TRADE NEWS BULLETIN Monday, November 9, 1992 _________________________________________________________ GATT News Summary _________________________________________________________ DUNKEL MAY MEDIATE US-EC TRADE DISPUTE General Agreement on Tariffs and Trade (GATT) chief Arthur Dunkel will probably receive full authority to serve as a mediator in the trade crisis developing between the United States and the European Community. After a Friday meeting with senior officials from more than 30 nations, Dunkel scheduled a meeting for Tuesday of the Trade Negotiations Committee (TNC) at which he is expected to ask GATT member nations for permission to intervene. Several countries have been asking Dunkel for months to act as a mediator in the long-running dispute over agriculture payments, but until now Dunkel has refused, hoping the two sides would reach a settlement on their own. Apparently, Dunkel changed his mind after the Bush Administration announced it would slap $300 million worth of punitive tariffs on EC goods entering the United States. EC trade ministers met informally near London over the weekend in an attempt to avoid an ensuing trade war with the United States. The ministers agreed not to announce counter-measures against the U.S., and instead urged that new talks on the issue be held. EC foreign ministers will meet today in Brussels; they are also expected to refrain from announcing retaliatory measures. British Prime Minister John Major has been working hard to solve the agriculture dispute and complete the Uruguay Round of GATT. The British Chambers of Commerce and other business groups have urged Major to use Britain's position as EC president to work for a breakthrough. Major and European Commission President Jacques Delors talked privately in London Friday and released a joint statement calling on agriculture negotiators to "re-engage without delay" to reach a compromise. Major also telephoned German Chancellor Helmut Kohl to enlist his support, but Kohl was hesitant to put pressure on France. U.S. and EC officials said they were generally optimistic a settlement could be reached. U.S. Trade Representative Carla Hills said she expected the two sides to return to the negotiating table and that a trade war would be averted. Agriculture Secretary Edward Madigan sounded less optimistic however, saying the U.S. and EC were still far from a deal. "I must have an honorable deal, a responsible deal, and a deal that is going to be perceived as being fair to the entire world, and we're not anywhere near that," Madigan said Friday. EC External Affairs Commissioner Frans Andriessen said he was hopeful a pact could be reached but warned that each side must be prepared to compromise. He rejected a German proposal for a summit between Major, Delors and U.S. President George Bush, saying it would create "an unpredictable situation from which no one will benefit." Source: John Zarocostas, "GATT Director May Intercede in EC-US Fight," JOURNAL OF COMMERCE, November 9, 1992, p. 1; Jill Serjeant, "EC Trade Ministers Attempt to Revive Trade Talks," REUTER, November 7, 1992; Michael Cassell, "Threat of Trade War Upsets UK Business," FINANCIAL TIMES, November 7,8 1992, p. 2; "Andriessen Says Both Sides Must Compromise on GATT," REUTER, November 8, 1992; _________________________________________________________ US PREPARING SECOND RETALIATION LIST In announcing punitive tariffs on European products last week, U.S. Trade Representative Carla Hills also released a new list of EC goods that face new taxes if a settlement is not reached soon. The new list includes tires, perfumes, paper, ceramics, glassware, pipes and tubes, records and tapes, and furniture. John McInespie, a trade analyst with a Washington, DC law firm, said the tariffs will not hurt U.S. consumers. "The Americans were quite clever in this," McInespie said. "There are American alternatives for every one of these (proposed targets)." Source: Nancy Dunne, "Washington Prepares Its Second Volley," FINANCIAL TIMES, November 7,8 1992, p. 2. _________________________________________________________ OTHER TRADE DISPUTES ERUPTING IN GATT During two days of meetings of the GATT Governing Council, a number of issues unrelated to the EC-U.S. dispute over agriculture subsidies were raised. The six-member Association of Southeast Asian Nations (ASEAN) called a new Austrian law "a unilateral and discriminatory action." The measure, which went into effect September 1, requires that eco- labels be used to identify tropical timber and products that come from "sustainable forests." Argentina, Canada, Brazil and others backed the complaint, noting that the Austrian law does not require similar labeling for timber from temperate climates imported into or produced in Austria. Meanwhile, the 22 developing nations that form the International Textiles and Clothing Bureau complained that U.S. fees on imported cotton products are discriminatory because non-cotton fibers are exempt from the duties. Rufus Yerxa, deputy U.S. trade representative, said the tariff, which has been in effect since July 31, is intended to help research aimed at increasing domestic consumption of cotton. Mexico criticized the recent Venezuelan move to ban the import of Mexican cement. Venezuela's decision, which resulted in the return of a shipment to Mexico, came after Venezuelan producers asked for protection from Mexican competition. Source: John Zarocostas, "Disputes Load GATT Agenda As New Rules Prove Elusive," JOURNAL OF COMMERCE, November 9, 1992, p. 14A. _________________________________________________________ NAFTA News Summary _________________________________________________________ CANADIAN FARMERS OPPOSE NAFTA An editorial in Canada's UNION FARMER newspaper argues the North American Free Trade Agreement will not be the "pathway to prosperity" that Prime Minister Brian Mulroney promises. In fact, the newspaper states, a document intended to drum up support for NAFTA actually "confirms the worst scenarios predicted by free- trade critics." The newspaper contends that under NAFTA, fruit and vegetable growers "are going to be given between five and ten years to adjust to producing commodities at a loss while protective tariffs are steadily reduced every year." The Canadian government claims that increased opportunities in Mexico will make up for any decrease in domestic sales. But the Canadian National Farmers' Union has argued the Canadian horticultural sector will not survive without import restrictions that prevent corporations from dumping American or Mexican products into the Canadian markets at depressed prices. Source: "NAFTA Not the Promised 'Pathway to Prosperity,'" UNION FARMER, November 1992, p. 4. _________________________________________________________ Produced by: Kai Mander The Institute for Agriculture and Trade Policy (IATP) 1313 Fifth Street SE, Suite #303 Minneapolis, MN 55414-1546 USA Telephone:(612)379-5980 Fax:(612)379-5982 E-Mail:kmander@igc.org Other On-line Conferences: trade.strategy - a discussion of trade issues trade.library - a repository of trade information eai.news - a news summary of Latin American trade topics susag.news - a news summary of sustainable agriculture issues _________________________________________________________