From iatp@igc.apc.org Fri Oct 4 11:38:25 1996 Date: Fri, 04 Oct 1996 06:28:48 -0700 (PDT) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 10-4- NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy Friday, October 4, 1996 Volume 3, Number 19 ________________________________________ Headlines: - CANADIAN WHEAT BOARD DECISION NEARS - AG TRADE UP - AVOCADO, TOMATO DECISIONS STILL PENDING - BEEF TRADE NEWS - SECOND PRIVATE SUIT FILED UNDER NAFTA - COFFEE PRODUCERS MEET - RETALIATING FOR HELMS-BURTON - COLOMBIAN FLOWER IMPORTS THREATENED ________________________________________ CANADIAN WHEAT BOARD DECISION NEARS Digging out from under an avalanche of 10,000 letters and fending off accusations from warring factions, Canadian Agriculture Minister Ralph Goodale is preparing to decide on recommendations made by the Western Grain Marketing Panel in July. The panel recommended ending the Canadian Wheat Board's (CWB) export monopoly on feed barley, organic wheat and unlicensed wheat, and allowing farmers to sell at least 25 percent of their wheat outside the CWB's pool accounts. Goodale initially indicated that he would reject any weakening of the CWB's monopoly but might make changes in the CWB governance and pricing policies. Goodale will submit proposed legislation to Parliament, based on the report and the subsequent comments. CWB chief commissioner Lorne Hehn predicted that the world wheat market will expand by 20 percent by the year 2005, and said that wheat exporters will need to plant more acres to meet increased demand. CWB studies show the United States and Canada making up 55 percent of the world wheat export market by 2005. The United States will continue to monitor Canadian wheat imports through September 1997, according to Acting U.S. Trade Representative Charlene Barshefsky and U.S. Secretary of Agriculture Dan Glickman. A 1.5 million metric ton quota on Canadian wheat imposed in 1994 was replaced by a one-year tariff rate quota in September 1995 after imports had slowed. World wheat harvests are expected to increase this fall, with an attendant decline in prices. The United States will also begin monitoring Canadian barley imports, but will not take action unless barley imports rise above the 1993-94 level. The U.S. National Barley Growers Association protested that 1993-94's record barley import season is not an adequate benchmark. Canadian Agriculture Minister Ralph Goodale said that the United States cannot act unilaterally to cap Canadian grain exports, and suggested that the monitoring announcements are related more to upcoming U.S. elections than to Canadian exports to the United States, which are "down substantially compared to previous years." "Battle Over C.W.B. Monopoly Expected to Reach Parliament," MILLING & BAKING NEWS, September 10, 1996; Adrian Ewins, "Goodale's Desk Stacked With Letters," WESTERN PRODUCER, September 19, 1996; "Reform MPs Push Goodale for Decision on Wheat Board," WESTERN PRODUCER, September 19, 1996; "CWB Chief: Wheat Trade Will Rise," AG WEEK, September 23, 1996; Roger Runningen, "Wheat Import Monitoring Extended," AG WEEK, September 23, 1996; "U.S. to Consult With Canada Over Wheat Trade," REUTERS, September 17, 1996; "U.S. Barley Growers Unhappy With Canada Monitoring," REUTERS, September 17, 1996; "Canada Says Nothing U.S. Can Do to Cap Grain Sales," REUTERS, September 17, 1996; "Joint Statement of Ambassador Charlene Barshefsky and Secretary Daniel Glickman Regarding U.S.-Canada Grains Issues," September 17, 1996. AG TRADE UP In its "NAFTA Situation and Outlook Report," issued on September 18, the U.S. Department of Agriculture predicted rapid growth in agricultural trade and projected intra-NAFTA agricultural trade of $30 billion by the year 2005. Agricultural trade within NAFTA totaled about $19 billion in 1995. U.S. agricultural exports to Canada and Mexico increased by 13 percent in 1994, the first year of NAFTA. In 1995, with the deep recession in Mexico affecting trade, U.S. trade with Canada and Mexico fell by eight percent. Mexican agricultural exports to the United States increased by 32 percent in 1995, mostly in key sectors of coffee, live cattle and tomatoes. "USDA: NAFTA Spurs North American Trade," FWN, September 18, 1996; "Farm Trade Seen Growing in NAFTA in Next 10 Years," REUTERS, September 18, 1996; "NAFTA Nets Mixed Results for U.S. Ag," AGWEEK, September 23, 1996. AVOCADO, TOMATO DECISIONS STILL PENDING The U.S. Department of Agriculture is still studying whether or not to reopen the comment period on its proposed rule to allow Mexican avocados to be exported to 19 northeastern U.S. states. Because the USDA has not yet ruled, avocados will not enter the United States during this November-February season. The complex "systems approach" safeguards against pests, which would be required under the rule, would take at least six months to set up. California avocado growers submitted allegedly new evidence of danger from pests after the end of the comment period on the rule. USDA officials say that the delay in decision-making is "unprecedented." California is a key electoral state, and the USDA ruling will probably not be issued until after the November elections. USDA officials say that California challenges to the "systems