From iatp@iatp.org Sat Oct 31 11:34:18 1998 Date: Sun, 31 May 1998 18:21:19 -0500 From: iatp@iatp.org To: nafta-news@igc.apc.org Subject: NAFTA & Inter-American Trade Monitor Vol. 5, Number 11 [ The following text is in the "iso-8859-1" character set. ] [ Your display is set for the "US-ASCII" character set. Some ] [ characters may be displayed incorrectly. ] ------------------------------------------------------------------------ NAFTA & Inter-American Trade Monitor - Vol. 5, Number 11 May 29, 1998 ------------------------------------------------------------------------ Table of Contents - U.S.-CANADIAN GRAIN DISPUTES - NAFTA LABOR CHARGES IN U.S., MEXICO - CENTRAL AMERICA FREE TRADE MOVES - TRADING WITH CUBA - FTAA DEVELOPMENTS - BORDER X-RAYS FAIL ON PRODUCE - RESOURCES/EVENTS U.S.-CANADIAN GRAIN DISPUTES With the price of U.S. grain at a five-year low, U.S. Trade Representative Charlene Barshefsky said in early May that existing rules governing U.S.-Canada wheat trade do not treat U.S. producers fairly. She indicated that the United States may bring up the issue of differences over the bilateral wheat trade at the World Trade Organization negotiations on agriculture, which are set for 1999. U.S. growers charge that the Canadian Wheat Board calculates its acquisition price lower than it should be. Canada calculates the price as the initial payment the CWB makes to producers plus storage and handling, a definition that was upheld in a 1993 dispute settlement panel brought by the United States under the U.S.-Canada Free Trade Agreement. The United States wants a broader calculation of the acquisition price. The bilateral agreement states that neither country should sell to the other's market below the acquisition price of its grain. The CWB represents growers in Manitoba, Saskatchewan, Alberta and areas of British Columbia, making an initial payment to producers when the grain is delivered. If the CWB gets a higher payment when it sells the grain, the CWB pays the difference to producers. The U.S. General Accounting Office has begun an investigation into whether the CWB competes unfairly in the U.S. market, but the investigation has stalled because of CWB refusal to disclose information on confidential sales contracts sought by the GAO. In 1997, Canada exported $733 million in grain to the United States, which exported only $214 million to Canada. Processed grain product exports also showed a balance in favor of Canada, which sold $635 million to the United States, and bought only $448 million from the United States. While price is a factor in the imbalance, it is not the only factor. An expert from the U.S. Department of Agriculture insisted that there are "a lot of barriers blocking our ability to export wheat to Canada." For example, Canada licenses individual varieties of wheat for production and keeps them separate. The United States does not segregate varieties, and the need to keep U.S. wheat separate from Canadian wheat in elevators poses a major barrier to U.S. exports to Canada. Canada also requires that U.S. wheat be laboratory-tested for karnal bunt fungus before crossing the border, refusing to accept blanket U.S. certification that wheat has come from a karnal bunt-free state. U.S. wheat producers face other problems that exacerbate their concerns over Canadian competition. Both disaster aid and price supports were slashed under the "Freedom to Farm" law passed in 1996. Minnesota state legislator Jim Tunheim says "They should have called it 'Freedom to go broke.' We're going to disappear at this rate." Wheat producers across the northern plains of the United States also suffered from an excess of moisture and attendant crop diseases. Net farm income in North Dakota fell from $764 million in 1996 to $15 million in 1997 for the state's 30,000 farmers. North Dakota Senator Conrad predicts that 3,000 of his state's farmers will be forced out of business this year. "Barshefsky Says U.S. May Press Canada on Wheat Trade in WTO Talks," INSIDE U.S. TRADE, May 8, 1998; Brian Rustebakke, "Free Trade vs. Fair Trade," AGWEEK, May 4, 1998; Barry Wilson, "CWB Rejects U.S. Request to Audit Sales Contracts," WESTERN PRODUCER, April 30, 1998; Scott Kilman, "On the