From iatp@igc.apc.org Wed Nov 6 20:57:39 1996 Date: Wed, 06 Nov 1996 09:20:51 -0800 (PST) From: IATP To: Recipients of conference Subject: NAFTA & Inter-Am Trade Monitor 11-1- NAFTA & Inter-American Trade Monitor Produced by the Institute for Agriculture and Trade Policy November 1, 1996 Volume 3, Number 21 _________________________________________ Headlines: - U.S. TO INVESTIGATE CANADA BEEF TRADE - WTO MEETING, AG EXPORTS, HUNGER - U.S. FRUIT, VEGETABLE EXPORTS UP - OFF AGAIN, ON AGAIN: OIL AND TOMATO DEALS - NAFTA LABOR CHALLENGE IN CANADA - LATIN AMERICAN INTEGRATION - U.S. BLOCKS WTO CUBA PANEL _________________________________________ U.S. TO INVESTIGATE CANADA BEEF TRADE An International Trade Commission investigation of the impact of world trade liberalization and NAFTA and of the Canadian cattle industry and beef trade, the fourth such investigation in twenty years, was approved by Congress in October. None of the earlier inquiries into Canadian beef trading (in 1978, 1987, and 1992) found any unfair trading. Canadian beef exports to the United States during the first nine months of 1996 were up 25 percent over the same time period in 1995, while cattle imports during the same period rose from 860,000 in 1995 to 1.1 million in 1996. Some Canadians expressed concern that Alberta's Farm Income Disaster Program, which one New Democrat Member of Parliament likened to a rich European subsidy program, could be judged as unfair trading. Canadian Agriculture Minister Ralph Goodale told the House of Commons that the Canadian government "will be watching very closely to make certain that all programs are applied in an equitable manner so that all farmers in every corner of this country are treated fairly." Barry Wilson, "U.S. Will Investigate Canadian Beef Trade," WESTERN PRODUCER, October 17, 1996. INCREASES IN AG EXPORTS, HUNGER Changes in agricultural production patterns are expected to be part of the discussion at the World Trade Organization (WTO) conference of trade ministers in Singapore on December 9-13. U.S. government officials are expected to use the WTO meeting in December to push for an end to duties and subsidies in the oilseeds sector and publication of details of commercial dealings of government marketing boards, such as the Canadian Wheat Boards. The United Nations Food and Agriculture Organization (FAO) reported in September that tariff-reduction agreements negotiated as part of the Uruguay Round accelerated modernization of agriculture throughout Latin America and the Caribbean. The FAO report predicted a sharp increase in export income from agriculture for the region by 1999, estimating that farm exports will earn $2.6 billion more annually after the year 2000. The increase is attributed to sugar, vegetable and animal oils, cereals, coffee and dairy products. The modernization of agricultural production has led to a major decrease in national food production in favor of increased agroexports, quickening the pace of concentration of land ownership, causing more dependency on food imports, and contributing to increased hunger and malnutrition. The FAO estimates that 14 percent of the population of Latin America and the Caribbean, some 60 million people, suffer from chronic malnutrition. Hunger and malnutrition are concentrated in rural areas, and in households headed by single women. In Haiti, the rate of rural poverty is estimated by the International Fund for Agricultural Development at 97 percent. The FAO says that malnutrition in Nicaragua, El Salvador, Bolivia, the Dominican Republic, Peru, Honduras, Panama and Guatemala is at 47 percent. In Bolivia, 15,000 rural and indigenous protesters marched on the capital in late September, demanding land. In Guatemala, continuing land occupations have been followed by violent evictions. One such eviction in late September resulted in the death of a 30-year-old rural worker and more than two dozen injuries. In Brazil, nearly 1,000 people were killed in land conflicts from 1985-1995. Looking ahead to the World Food Summit in Rome on November 13-17, FAO Director-General