TRADE NEWS BULLETIN Monday, November 16, 1992 _________________________________________________________ GATT News Summary _________________________________________________________ LEAKED REPORT INDICATES MACSHARRY GOING BEYOND CAP In agriculture negotiations with the United States, European Community Agriculture Commissioner Ray MacSharry is going beyond the price and production cuts agreed under the EC's recently reformed Common Agricultural Policy (CAP), according to a document obtained by a French newspaper. The Paris-based LIBERATION newspaper said the document, which was obtained from a European Commission official, reveals that the 10 million ton limit on oilseeds production offered to the U.S. by MacSharry would require 21 percent of land to be taken out of production compared to the 15 percent under CAP. Further, if the U.S is successful in its demand for an output ceiling of 9 million tons, "set-aside" land could reach 38 percent. MacSharry briefly resigned as EC agriculture negotiator last week, claiming that Commission President Jacques Delors was blocking a deal. Delors and others had accused MacSharry of offering more concessions than he was authorized in searching for a deal. The Uruguay Round of the General Agreement on Tariffs and Trade (GATT) is stalled over the EC and U.S. failure to reach an agriculture agreement. The U.S. recently announced it would impose $300 million in retaliatory tariffs on European products if the EC does not reduce its farm subsidies by December 5. Meanwhile, the heads of 27 leading European industrial companies called on Delors to seek an EC-U.S. accord on agriculture. "Business leaders do not find it acceptable that the prospects of recovery for the whole range of manufacturing and service industries should be endangered by the continued failure to reach a mutually satisfactory agreement on trade in agriculture products," members of the European Round Table (ERT) told Delors in a meeting. But European farm leaders applauded Delors for his "clear and unbending" position in EC-US negotiations. The farm lobby organization COPA called on Delors to continue "to defend the interests of agriculture to the benefit of the whole Community." Source: David Gardner, "Dispute Over Trade Talks Revived By Leaked Report," FINANCIAL TIMES, November 16, 1992, p. 1; "European Farm, Industry Chiefs Pull on Opposite Ends," REUTER, November 16, 1992. _________________________________________________________ DUNKEL MEETS US OFFICIALS TODAY GATT Director-General Arthur Dunkel will talk with Bush Administration officials today in an attempt to settle the long- running dispute over European farm payments. Dunkel, who arrived in Washington Sunday after talks with European officials, will meet with U.S. Trade Representative Carla Hills and Agriculture Secretary Edward Madigan. "I think there is now a real political will (to reach a solution) and I hope this time it will work," Dunkel said. He said he would tell USTR Hills that the EC seemed ready to reach an agreement. EC External Affairs Commissioner Frans Andriessen and Agriculture Commissioner Ray MacSharry will meet with Hills and Madigan Wednesday to work on a compromise. Source: Peter Blackburn, "EC Farm Meeting to Review World Trade Deal Prospects," REUTER, November 15, 1992; Robert Trautman, "Talks to Open Amid Signs Trade War May Be Averted," REUTER, November 16, 1992. _________________________________________________________ GATT THREATENS WORLD ENVIRONMENT, GROUPS SAY While politicians and business officials are promoting the economic benefits of GATT, environmentalists say it may be the single-greatest threat to laws protecting the world's environment. Roger Wilson of Greenpeace in Amsterdam argues that because GATT endorses free trade as its number one priority, environmental laws will be overturned. "We have already seen situations where environmental regulations have been determined by GATT to be illegal barriers to trade and we fear this will be the trend for the future," Wilson said. As evidence, environmentalists point to a GATT ruling that U.S. bans on tuna imports caught in dolphin-unsafe methods are unfair trade barriers. They say that ruling could set a dangerous precedent which could stifle efforts of other countries to protect animal and plant species. Most environmentalists welcome the impasse in concluding the Uruguay Round of GATT as an opportunity to remind people of GATT's environmental consequences. "As long as we don't have a massive trade war, then I think this delay could be beneficial," said Charles Arden-Clarke of the World Wide Fund for Nature in Switzerland. Source: Ben Hirschler, "Why GATT Makes Greens See Red," REUTER, November 16, 1992. _________________________________________________________ NAFTA News Summary _________________________________________________________ NAFTA COULD END CLINTON'S "HONEYMOON" WITH CONGRESS An article in Saturday's WASHINGTON POST asserts that if Bill Clinton tries to force the North American Free Trade Agreement on skeptical Democrats, "whatever honeymoon he enjoys with Congress could turn sour early." A number of Democrats are opposed to the trade pact, believing it will lead to U.S. job losses because of cheaper labor and looser environmental enforcement in Mexico. "We just had a jobs election - that was clearly the overriding issue," said Senator Donald W. Riegle Jr. (D-Michigan), a strong opponent of NAFTA. "Something as potentially destabilizing as this (agreement) has to be dealt with very carefully." Clinton has said he supports NAFTA if "supplemental agreements" on the environment, labor standards and import safeguards are submitted to Congress. He told Mexican President Carlos Salinas de Gortari that he would not try to renegotiate the trade pact itself. Source: Guy Gugliotta, "North American Free Trade Pact Should Shorten Clinton Honeymoon; Some Democrats in Congress, Labor Oppose Accord as Job Destroyer," WASHINGTON POST, November 14, 1992. _________________________________________________________ REPORT TRIES TO EASE PUERTO RICAN CONCERNS ABOUT NAFTA Puerto Rican government officials and economists have expressed concern that a more competitive Mexico under the North American Free Trade Agreement would reduce Puerto Rico's earnings from exports. But a study commissioned by the island's development bank concludes that, if NAFTA were implemented, Puerto Rico would enjoy advantages over Mexico in pharmaceuticals, electronic components and accessories, professional instruments, electronic computing and rum distilling. The report, undertaken by KPMG Peat Marwick of the U.S., said Puerto Rico will have a more difficult time competing in other sectors such as clothing, textiles, tuna and leather footwear industries. Source: Canute James, "Puerto Rico Sees Gains in NAFTA," FINANCIAL TIMES, November 13, 1992, p. 3. _________________________________________________________ Events: The American Conference Institute has organized a two-day conference December 2-3 in Washington, DC to look at "business implications and legal rules" for the North American Free Trade Agreement. Among the speakers are U.S. Trade Representative Carla Hills, Mexican Secretary of Commerce and Industry Jaime Serra- Puche and Canadian Trade Minister Michael Wilson. For a complete agenda or a registration form, call (416) 926-8200. The registration fee is only $895 per person. For government employees and academics the fee is $595. _________________________________________________________ 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 _________________________________________________________