TRADE NEWS BULLETIN Thursday, November 12, 1992 _________________________________________________________ GATT News Summary _________________________________________________________ DUNKEL GETS TO WORK ON EC-US FARM DISPUTE European officials sounded optimistic that a breakthrough in the agriculture trade impasse between the European Community and the United States is close at hand. GATT Director-General Arthur Dunkel, who is set to begin private talks with EC and U.S. officials, said yesterday he was optimistic an agreement could be reached because France was showing clear signs of giving in to demands to cut payments to farmers. Dunkel said also that Germany now seems determined to conclude a deal by the end of the year. Dunkel was scheduled to hold discussions with EC officials today in Brussels before traveling to Washington for Monday talks with U.S. trade officials. Trade officials from the U.S. and EC say EC Agriculture Commissioner Ray MacSharry now has the negotiating power to strike a deal. MacSharry said the two sides were "very, very close to finding a deal." The EC has offered to cut subsidies to oilseeds farmers and cut production to approximately 9.5 million tons. The U.S. would likely agree to this offer if the EC could guarantee production at this level. The Europeans contend they cannot make guarantees because crop yields vary from year to year. The U.S. and EC are expected to resume talks next week. In Sao Paolo, former U.S. Secretary of State Henry Kissinger said the U.S. threat to impose prohibitive tariffs on EC goods shows that a failure to conclude GATT negotiations will lead to increased protectionism. Speaking to a group of Brazilian business leaders, Kissinger called the EC-US stalemate a "political problem" because, "France has parliamentary elections in March and therefore the French government does not want to face the outrage of its farmers by agreeing to a change in agricultural policy." Kissinger said he expected the sides to reach a compromise. Kissinger's remarks were in line with those of the Bush Administration, which is trying to convince French government officials and farmers that it is in their best interest to finish the Uruguay Round. An informal Agriculture Department study said a reduction in French agriculture subsidies and a conclusion to the round would result in greater demand for processed French products which would create "new opportunities for French farmers." The report projected that each additional $1 billion in new exports would create 35,000 to 40,000 jobs in France. Source: Roger Cohen, "A Hopeful Outlook on GATT," NEW YORK TIMES, November 12, 1992, p. C1; "U.S. Sending Warning to EC on GATT - Kissinger," REUTER, November 10, 1992; "U.S. Says Successful GATT Pact Means Export Boom for France," REUTER, November 10, 1992; David Gardner, "Optimism on Trade as EC, US Agree to Fresh GATT Talks," FINANCIAL TIMES, November 12, 1992, p. 1; Keith M. Rockwell, "Route to Trade War Marked By Mistrust, Misunderstanding," JOURNAL OF COMMERCE, p. 3A; Stephen Nisbet, "EC Foresees Renewed U.S. Farm Talks Soon," REUTER, November 11, 1992. _________________________________________________________ NAFTA News Summary _________________________________________________________ CANADA JOINS MEXICO IN OPPOSING ANY NAFTA CHANGES Canada has joined Mexico in opposing possible efforts by President- elect Bill Clinton or the Congress to renegotiate the North American Free Trade Agreement. A Canadian official said the government would prefer establishing parallel agreements over changing the NAFTA itself. Clinton has expressed support for NAFTA if it includes tighter rules on environment, workers' rights and health and safety standards. Source: Bernard Simon, "Canada in Tough Line on NAFTA," FINANCIAL TIMES, November 12, 1992, p. 5 _________________________________________________________ US BEEF INDUSTRY 'OUTRAGED' BY MEXICAN TARIFFS The U.S. National Cattlemen's Association said it was 'outraged' by Mexico's recent decision to impose 15-25 percent tariffs on several U.S. beef products. "Without question, this violates the spirit of the North American Free Trade Agreement," NCA President Jimmie Wilson said in letters to Agriculture Secretary Edward Madigan and U.S. Trade Representative Carla Hills. The Mexican government said the tariffs are necessary because of the sharp increase in beef imports since tariffs were reduced in the late 1980s. President Carlos Salinas de Gortari said domestic producers were badly hurt by the increased imports. Mexican officials added the tariffs "are within Mexico's GATT-bounded rates." The tariffs would be removed once NAFTA is implemented. Source: "U.S. Cattlemen 'Outraged' by Mexico's Beef Tariffs," REUTER, November 11, 1992; "Mexico Imposes Tariffs on Imported Beef," UPI, November 11, 1992. _________________________________________________________ MEXICAN ELECTIONS INCREASE PRESSURE ON SALINAS Mexico's ruling Institutional Revolutionary Party (PRI) claimed victory in all four state elections held Sunday, but opponents are charging fraud. The elections led some human rights' organizations to call for political reforms to accompany the economic reforms implemented under President Carlos Salinas. "(Salinas) has ... stated that economic reforms must precede political reforms, but with these latest elections the gap between the political and economic reforms is widening," said Douglas Payne of New York-based human rights advocates, Freedom House. Referring to the North American Free Trade Agreement, Payne asked, "Can the United States be sure it is doing the right thing forging an agreement normally reserved for modern democracies?" Mexico has shown interest in joining the Paris-based Organization of Economic Cooperation and Development (OECD), but criteria for admission to OECD includes the encouragement of multi-party elections. OECD has praised Mexico's pursuit of NAFTA. Source: William Cormier, "Mexico-Elections," AP, November 12, 1992. _________________________________________________________ JAPAN SCHEDULES CONFERENCE TO DISCUSS NAFTA Japan continues to express strong concerns about the North American Free Trade Agreement, particularly the plan to expand the trade pact to other regions. The Japanese government has organized a special conference tentatively titled, "The Changing World Economy and the Asia Pacific Region" at which NAFTA will be "the most import issue," according to a government official. The conference, which will take place in Tokyo in April, will also be used to prepare regional views to present to June's summit of the Group of Seven industrialized countries. Source: Richard McGregor, "Tokyo Calls NAFTA Summit," AUSTRALIAN, November 1992. _________________________________________________________ Resources: 1. The National Wildlife Federation has released a report entitled, NEW INITIATIVES TO REDUCE PACKAGING WASTE, THE IMPLICATIONS FOR TRADE POLICY, AND A SUGGESTED RESPONSE BY THE US GOVERNMENT by Rodrigo J. Prudencio. For a copy, contact NWF, 1400 Sixteenth Street, NW, Washington, DC 20036-2266. (202) 797-6800. _________________________________________________________ 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 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 _________________________________________________________