TRADE NEWS BULLETIN Tuesday, November 10, 1992 __________________________________________________ GATT News Summary __________________________________________________ EC SPLITS HINDER OILSEED DEAL, DUNKEL TO INTERVENE European Community ministers yesterday called for the immediate resumption of talks with the U.S. on farm subsidies and held off from drawing up a list of U.S. goods to hit with retaliatory measures. The U.S. said last week it will impose 200% tariffs on European white wine, rapeseed oil and wheat gluten if a deal on oilseeds is not reached by December 5. U.S. soybean growers fear their products would be targeted if the EC retaliates. Leading trade envoys indicated yesterday that General Agreement on Tariffs and Trade (GATT) chief Arthur Dunkel appears likely to be given formal approval today by the Trade Negotiations Committee (TNC) to intervene in the dispute. The TNC is made up of top envoys from the 108 GATT member states. The GATT has twice ruled against the EC's subsidy policy, but FEDIOL, a Brussels-based seed crushers and oil processors federation, says the GATT rulings don't stipulate production volume cuts. The U.S. is demanding guaranteed volume production cuts, while the EC prefers to make cuts in acreage. FEDIOL, a large buyer of U.S. soybeans, contends the EC has already made considerable concessions to the U.S. While U.S. soybean growers blame their falling market share in Europe mainly on EC subsidies, part of the decrease is also due to increased European imports from countries such as Brazil. U.S. Department of Agriculture spokesman Roger Runnigan said U.S. negotiators are ready to meet with the EC any time, and that "We do hope that whoever is the (EC) negotiator has the authority that parallels that which secretary Madigan has from President Bush." Madigan claims unlimited authority to strike a deal. Deep divisions remain in the EC over how far to go in order to reach an agreement. Spain, Belgium, Portugal and Greece all rallied behind France's stance favoring retaliation over concessions to the U.S. in Monday's meeting of EC ministers. The UK, Germany, the Netherlands and Denmark were the countries most opposed to retaliation. Divisions between industry and agriculture cross borders. Although German and French leaders disagree, the German farm minister has been one of France's strongest allies in opposing U.S. demands. The EC farmers body, COPA, said the EC should stand united against further concessions. Meanwhile, a German industry group head said, "... there is a threat that European industry could be held hostage to mistakes in EC agriculture policy." The international reaction to the U.S.-EC row has been impatience and worry over the effects of a trade war. Canada criticized the U.S. for acting outside the GATT rules in leveling sanctions, and Japan said the EC should not take counter-measures. U.N. Conference on Trade and Development (UNCTAD) chairman Juan Manuel Santos said "A trade war would be suicidal for the industrialized countries ... But for the developing world a trade war would be catastrophic ..." U.S. President-elect Bill Clinton has not made clear what his stance on the oilseed negotiations would be, but on agriculture in general has said, "Until the EC and others play by fair trade rules, I would play by their rules." Source: Frances Williams, David Gardner, "GATT Chief Dunkel to Intervene in Europe-U.S. Row, FINANCIAL TIMES, November 10, 1992; Robert Evans, "GATT Envoys Mandate Dunkel Act to Save Trade Talks," REUTER, November 9, 1992; Craig Forman, Peter Gumbel, "Trade Talks Expose Disarray in the EC," WALL STREET JOURNAL, November 10, 1992; Peter Blackburn, "FOCUS - EC Wants GATT Talks, France Softens Stance," REUTER, November 9, 1992; "EC Wants to Avoid Provoking Trade War With U.S., UP, November 10, 1992; "EC Oilseed Lobby Says Wants GATT, US Must Move Too," REUTER, November 11, 1992; Richard Murphy, "German Industry, Slamming Delors, Calls for Trade Deal," REUTER, November 9, 1992; "Trade, Infrastructure Need Quick Action," JOURNAL OF COMMERCE, November 5, 1992; Sharon Schmickle, "Soybean Growers Wary of Sanctions," MINNEAPOLIS STAR-TRIBUNE, November 7, 1992; " EC Should Not Retaliate vs U.S. on Oilseeds - MITI, REUTER, November 9, 1992; "Canada Disapproves if U.S. Trade Sanctions," UP, November 6, 1992, "U.N. Body Says Trade War Would Crush Poor Nations," REUTER, November 9, 1992. __________________________________________________ CANADIAN BREWERS WANT GATT ARBITRATION Some Canadian brewers are calling for binding arbitration under GATT to end their beer trade war with the U.S. The dispute started when the U.S. imposed retaliatory duties on Canadian beer for an environmental levy on cans it claimed was discriminatory. More U.S. beer than Canadian beer is sold in cans. Third party arbitration of the dispute could occur under the U.S.-Canada Free Trade Agreement rather than GATT. Source: Jason Szep, "Canadians Push to Cap Costly Beer Trade War," REUTER, November 6, 1992. __________________________________________________ NAFTA News Summary __________________________________________________ BORDER POLLUTION MONITOR FEARS NAFTA Currently allotted a $250,000 annual budget to enforce environmental standards over an 8,800 square mile region along the U.S.-Mexico border, Hector Villa is concerned about the prospect of increased industrial growth resulting from the North American Free Trade Agreement (NAFTA) without adequate funds to control it. Villa is the district manager for the Texas Water Commission, the state's main evironmental enforcement agency. His inspectors currently face massive levels of illegal dumping without the protective gear to handle toxic materials. The minimal level of environmental regulation in the region is indicated by the fact that more than 25 years after maquiladoras have begun operating on the Mexican side of the border, no agency does testing for heavy metals or other industrial effluents in the Rio Grande. Source: Robert Tomsho, "Environmental Posse Fights Lonely War Along the Rio Grande," WALL STREET JOURNAL, November 10, 1992. __________________________________________________ Other Trade News 1. China has threatened to stop buying planes from Boeing if the Clinton Administration revokes China's most-favored-nation trading status. Clinton has said he would approve the preferential status -- which allows goods otherwise facing 70% tariffs to enter the U.S. with 3% tariffs --only if China enacts human rights and economic reforms. China's threats not to buy Boeing aircraft could influence Clinton's decision. Boeing is the largest U.S. exporter. Source: "Boeing Fears Clinton Will Reverse China's Most-Favored- Nation Status," JOURNAL OF COMMERCE, November 9, 1992. __________________________________________________ Resources: 1. A package of reports on the U.S.-EC dispute on agriculture subsidies: "GATT: U.S.-EC Brinkmanship, Again," THIRD WORLD ECONOMICS, October 16-31, 1992, Published by the Third World Network. 87 Cantonment Road, 10250 Penang Malaysia. __________________________________________________ Produced by: Hannah Holm 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 Confrences: 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 __________________________________________________