Jacques Diouf warned that world food needs are increasing, and called for a guarantee of access to food for everyone while developing production and supply systems, "which take into account the environmental balance and the richness of the water resources." "Upcoming World Trade Organization Conference Generates Debate Over Uruguay Round's Impact on Latin America," NOTISUR, October 18, 1996; Ian Elliott, "U.S. Spells Out Goals for WTO Meeting," FEEDSTUFFS, October 7, 1996; Zoraida Portillo, "Plenty of Food But Many Still Hungry," INTERPRESS SERVICE, October 22, 1996; Jorge Piqa, "The Paradox of the Fat and the Thin," INTERPRESS SERVICE, October 16, 1996; "Protests and Violence Over Land," INTERPRESS SERVICE, September 27, 1996. U.S. FRUIT, VEGETABLE EXPORTS UP According to the U.S. Department of Agriculture, U.S. fruit and vegetable exports totaled $9.1 billion in 1995, having tripled since 1985. Fruits and vegetables account for more than 15 percent of 1995's U.S. agricultural exports. Top buyers of U.S. fruits and vegetables are Canada, Japan, the European Union, Hong Kong, Mexico, Taiwan and South Korea. Apples, grapes, pears, citrus fruit and bananas are the leading export fruits, with tomatoes and bell peppers leading vegetable exports. Scott Horsfall, chair of the Produce Marketing Association's International Trade Conference, believes increased exports reflect rising expectations in developing countries. "On a per capita basis, nobody can afford these products," observes Horsfall. "But there's a small but growing middle class. . . . Maybe they can't run out and buy a Mercedes-Benz, but they can buy a Washington apple." Growers look to Japan as a growth market, ripe for development from a $1 billion market today to a $10 billion market over the next decade. China and Australia are also key markets, though many phytosanitary barriers slow development of export channels. Total U.S. agricultural exports to Mexico seem headed for record levels in 1996, reversing the United States' 1995 agricultural trade deficit with Mexico. Fruits and vegetables continue to be flashpoints of controversy, with Mexican avocados, U.S. cherries, and Mexican tomatoes and bell peppers at issue. [See following article and "Tomato Case Settled," NAFTA & INTER- AMERICAN TRADE MONITOR, October 4, 1996.] Michael Goldstein, "U.S. Fruits and Vegetables on an International Roll," JOURNAL OF COMMERCE, October 11, 1996; "U.S.-Mexico Agricultural Trade Back on Track but Under Dispute," TRACKING U.S. TRADE, October 18, 1996. OFF AGAIN, ON AGAIN: OIL AND TOMATOES Despite Mexican President Zedillo's reversal of plans to privatize 61 secondary petrochemical plants, controversy over proposed legislation that would allow investment in existing plants and up to 100 percent foreign ownership of new secondary petrochemical plants continues. [Mexican governments have distinguished between eight primary petrochemicals and other secondary petrochemicals, such as ammonia used in fertilizers and polyethylene used in plastic bags.] Almost as soon as a tentative agreement to control prices for Mexican tomatoes in the United States was reached, some Mexican tomato growers announced their opposition. In order to implement the plan, 85 percent of Mexican growers must agree to it. Under the agreement, Mexican tomatoes cannot be sold for less than 20.6 cents per pound at the wholesale level. The U.S. Commerce Department has delayed ruling on Florida tomato growers' anti-dumping case until October 28, when the agreement will be finalized. The Florida tomato industry is dominated by big producers 88 growers in 1996. Among the largest producers are those owned by the DiMare, Gargiulo, Heller and Esformes families. The Mexican government did not endorse the agreement, reached by two Mexican growers' groups and the U.S. Department of Commerce and Florida growers. Instead, the Mexican government reiterated its concern "on the manner in which the U.S. authorities have conducted this antidumping investigation," and reserved the right to redress under the WTO and NAFTA. Daniel Dombey, "Mexico Scales