Northern Plains, Free-Market Farming Yields Pain, Upheaval," WALL STREET JOURNAL, May 5, 1998; Courtney Tower, "U.S. Farmers Seek to Even Grain Trade Imbalance," JOURNAL OF COMMERCE, April 17, 1998; Senator Conrad on Wheat and Barley in North Dakota, CONGRESSIONAL RECORD, May 4, 1998. NAFTA LABOR CHARGES IN U.S., MEXICO On May 27, four Mexican unions filed a NAFTA complaint with the Mexican government office charged with administration of the NAFTA labor side accord. The complaint charges that the U.S. government, Washington State and the apple industry have failed to uphold worker rights guaranteed in the labor side accord, including protection from dismissal or retaliation for union activities, minimum wage and overtime laws, and that workers face "high exposure to dangerous chemicals, safety hazards and unsanitary conditions in fields and warehouses." The unions filing the complaint were the National Union of Workers, the Democratic Farmworkers Front, the Authentic Workers Front and a metal workers union. The International Brotherhood of Teamsters, which is trying to unionize apple packers, and the United Farm Workers, which wants to organize apple pickers, supported the Mexican union's action. Both Mexican and U.S. officials say that at least half of the 45,000 apple pickers and packers in Washington State come from Mexico. This is the second complaint filed by Mexican unions. The first charged that Sprint Corporation improperly closed a California plant during a unionization drive. U.S. unions have filed nine complaints against Mexican labor practices. On April 28, U.S. Labor Secretary Alexis M. Herman sent a letter to her Mexican counterpart, Javiér Bonilla, requesting formal consultations on the issue of the Mexican government's favoritism toward unions aligned with the ruling Institutional Revolutionary Party. The letter came after a six-month U.S. Labor Department review of a disputed election at the Han Young maquiladora in Tijuana. The Mexican Labor Ministry responded that the United States was "supporting the demands of one side in this dispute, stirring up emotions and generating hopes that go beyond the terms of the North American Free Trade Agreement." The Han Young complaint was filed in October under the terms of a NAFTA side accord on labor rights. Han Young workers charged that government labor boards refused to certify an independent union even after workers voted to switch from the government-affiliated union to the independent union by a 2-1 margin. The Mexican Labor Ministry intervened in December to support the independent union's victory in a second election. On May 22, more than 40 of Han Young's 120 workers went on strike over what they say is management's refusal to negotiate a new contract with their union. Plant manager Pablo Kang said that salaries average $63 a week and that workers "don't deserve more money." Han Young make struck chassis for Hyundai Precision America in San Diego. In its plant in Saltillo, Chrysler Corporation discovered that it can produce Dodge Ram pickups not only cheaper, but also faster and better, than in U.S. factories. Chrysler, General Motors, and Volkswagen all plan to increase auto production in Mexico. Between 1992 and 1997, the total value of automotive trade between the United States and Mexico more than doubled to $36.3 billion, while the U.S. automotive trade deficit with Mexico grew by more than five times to $13.4 billion. Bob King, a regional director for the United Auto Workers union, blames NAFTA for encouraging companies to shift production to low-wage Mexican plants, abandoning U.S. workers. Steven Greenhouse, "Mexicans Were Denied U.S. Rights, Suit Says," NEW YORK TIMES, May 28, 1998; Sam Dillon, "Bias Said to Hurt Independent Mexican Unions," NEW YORK TIMES, April 30, 1998; "Mexico: Han Young Workers Strike," WEEKLY NEWS UPDATE ON THE AMERICAS, May 24, 1998; John Lippert, "Mexico Growing Into an Auto Zone: Plants Making cheaper, and Better, Cars," HOUSTON CHRONICLE, April 29, 1998. CENTRAL AMERICA FREE TRADE MOVES Chilean president Eduardo Frei said during a May 9-10 visit to Costa Rica that his country is eager to sign a free trade agreement with Central American countries by 1999. Frei said