAFTA. If the panel decides that the new U.S. arguments have merit, then the preliminary ruling might be altered to allow more negotiating room for the United States. While the present U.S.-Canada dispute focuses on the replacement of dairy and poultry import quotas with tariffs, dairy subsidies may also be on the table soon. On September 11, the Washington-based International Policy Council on Agriculture, Food and Trade recommended that the World Trade Organization (WTO) act to bring the dairy and sugar industries under free trade rules. Pressure from the European Union (EU), Canada, Japan and Switzerland kept dairy subsidies off the table during the General Agreement on Tariffs and Trade talks that led to the establishment of the WTO. The WTO is preparing the agenda for its first ministerial meeting in Singapore in December. "NAFTA Dairy-Poultry Panel Delayed by New U.S. Charges," INSIDE U.S. TRADE, September 6, 1996; Robert Evans, "World Trade Body Urged to Eye Dairy, Sugar Accords," REUTER, September 11, 1996. USDA PROMOTES AG SALES TO MEXICO The United States Department of Agriculture (USDA) began a new Supplier Credit Guarantee Program, authorized under the 1996 Farm Bill, to boost sales of U.S. agricultural products to Mexico. The program will begin by providing loan guarantees for purchases of $20 million in U.S. exports of fruits, vegetables, tree nuts, potatoes, wine, brandy, dairy products and ice cream. USDA Secretary Dan Glickman said the new program will eventually be used to extend credit to buyers of U.S. exports from other countries as well. Heather C. Jones, "USDA Utilizes New Trade Mechanism," FEEDSTUFFS, September 9, 1996. FTAA ISSUES CLARIFICATION STUDIED Small countries will suffer from loss of tariff revenues under the Free Trade Area of the Americas (FTAA), according to a preliminary background study prepared by the Economic Commission for Latin America and the Caribbean (ECLAC) for the FTAA working group on smaller economies. Smaller economies have less room for reducing government expenses and will have difficulty increasing tax revenue to compensate for loss of tariff income, at least in part because a strong private sector lobby resists taxation. Tariffs make up more than half of tax revenues in all Organization of Eastern Caribbean States countries. An Inter-American Development Bank (IDB) working paper called on Western Hemisphere nations to define quickly whether the FTAA will include agreements going beyond those of the World Trade Organization (WTO) or will simply remove intra-regional tariffs. The United States, Canada, Mexico, Chile, Colombia and Costa Rica have advocated stricter-than-WTO disciplines in such areas as investment, services and intellectual property. Brazil has led other nations in advocating that the FTAA not go beyond WTO disciplines but rather focus on free trade in goods in the hemisphere. The IDB paper also outlined four basic paths to formation of the FTAA: a two-track approach that divides countries into two groups according to the level of their commitment to free trade or a variation that would provide various levels of commitment in a "concentric circle" approach; a convergence of existing bilateral and subregional agreements into a single FTAA; accession of all countries to either NAFTA or Mercosur; or negotiation of a single regional accord that would co- exist with the varied integration agreements within the region. The FTAA working group on competition policy agreed at its mid-August meeting to begin identifying areas of commonality and difference in domestic competition laws of Western Hemisphere nations. The working group also requested that the Organization of American States Trade Unit compile an inventory of the application of countries' domestic competition laws by analyzing case law in each country. "Scope of FTAA Should be Defined Rapidly, IDB Paper Says," INSIDE NAFTA, August 21, 1996; Scott Otteman, "FTAA Group to I.D. Areas of Divergence in Competition Policy," INSIDE NAFTA, August 21, 1996; "Small-Nation Reliance on Tariff Funds Is FTAA Problem, ECLAC Says," INSIDE NAFTA, August 21, 1996. NAFTA/ENVIRONMENTAL ISSUES RE-EMERGE >From coral reefs to nuclear waste dumps, environmental issues crowd the agenda of the NAFTA bodies charged with implementation of the side accord on the environment. * At its third annual meeting in Toronto on August 1-2, the trinational Commission for Environmental Cooperation (CEC) agreed to draft regional action plans for PCBs, chlordane, DDT and mercury by October; to publish the first annual North American Pollutant Release Inventory in February 1997; to form a working group to develop enforcement strategies; to create a continental "rapid response system" to address disease outbreaks in migratory birds; and to work together to protect the habitat of the endangered Monarch butterfly. The CEC is headed by the chiefs of the U.S. Environmental Protection Agency, the Canadian Environmental Ministry and the Mexican Environmental Ministry and has a 30- person staff based in Montreal. * The CEC agreed in August to investigate whether the Mexican government was observing its own laws