approach" to pest control could boomerang, since the same approach is used to gain access to other foreign markets for some U.S. produce. U.S. Representative Mark Foley (R-FL) met in September with Republican presidential candidate Bob Dole to present grievances of Florida vegetable growers, who accused President Clinton of reneging on a guarantee to protect them against Mexican growers. Florida grower Glenn Whitworth charged that Mexican growers "aren't paying 25 cents an hour in wages. There's no child labor laws. They use any kind of pesticide they want." The U.S. International Trade Commission ruled against Florida growers in July. "USDA Inaction to Leave Avocado Ban in Place for Another Year," INSIDE NAFTA, September 4, 1996; "Florida Growers Accuse Clinton of Reneging on Deal," AGRI-NEWS, September 12, 1996. BEEF TRADE NEWS Canadian slaughter cattle exports to the United States rose by 28 percent during the first half of 1996, compared to the first half of 1995, with feeder cattle exports also increasing. Total Canadian and Mexican exports of feeder cattle to the United States during the first half of 1996 were only about 37 percent of the 1995 feeder cattle imports during the same period. U.S. beef exports to Mexico rose sharply during the first five months of 1996, compared to the same period in 1995. The volume of U.S. beef exports was 31 percent higher (at 24,418 metric tons) and the value was 42 percent higher ($64.2 million). U.S. beef exports had declined dramatically in 1995, compared to 1994 and earlier years. Mexico is expected to import 1.5 million breeding cattle to replace cattle liquidated during the last two years Mexican cattle herds were sold off during the past two years, in response to both drought and recession.. Canada is expected to increase packing capacity in Western Canada from 700,000 carcasses to 1 million per year in 1997. Chuck Lambert, "Canadian Trade Data;" Chuck Lambert, "Mexican Trade Data;" Michael Igoe, "U.S. Beef Exports to Mexico Recover With Economy," NATIONAL CATTLEMEN'S BEEF ASSOCIATION, July/August, 1996' Debora Montesinos, "Mexico Ranchers Sell Cattle to Pay Banks," REUTERS, September 12, 1996. SECOND PRIVATE SUIT FILED UNDER NAFTA Virginia-based Ethyl Corporation has filed a claim against the Canadian government under NAFTA's Chapter 11, which allows companies to seek damages against the governments of the United States, Canada and Mexico. Ethyl's claim is based on Canada's proposal to ban imports of MMT (methylcyclopentadienyl manganese tricarbonyl), an octane-enhancing fuel additive produced in North America exclusively by Ethyl. Canada says the ban is based on health grounds and on MMT's possible interference with monitoring of exhaust emissions. Ethyl says the import ban unfairly favors Canada-produced ethanol gasoline additives over the MMT additive. The NAFTA dispute resolution process bypasses domestic courts in favor of a 90-day consultation period followed by binding arbitration. (A previous complaint by Mexican Signa drug manufacturer against Canadian protection of a brand-name antibiotic's patent is pending, having been delayed by an unrelated court case.) Ethyl's lawyer, Barry Appleton, said that the NAFTA provision might also provide a forum for Canadian and Mexican companies harmed by the U.S. Helms-Burton sanctions on foreign companies doing business in Cuba. Bernard Simon, "Nafta Countries May Face Waves of Claims," FINANCIAL TIMES, September 13, 1996; "Ethyl Acts to Avert Losses If Canada Bans Fuel Additive," WALL STREET JOURNAL, September 11, 1996. COFFEE PRODUCERS MEET The 14-member Association of Coffee Producing Countries, meeting in London in September, said that the group's July 1995-June 1996 exports reached 44.83 million 60-kg bags, slightly below the target of 45.8 million bags. Export figures were prepared by a producer-consumer group, the International Coffee Organization (ICO), which also met in London in September. ACPC members produce more than 80 percent of the world's coffee. Zaire has just joined the group, while the major coffee producing countries of Mexico, Guatemala and Vietnam remain outside the ACPC. ACPC president Rubens Antonio Barbosa of Brazil characterized the shortfall as positive, showing the success of ACPC retention programs, and said the group will continue its existing export programs. The ACPC agreed in May to limit green coffee exports to 53.5 million bags in 1996-97. ACPC secretary-general Roberto Oliviera Silva of Brazil said that the export limits might be decreased if prices continue to fall. Coffee prices have fallen from a peak of $4,000 per ton in 1994, after Brazilian frosts, to $2,000 per ton in May and $1,500 per ton in September. The ICO discussed consumer organization proposals to label coffee processed beyond a certain degree as originating in the processing country rather than the growing country. Producers generally opposed the proposals. The ICO also approved a project to assist five coffee-producers to implement gourmet quality development and marketing strategies. Jalil Hamid, "ACPC 95/6 Coffee Exports Below Target; No New Moves," REUTERS, September 28, 1996; "Coffee Growers to Maintain Grip on Exports," REUTERS, September 28, 1996; Julie Meehan, "ICO Coffee Talks End, Rules