trade talks between Chile and Central American countries will begin by July. Panamanian officials said that they will begin talks on a free trade agreement with Honduras, El Salvador and Guatemala in June or July, and that similar talks with Chile may begin in October. The five Central American Common Market Countries - Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua - signed a partial free- trade agreement with the Dominican Republic on April 16. On April 18-19 at the Summit of the Americas, the CACM countries signed preliminary trade agreements with Chile and with the Southern Cone Common Market (Mercosur). The free trade agreement with the Dominican Republic exempts from its coverage sugar, grain-based alcohol, coffee beans, wheat flour, petroleum derivatives, liquor and some kinds of oil. Some other exemptions may be added by the Dominican Republic within the next six months. Still at issue are the treatment of products produced at Dominican maquiladora plants and some clauses regarding rules of origin and intellectual property rights. Tariffs on non-exempt goods and services will be eliminated on January 1, 1999. "Chile Wants Free Trade With Central America," CENTR-AM NEWS, May 10-16, 1998; "Free Trade is the Theme of Talks Among Central American Countries," CENTR-AM NEWS, May 10-16, 1998; "Central America Negotiates Free-Trade Agreements With Caribbean & South American Nations," ECOCENTRAL, May 7, 1998. TRADING WITH CUBA "It will be a cold day in you-know-where before the EU convinces me to trade the binding restrictions in the Helms-Burton law for an agreement that legitimizes their theft of American property in Cuba," said Senate Foreign Relations Committee Chair Jesse Helms (R-NC), as he was joined by congressional allies in criticizing the agreement reached by the United States and the European Union to resolve a dispute over the Helms-Burton law. The U.S.-EU agreement would impose disciplines on investment in properties that are expropriated in violation of international law, in exchange for changes to the Helms-Burton law that would allow the President to waive application of the Title IV bar to entry into the United States for executives of firms investing in contested property in Cuba. Title III, which creates a right to sue in U.S. courts over alleged expropriations in Cuba, could also be changed. So far, application of Title III has been waived by the president. "The EU can drop dead on a [permanent] Title III waiver," said a Helms aide. In contrast to the hostile reception on Capitol Hill, EU member states raised no objections to the agreement in a May 20 meeting. But EU Commission President Jacques Santer and British Prime Minister Tony Blair specified that the United States must continue to waive Title III of Helms-Burton. Speaking to the May 19 meeting of the World Trade Organization, Cuban President Fidel Castro called the U.S.-EU accord "unclear, contradictory and lacking in ethics," and called on the World Trade Organization to "prevent economic genocide," referring to U.S. trade embargoes. On May 13, U.S. President Bill Clinton authorized direct air flights between the United States and Cuba, along with some humanitarian aid, family remittances and sale of some medicines. But the State Department indicated that there would be tight controls on flights, remittances, and money spent by U.S. citizens visiting Cuba. Dalia Acosta, "Flexibilisaton With as Tough a Face as Ever," INTERPRESS SERVICE, May 14, 1998; "U.S., Europe Reach Cuba Accord," WEEKLY NEWS UPDATE ON THE AMERICAS, May 24, 1998; Gustavo Capdevila, "Castro Proposes New Strategy for Developing World," INTERPRESS SERVICE, May 19, 1998; "Congress Strongly Criticizes U.S.-EU Agreement on Helms-Burton Law," INSIDE U.S. TRADE, May 22, 1998; "Member States Poised to Accept U.S.