Back Move for Energy Industry Sell-Off," FINANCIAL TIMES, October 14, 1996; Kevin G. Hall, "Mexico Petrochemical Flap to Enter Legislative Debate," JOURNAL OF COMMERCE, October 22, 1996; John Maggs, "Mexican Tomato Growers Split on Tentative Trade Deal With U.S.," JOURNAL OF COMMERCE, October 15, 1996; Dan Balaban, "Settlement Staves Off Tomato War," THE PACKER, October 21, 1996; Robert S. Greenberger, "Mexico Agrees to Temporary Floor on Price of Tomatoes Sold in U.S.," WALL STREET JOURNAL, October 14, 1996; "Commerce Tomato Deal Remains Tenuous, Mexican Sources Caution," INSIDE NAFTA, October 16, 1996; "U.S. Vegetable Farmers Fight Imports," NAFTA & INTER-AMERICAN TRADE MONITOR, May 3, 1996. NAFTA LABOR CHALLENGE IN CANADA U.S. and Canadian lawyers plan to use NAFTA's Tribunal on Labor Standards to challenge Alberta's decision to privatize enforcement of labor standards. The challenge is based on the theory that Alberta's action unfairly drives down its regulatory wage labor standards. The Alberta government will save an estimated $2 million by privatizing enforcement of minimum labor standards in areas such as pay, employment records, hours of work, vacation, and employment of children. Alberta's unionization rate is the lowest in Canada, with only one in four of the province's workers belonging to a labor union. If the NAFTA tribunal finds that Alberta has violated NAFTA provisions, then it could order Alberta to pay a financial penalty, based on a percentage of its trade with the United States and Mexico. Paul Weinbert, "Canada Faces Challenge Under NAFTA Labour Accord," INTERPRESS SERVICE, October 2, 1996; LATIN AMERICAN INTEGRATION The 22nd ministerial meeting of the Latin American Economic System (SELA) council, held in late October in Montevideo, Uruguay, heard reports of growing regional trade, increasing from $16 billion in 1990 to nearly $40 billion in 1995. Exports among the 11 countries of the Latin American Integration Association (ALADI, comprised of Argentina, Bolivia, Brazil, Colombia, Chile, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela) increased from 10.8 percent of their total trade in 1990 to 17.5 percent in 1995. According to Manuela Rangel, director of economic relations for SELA, trade is as dominant a theme in Latin America and the Caribbean today as "the foreign debt and the financing of development were in the 1980s." Intra-regional customs unions include the Andean Community, Mercosur, Central American Common Market, and Caribbean Common Market (Caricom.) Exports among the members of the Andean Community (Bolivia, Colombia, Ecuador, Peru and Venezuela) rose from 4.1 percent to 11.9 percent of that bloc's total trade. Exports among the Mercosur nations (Argentina, Brazil, Paraguay and Uruguay) increased from 8.9 percent to 22 percent of the group's total exports. The SELA report attributed the growth in intra-regional trade to "open regionalism," which it characterized as including a preference for nations in geographical proximity and sharing cultural affinity. Mercosur occupies a central place among the many trade agreements, having the most comprehensive agreement and the most prosperous countries. Chile signed a trade agreement with Mercosur last June and Bolivia is currently negotiating a similar deal. The Andean Community and Mercosur began negotiations for a free trade area in October, with an anticipated 10-year time frame for completion. Mercosur has also signed a framework agreement with the European Union, with a tentative target of free trade by 2005. A draft World Bank report leaked in October, criticizes Mercosur for favoring capital-intensive industries that cannot compete internationally. Examples include manufacture of cars, buses, and agricultural machinery, which can be sold within Mercosur but are too expensive to be exported competitively. Karen Hanson-Kuhn of the Development Group for Alternative Policies criticized the World Bank draft report, saying that it implies that "developing countries should be content to promote the low-wage raw material exports that are efficient