in allowing construction of a tourist complex near an environmentally sensitive coral reef at Cozumel. The complex would include a Caribbean port and a giant pier to accommodate tourist ships. The Mexican Center for Environmental Law, the Group of 11 and the Natural Resources Protection Committee all claim that the Mexican government did not carry out an environmental impact study required by Mexican law. Although Mexican President Ernesto Zedillo responded to complaints by designating the area as a national marine park, this designation does not halt development. The CEC has received four formal complaints of violations of the NAFTA environmental side accord and has thrown out all but the Cozumel complaint on technical grounds. * The Mexican Center for Environmental Law charges that developers, funded in part by the government tourism development agency, have killed baby alligators and smashed alligator eggs at the Marina Ixtapa resort on the Pacific Coast. The Guerrero state office of the Federal Prosecutor for Environmental Protection said it has no evidence of recent alligator kills, and did not have jurisdiction over such matters until December 1994. Although alligators are protected in Mexico, killing them is not an offense punishable by jail. Environmentalists claim that there were more than 2,000 alligators in the Ixtapa project area and that only 150 have been documented as relocated by developers. * U.S. congressional investigators criticized the North American Development Bank (NADBank) for failure to lend to poor communities on both sides of the U.S.-Mexico border during its first 18 months of operation. NADBank's mission is to provide loans for environmental projects. According to the congressional General Accounting Office (GAO), lack of basic water and sanitation services affect the well-being of many of the 10 million Mexican and U.S. citizens living along the border. NADBank officials say they need to take time to determine whether projects are viable. The GAO suggests that problems include lack of resources and know-how to deal with government red tape on the part of small, unincorporated "colonias" or neighborhoods; a Mexican constitutional ban on communities borrowing directly from foreign lenders; and NADBank's requirement that loans must be made at or above market rates. * The environmental group Greenpeace charged in early September that a nuclear waste dump planned for the Texas town of Sierra Blanca, just 16 miles from the Mexican border, poses a health hazard to residents on both sides of the border. The dump would be the largest facility for disposal of low-level radioactive waste from nuclear plants, hospitals and industries. According to Greenpeace, the site sits on an earthquake zone and may contaminate groundwater. Mexico's National Water Commission and Nuclear Safeguard Commission, relying on information furnished by U.S. officials, concluded that the dump poses no health hazard in Mexico. Two Mexican states, Coahuila and Chihuahua, oppose the dump. "NAFTA Body Accuses Mexico Over Threat to Coral Reef," REUTER, June 7, 1996; "Nafta Agency Looks at Mexican Port Project," EL FINANCIERO, August 12-16, 1996; Michelle Mittelstadt, "NAFTA-Environment," ASSOCIATED PRESS, August 6, 1996; "NAFTA Group Plans to Beef Up Green Laws," UNITED PRESS INTERNATIONAL, August 2, 1996; Aviva Freudmann, "Nafta Green Panel to Meet," JOURNAL OF COMMERCE, August 1, 1996; Aviva Freudmann, "Nafta Agency Probes Cozumel," JOURNAL OF COMMERCE, August 5, 1996; "Greenpeace Says Texas Nuclear Dump Unsafe for Mexico," REUTERS, September 6, 1996; Kevin G. Hall, "Mexico Knee- Deep in Gator Controversy," JOURNAL OF COMMERCE, July 23, 1996. CUBA SANCTIONS STILL AT ISSUE Despite a surprise visit from U.S. Ambassador to the United Nations, Madeleine Albright, leaders of the 12 Latin American and Caribbean nations of the Rio Group meeting in Bolivia in early September condemned the U.S. Helms-Burton law, which reinforced the U.S. trade sanctions against Cuba. "It is symptomatic that the United States has sent an ambassador as important as Mrs. Madeleine Albright, without a clear agenda, to a forum with which it has nothing to do," said an official of a Latin American government. An August 27 decision of the Inter-American Juridical Committee, a legal committee of the Organization of American States, determined that the U.S. Helms-Burton Act violates international standards on extra- territorial jurisdiction and on protection of property rights. The committee said that successful enforcement of a Helms-Burton claim "could itself constitute a measure tantamount to expropriation and result in responsibility of the claimant State." The committee said the United States "does not have the right to espouse claims by persons who were not its nationals at the time of injury," or to "attribute liability to nationals of third States" for claims against the Cuban government. In July European Union (EU) foreign ministers told the European Commission (EC) to find ways to retaliate against the United States for its implementation of the Helms-Burton anti-Cuba trade provisions. Retaliation could take