-EU Agreement on Helms-Burton," INSIDE U.S. TRADE, May 22, 1998; David White, Robert Graham and Stefan Wagstyl, "Companies Welcome Deal on U.S. Sanctions," FINANCIAL TIMES, May 19, 1998; "Helms Aide Tells EU to 'Drop Dead' on Request for Helms-Burton Fix," INSIDE U.S. TRADE, May 29, 1998. FTAA DEVELOPMENTS Canadian Trade Minister Sergio Marchi warned on May 13 that the United States will need fast-track trade negotiating authority by early next year if negotiations for the Free Trade Area of the Americas are to proceed on schedule. Marchi said he believed U.S. President Clinton could win fast track approval from Congress: "Going into a new millennium, he can do that, because it is inconceivable that America should be looking inward at its belly button, rather than outward in terms of galvanising the international community." U.S. Ambassador Richard Brown, director of the State Department's Office of Inter-American Economic Policy, and Kathryn McCallion, Canada's chief hemispheric trade negotiator, said that the next two months will be crucial for structuring mechanisms for public input into the FTAA talks. The structure for the Committee of the Chair will be decided in Argentina in June. The Committee of the Chair will receive input from non-governmental groups. This committee will be the only mechanism for presenting labor and environmental concerns, but will also be a place for businesses to have input on the FTAA. Kevin G. Hall, "Business Pressed for Input on Hemisphere Trade," JOURNAL OF COMMERCE, May 15, 1998; Guy de Jonquiéres, "Fast-Track Authority 'Key to FTAA Talks,'" FINANCIAL TIMES, May 14, 1998. BORDER X-RAYS FAIL ON PRODUCE Though they were billed as a way to avoid intensive Customs examinations involving unloading trailers full of cargo, the sophisticated X-ray machines that U.S. Customs is using along the Mexican border do not work with truckloads of produce. The machines, which look like giant garages with doors on both ends, x-ray entire trucks as they drive through. But the x-ray machines work by detecting organic material in a truck, and they cannot distinguish between drugs and vegetables. While shipments of electronics, plastics and other non-organic cargo can speed through customs with the machines, trucks of produce are still subject to random "intensive" inspections, which require unloading perishable produce in the border heat. Paul Conley, "X-rays Keep an Eye on Border Crossings," THE PACKER, May 11, 1998. RESOURCES/EVENTS Restarting Fast Track. Jeffrey Schott, ed. Institute for International Economics, Washington, DC, April 1998. 86 pp. Compilation of papers presented at February 1998 conference on fast-track legislation, sponsored by the Institute for International Economics, including suggested changes in legislation, questions about social justice and discussion of domestic adjustment in an age of rapid globalization. For further information, contact Institute for International Economics, 11 Dupont Circle NW, Washington, DC 20036-1207. Telephone 202/328-9000; fax 202/328-5432. http://ww.iie.com Vital Signs 1998: The Environmental Trends That Are Shaping Our Future. Lester Brown et al. Worldwatch Institute. Washington, DC: 1998. Reports on more than 50 environmentally related indicators, describing rising incomes, growing populations, and increased stresses on the environment. Also includes discussion of human health trends, especially AIDS/HIV pandemic and cigarette smoking. Contact Mary Caron, Worldwatch Institute, 1776 Massachusetts Ave. NW, Washington, DC 20036-1904. Telephone: 202/452-1999; fax 202/296-7365. WEB: www.worldwatch.org. Chiquita Secrets Revealed. Mike Gallagher and Cameron Whirter. THE CINCINNATI ENQUIRER, May 3, 1998. 100+ pages of in-depth reporting and analysis of Chiquita Banana and banana trade in South America generally. Includes information ranging from working conditions to pesticide use to World Trade Organization case. Access report at http://enquirer.com/ chiquita/ ------------------------------------------------------------------------ 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, 2105 1st Ave. S., Minneapolis, MN 55404. Phone: 612-870-0453; fax: 612-870-4846; e-mail: iatp@iatp.org. The Spanish version of this news bulletin, El Monitor de NAFTA y Comercio Interamericano, and a searchable archive of all back issues is available at: http://www.sustain.org/bulletins. To unsubscribe to the email version of this news bulletin, send email to: Majordomo@igc.apc.org. Leave the subject blank. In the body of the message say: unsubscribe trade-news. ------------------------------------------------------------------------