of Origin Discussed," REUTERS, September 27, 1996; "Coffee Talks Focus on Projects, ICO's Role," JOURNAL OF COMMERCE, September 25, 1996. RETALIATING FOR HELMS-BURTON Canada's Parliament is considering legislation that would allow Canadians to sue the United States for land seized during its 1776 War of Independence from Canadians who refused to renounce their allegiance to England. The legislation echoes the U.S. Helms-Burton law's authorization of private suits against companies that benefit from properties seized by the Cuban government after the 1959 Cuban Revolution. Liberal parliamentarian John Godfrey, a co-sponsor of the bill, says that there are three million Canadians descended from people who had land seized. "We're talking about land which is now part of Boston, Manhattan, Philadelphia -- although from what I've seen of Philadelphia, I'm not sure that any Canadian would want to get that back," said Godfrey. Seven Canadian executives and board members for Sherritt International Corporation have been barred from entry to the United States, under Helms-Burton, as have officials of the Mexican Grupo Domos firm. European Union member states plan to adopt retaliatory measures against the United States by October 1, although those measures would not actually take effect until U.S. nationals bring lawsuits under Helms-Burton. In July, Florida-based Consolidated Development Corporation filed a claim in Miami against Canadian Sherritt International Corporation, seeking $50 million for Sherritt's use of Cuban oil properties formerly owned by Consolidated. This suit, however, was filed under U.S. and international law, not under Helms- Burton. In the United States, the 500 large multinational corporations of the National Foreign Trade Council are considering ways to reverse or modify unilateral U.S. trade sanctions. The U.S. companies are concerned that unilateral trade sanctions bar them from marketplaces that are then taken over by other non-U.S.-based companies. Stephen Dale, "Helms-Burton Look-Alike Attracts Interest,' INTERPRESS SERVICE, September 19, 1996; "EU States Press for Helms-Burton Decisions by Early October," INSIDE U.S. TRADE, September 13, 1996; "Consolidated Development to Sue Sherritt Outside Helms- Burton Act," INSIDE U.S. TRADE, July 12, 1996; Louis Uchitelle, "Who's Punishing Whom?" NEW YORK TIMES, September 11, 1996. COLOMBIAN FLOWER IMPORTS THREATENED California flower growers want an end to trade preferences for Colombian flower growers. Two out of three flowers sold in the U.S. come from Colombia, where 75,000 women are employed in fields and greenhouses raising carnations, chrysanthemums and roses. Colombia's flower industry is second only to that of the Netherlands. Colombians fear that President Clinton may remove the trade benefits currently enjoyed by Colombia under the Andean Trade Preference Act in order to show that he is tough on drugs. The United States already "decertified" Colombia, removing it from the list of countries active in fighting drugs. While decertification has no concrete effect on trade, removal of Andean Trade Preference benefits would result in imposition of an eight percent tariff on cut flowers, which presently enter the United States duty-free. Colombia's foreign trade minister Morris Harf Meyer said in September that Colombia is optimistic about regaining certification status with the U.S. government, and hopeful that it will not lose Andean preferential trade status. The European Union, Colombia's second largest trading partner after the United States, recently extended special trade privileges to Andean Pact countries (Colombia, Bolivia, Peru, Ecuador and Venezuela) until 2005. Tim Johnson, "US Sanctions May Wilt Colombia Flower Sector," JOURNAL OF COMMERCE, August 26, 1996; Caroline Flowers, "Colombia Wants to Clear Its Drug-Tarnished Name," REUTERS, September 30, 1996. RESOURCES/EVENTS "GOVERNMENT RESPONSES TO THE LATIN AMERICAN DEBT PROBLEM," edited by Robert Grosse. North-South Center Press, University of Miami. 1995. 214 pp. Order from Lynne Riemer Publishers, 1800 30th Street, Suite 314, Boulder, CO 80301-1026. Telephone 303/444-6684; fax 303/444-0824. $24.95. Studies Latin American debt crisis in Chile, Brazil, Peru, Bolivia and Mexico, including analysis of Brady Plans in each country and comparison of ten countries' return to international creditworthiness. "REGIONALISM AND THE GLOBAL ECONOMY: THE CASE OF LATIN AMERICA AND THE CARIBBEAN," edited by Jan Joost Teunissen. Forum on Debt and Development (FONDAD). 1995. 163 pp. Order from FONDAD at Noordeinde 107A, 2514 GE The Hague, the Netherlands. Telephone 31-70-3653820; fax 31-70-3463939. Email: fondad@pi.net. Four papers and reports of floor discussions from 1995 meeting of the Economic Commission for Latin America and the Caribbean in Santiago, Chile. Subjects: Open Regionalism: Stepping Stone or Millstone toward an Improved Multilateral System?; Financial Flows for Regional Integration; Trends in Regional Cooperation in Latin America and the Caribbean: the Crucial Role of Intra-Regional Trade; Preferential Trade Liberalisation in the Western Hemisphere: NAFTA and Beyond. ____________________________________________ 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.