the form of forbidding EU nationals and companies from complying with U.S. court rulings, allowing companies or individuals to counter-sue, or penalizing U.S. companies or citizens that sue under Helms-Burton. In September, the EC retaliation was broadened to include the D'Amato bill, which seeks to prevent foreign companies from investing in oil and allied industries of Iran and Libya. Juan Carlos Rocha, "'Summit for 'Democracy Without Poverty' Opens," INTERPRESS SERVICE, September 2, 1996; Juan Carlos Rocha, "U.S. Manoeuvres at the Cochabamba Summit," INTERPRESS SERVICE, September 2, 1996; "OAS Legal Panel Says Helms-Burton Violates International Norms," INSIDE U.S. TRADE, September 6, 1996; David Fox, "EU Widens Retaliation to U.S. Trade Measures," REUTER, September 15, 1996. BANANAS, NAFTA, FTAA ON CARIBBEAN AGENDA As the World Trade Organization (WTO) began consideration early this month of the United States complaint against the European Union (EU) banana regime benefiting Caribbean nations, Caribbean nations awaited both the WTO decision and the outcome of the U.S. elections. The United States and four Latin American countries (Guatemala, Honduras, Ecuador and Mexico) have challenged EU preferential treatment of African, Caribbean and Pacific (ACP) producers, which the EU defends as part of its obligations under the Lomi Convention granting preferences to former European colonies. The EU moved to exclude the U.S. from the WTO settlement panel because the U.S. does not export any bananas to Europe. The U.S. says it has legal right to complain because a U.S.-headquartered corporation, Chiquita, is a major exporter of Latin American bananas. The U.S. has blocked a request by ACP banana producers to give them full and direct participation in the proceedings. The U.S. argued successfully that only permanent government employees could attend the hearings, while lawyers for Caribbean states responded that their small island clients could not afford to retain full-time legal representation. Islands such as St. Lucia, St. Vincent and Dominica depend on banana exports to the European Union for between 50 and 60 percent of their total foreign earnings, according to Gordon Myers, European representative of the Caribbean Banana Exporters Association. The countries have a combined Gross Domestic Product of less than $1 billion, which is about one-fourth of Chiquita's annual gross revenues. The present U.S. Congress and administration seem to Caribbean countries to be unsympathetic to the plight of small Caribbean economies. Congress has refused to extend Caribbean Basin Initiative benefits or to grant parity (equal import treatment) with Mexico for Caribbean exports, and has moved to abolish Section 936 loans and grants to Caribbean countries, which totaled more than $300 million in 1994. Tiny Trinidad and Tobago has told the United States, Canada and Mexico that it wants to join NAFTA as soon as Chile is admitted. Jamaica has joined Trinidad and Tobago in signing intellectual property rights agreements and bilateral investment treaties with the United States to facilitate accession to NAFTA. Barbados, on the other hand, has decided to continue seeking parity with Mexico for Caribbean exports to the United States and Canada, but will not seek NAFTA membership. Instead, said Barbadian Prime Minister Owen Arthur, Barbados will wait until the Free Trade Area of the Americas is created in 2005. Barbados, Jamaica and Trinidad and Tobago are the most influential members of the 14-nation Caribbean Community (Caricom). The United States would prefer to negotiate trade terms and agreements with Caricom as a whole, instead of with individual Caribbean nations. Canute James, "Trinidad Knocks on Nafta's Door," FINANCIAL TIMES, August 28, 1996; Canute James, "Barbados Will Not Seek Membership in Nafta," JOURNAL OF COMMERCE, September 6, 1996. Yvette Collymore, "Caribbean Economies Approach Moment of Truth," INTERPRESS SERVICE, September 11, 1996; "WTO Banana Panel to Hold First Meeting Next Week," INSIDE U.S. TRADE, September 6, 1996; "European Union Presses to Exclude U.S. From WTO Banana Panel," INSIDE U.S. TRADE, August 16, 1996; Robert Evans, "Caribbean Legal Advisers Banned in WTO Banana Row," REUTER, September 10, 1996; Carolyn Henson, "Banana Trade War Feared," ASSOCIATED PRESS, September 9, 1996. RESOURCES/EVENTS "THE TIGER WITHOUT A JUNGLE: ENVIRONMENTAL CONSEQUENCES OF THE ECONOMIC TRANSFORMATION OF CHILE," Raye'n Quiroga Marti'nez and Saar Van Hauwermeiren. Institute of Political Ecology, Ecological Economics Program. 1996. 172 pp. Order from Institute of Political Ecology, Seminario 776, N~un~oa, Santiago, Chile. Fax 562-223- 4522. Email iep@huelen,reuna.cl. Translation and update of 1994 study called "EL TIGRE SIN SELVA" examines mining, forestry, fruit production and fishing and the social and environmental challenges arising from an economy based largely on export of unprocessed or slightly processed resources. Includes analysis of impact of global trade, including NAFTA and Mercosur. ____________________________________________ 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.