TRADE NEWS BULLETIN Wednesday, November 18, 1992 _________________________________________________________ GATT News Summary _________________________________________________________ EC-US TALKS BEGIN TODAY - FRENCH MAINTAIN OPPOSITION Just hours before the United States and European Community were set to begin key agriculture trade talks in Washington, a statement from the office of French President Francois Mitterand reiterated his opposition to any agreement that goes beyond the subsidy and production cuts outlined in the EC's Common Agricultural Policy (CAP). The office also announced the French parliament would be asked to debate the trade issue and approve a government-drafted position on the negotiations. U.S. and EC negotiators planned to meet today to avert a looming trade war over EC subsidies, which the U.S. claims cost American farmers $1 billion in sales a year. Still in question is what France's reaction would be if the EC and U.S. reach a deal without France's blessing. The French government announced their continued opposition after an emergency inner cabinet meeting on the talks. "The inner cabinet recalls that France has always wanted a global and balanced agreement beneficial to the world economy. It notes that the conditions for this do not currently exist." On Monday night, EC agriculture negotiator Ray MacSharry was granted a "clear benediction" by the EC to achieve a deal with the U.S. At a farm ministers meeting, France tried to shore up support from other EC members by presenting studies of the predicted effects of a new agriculture deal, but according to UK Agriculture Minister David Curry, "Nobody endorsed the French figures." Ireland and Spain expressed some concern that a GATT deal would, as France claims, go beyond the recently reformed CAP. But France's support has declined since last week. MacSharry disputed French claims that a deal would require that more land be taken out of production than the 15 percent "set-aside" agreed under CAP. French farmers, who export 50 percent of their agriculture production and oppose U.S. demands for further reductions, staged protests today in France, including a large one in front of the U.S. embassy in Paris. Some fear a completed GATT would set off massive, destructive protests. Farmers already object to reforms in the EC's Common Agricultural Policy (CAP) and say that an agriculture deal would further cut their exports. EC trade negotiator Frans Andriessen contends a new deal would remain within the framework of CAP. The French wheat growers' association, AGPB, said the U.S. demand for cuts would more than halve the EC's share of the world grain market by the year 2000. "The issue would no longer be only economic, but also strategic, since grain exports are a food weapon," AGPB said in its monthly newsletter. France's largest opposition party, the neo-Gaullist RPR, called on the French government to veto any GATT deal because of its effects on French agriculture. In a separate statement, the Senate economic affairs commission also called on the government to exercise its right of veto if a trade accord set quantitative restrictions on agricultural production or exports. The U.S. rejected an EC proposal to reduce EC oilseeds production to 9.5 million tons and the volume of its subsidized wheat exports by 21 percent. Source: ICDA UPDATE, URUGUAY ROUND IN GATT AND TRADE RELATED ISSUES, May-October 1992, "GATT Deal Would Halve EC Grain Market Share - Group," REUTER, November 18, 1992; "Trade Talks," AP, November 18, 1992; Martin Crutsinger, "Trade," AP, November 17, 1992; Andres Wolberg-Stok, "France Slams Possible Deal in Key Trade Talks," REUTER, November 18, 1992; David Gardner, "France Fails to Block Farm Accord," FINANCIAL TIMES, November 17, 1992, p. 1; "French Opposition Party Urges Veto of GATT Accord," REUTER, November 18, 1992. _________________________________________________________ CHINA DENIES GATT ENTRY MEANS CHEAP IMPORTS A senior Chinese official denied widespread reports that China's possible re-entry into the General Agreement on Tariffs and Trade would mean a flood of cheap imports into the country. "Once China joins GATT, it doesn't mean there won't be any import controls," Ministry of Foreign Economic Relations official Long Yongtu told the LEGAL DAILY. Long said there were a number of safety valves China could employ if domestic industries were threatened but that any controls China places on imports would be consistent with GATT guidelines. Source: "China Denies GATT Membership Means Import Flood," REUTER, November 17, 1992. _________________________________________________________ NAFTA News Summary _________________________________________________________ MEXICO NOT PUSHING NAFTA, WAITING FOR CLINTON Mexico has stopped pushing for quick passage of the North American Free Trade Agreement amid signs the Clinton Administration may want to focus on the domestic economy first, the NEW YORK TIMES reports today. Apparently the Mexican government will not push President-elect Bill Clinton nor the 121 new members of Congress into a rapid decision on the trade pact. Rather, Mexican officials say, they will discuss any of Clinton's objections to the pact at his convenience. At a hearing, Canadian Trade Minister Michael Wilson said he expected NAFTA to remain on schedule despite the election of Clinton. Wilson said the leaders of Canada, the United States and Mexico will probably sign the NAFTA toward the end of December. "We will, however, be watching the developments in the United States and in Mexico closely and will work both with the outgoing and incoming administrations as well as (Mexican) President Salinas and his team to ensure that we have a coordinated approach to implementing the agreement," Wilson said. The agreement, which is scheduled to go into effect January 1, 1994, must still be approved by the legislatures of the three countries. Clinton, who believes in free trade in principle, has expressed concern that NAFTA may encourage an exodus of U.S. jobs to Mexico, as businesses take advantage of Mexico's lax environmental regulations and labor laws. Clinton has said he would not seek a renegotiation of NAFTA, but that he would enact "supplemental" agreements. In listing his top priorities upon assuming office, Clinton has noticeably not mentioned completing the NAFTA or GATT accords trade pacts. Meanwhile, the International Trade Commission began conducting an independent review of NAFTA yesterday. The six-member commission, which was asked by Congress to conduct an investigation, heard testimony from a variety of supporters and opponents of NAFTA. Source: Keith Bradsher, "Trade Pact May Have to Wait," NEW YORK TIMES, November 18, 1992, p. C1; "NAFTA to be Signed Next Month," Canada Says," REUTER, November 17, 1992. _________________________________________________________ Resources: Just released is the May-October 1992 edition of ICDA UPDATE: URUGUAY ROUND NEGOTIATIONS IN GATT AND TRADE RELATED ISSUES. It's available from the International Coalition for Development Action (ICDA), Rue Stevin 115, B-1040 Brussels, Belgium. Tel: 32-2-230-04-30. Fax: 32-2-230-03-48. _________________________________________________________ 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 _________________________________________________________