at this time." Raul Ronzoni, "Integration, a Shield Against Protectionism," INTERPRESS SERVICE, October 23, 1996; Raul Ronzoni, "Finding Markets is Dominant Theme of 1990s," INTERPRESS SERVICE, October 22, 1996; Abid Aslam, "MERCOSUR Draws Fire From World Bank Economist," INTERPRESS SERVICE, October 23, 1996; Michael M. Phillips, "South American Trade Pact is Under Fire," WALL STREET JOURNAL, October 23, 1996; "The End of the Beginning," THE ECONOMIST, October 12, 1996. U.S. BLOCKS WTO CUBA PANEL The United States blocked the first request by the European Union for a World Trade Organization (WTO) dispute panel on the U.S. Helms-Burton law, which penalizes trade with Cuba. Despite U.S. delaying tactics, a panel will be created under WTO dispute- settlement rules when the EU makes its second request on November 20. The United States wants to claim the WTO's security exception clause for its Cuba sanctions, but these would not apply to third-party countries. The EU continues to work out complicated internal jurisdictional questions to determine which kinds of retaliation against Helms-Burton are appropriate to the EU and which should be reserved to member states. Despite their dispute over Cuba, the EU and the United States continue work on other trade issues, such as a proposal for duty-free trade in information technology products. Other WTO disputes continue, with panels currently examining U.S. complaints about the Japanese consumer photographic film and paper market and Canadian objections to the EU's ban on hormone-treated beef. The United States withdrew a request for a panel against Pakistan on issues of patent protection for certain chemicals and Canada withdrew a complaint against Brazil over alleged subsidies to a Brazilian aircraft manufacturer. John Zarocostas, "U.S. Blocks Bid for WTO Panel on Anti- Cuba Law," JOURNAL OF COMMERCE, October 17, 1996; Richard Lawrence, "Despite Cuba Flap, US, EU Move Ahead on Trade Issues," JOURNAL OF COMMERCE October 18, 1996; "Jurisdiction Wrangle Complicates EU Response to Helms- Burton," INSIDE NAFTA, October 16, 1996. RESOURCES/EVENTS Center for U.S.-Mexican Studies at the University of California, San Diego focuses significant research on the campesino sector in Mexico, including a recently concluded Ejido Reform Research Project and the new Transformation of Rural Mexico Research Project. Contact the Center at University of California, San Diego, 9500 Gilman Drive, Dept. 0510, La Jolla, CA 92093-0510. Telephone 619/534-4503; fax 619/534-6447; email ejido@weber.ucsd.edu. Visit Rural Mexico Research Project homepage on the WorldWide Web at http://weber.ucsd.edu/Depts/USMex/rural.htm. Annual Report: Council of the Commission for Environment Cooperation. Commission for Environment Cooperation, Montreal: 1996. Approx. 200 pp., including annexes. Official report on progress made in 1995 in meeting goals of North American Agreement on Environmental Cooperation. Environmental Infrastructure Needs in the U.S.-Mexican Border Region Remain Unmet. General Accounting Office Report to the Ranking Minority Member, Committee on Commerce, House of Representatives: July, 1996. 42 pp. Order from U.S. General Accounting Office, P.O. Box 6015, Gaithersburg, MD 20884-6015; telephone 202/512- 6000; fax 301/258-4066. For internet access, send e-mail with "info" in the body to info@www.gao.gov. $2. Report examines environmental problems of border region. __________________________________________ NAFTA & Inter-American Trade Monitor is produced by the Institute for Agriculture and Trade Policy, Mark Ritchie, President. Editor: Mary C. Turck. NAFTA & Inter-American Trade Monitor is available on-line free of charge. For additional information about fax/mail subscriptions or to receive a free listing of all available Institute research reports and documents, contact: Institute for Agriculture and Trade Policy, 2105 1st Avenue South, Minneapolis, MN 55404. (612) 870-0453; fax: 870-4846; e-mail: iatp@iatp.org. To learn more about IATP's contract research services, contact Dale Wiehoff at 612-870-0453 or e-mail: .