TRADE NEWS BULLETIN Volume II Number 26 Thursday, February 11, 1993 _________________________________________________________ NAFTA News Summary _________________________________________________________ WHEAT GROWERS OPPOSE NAFTA AFTER PRICING DECISION A bi-national trade panel found "no evidence" that Canada's wheat pricing system violates the terms of the Canada-U.S. Free Trade Agreement (FTA). U.S. grain producers had charged that Canadian Wheat Board transportation subsidies of 50 cents per bushel lower Canadian production costs unfairly, undercutting U.S. durum prices. Following the announcement, the U.S. National Association of Wheat Growers (NAWG) announced it would oppose the North American Free Trade Agreement. "When this agreement was being negotiated, we were told it would remove subsidies and promote free trade, a philosophy we embrace," said a NAWG spokesperson. "Now we're told Canadian subsidies don't count and that we have no redress." U.S. senators from durum producing states also criticized the panel's decision. "U.S. negotiators sold out the interests of American farmers when they negotiated the U.S.-Canada Free Trade Agreement and now we learn that agreement's dispute-resolution mechanism is a hoax," said Senator Byron Douglas (D-North Dakota). U.S. Trade Representative Mickey Kantor said last week he would consider introducing legislation requiring the U.S. to launch an unfair-trading case against Canada. U.S. farmers have lost over 20 percent of their U.S. durum market share to Canadian imports since 1987. Sources: "Trade Committee Approves Canada's Pricing of Wheat," WALL STREET JOURNAL, February 10, 1993; "Panel Says Canada Not Dumping Durum in U.S.," REUTER, February 9, 1993; Leo Ryan, "Trade Panel Clears Canada On US Wheat Complaint," JOURNAL OF COMMERCE, February 9, 1993; "U.S. Wheat Growers to Oppose NAFTA Due to Durum Rule," REUTER, February 10, 1993. _________________________________________________________ GATT News Summary _________________________________________________________ US STEEL DUTIES CRITICIZED AT GATT The governing council of the General Agreement on Tariffs and Trade heard close to 20 countries denounce a preliminary U.S. decision to impose punitive anti-dumping duties on steel imports. Many of the delegations blamed the tariffs, of up to 109 percent on $2 billion worth of steel imports, on the U.S. steel industry, which they said failed to respond to a weak international market. The European Community offered to spend more than $1 billion to restructure its steel industry to reduce excess production,; Mexico vowed to protect its steel producers. Brazil, Japan and the Nordic countries said they will seek discussions and a new Multilateral Steel Agreement. "These actions awake pressures for retaliation and establish parameters of protectionism for other sectors and other countries," said Celso Amorim, Brazil's trade ambassador. U.S. Agriculture Secretary Mike Espy said the steel duties are just the beginning of U.S. efforts to open markets and seek fair trade. "This administration will insist that our trading partners and competitors comply with trading rules that are fair and equitable," Espy told a U.S. Feed Grains Council conference. "You've already seen some of the tough actions on steel import quotas and other areas ... and you can expect more such decisions." The Economic Policy Institute says U.S. restrictions on steel imports in the 1980s actually benefited foreign steel manufacturers by driving prices higher. In a study, the think-tank said Voluntary Restraint Agreements (VRAs), cost the U.S. economy close to $1 billion a year from 1984-1989. The institute favors protecting U.S. steelmakers but recommends tariffs and auction quotas over a renewal of VRAs, which expired in March 1992. Sources: Lionel Barber, "European Steelmakers Willing to Discuss Cuts," FINANCIAL TIMES, February 8, 1993; "Mexico Vows Protection Against U.S. Steel Tariffs," JOURNAL OF COMMERCE, February 8, 1993; "U.S. Steel Duties Attacked at GATT," REUTER, February 9, 1993; Frances Williams, "Washington in Row Over Steel Duties," FINANCIAL TIMES, February 10, 1993; Vicki Allen, "Espy Says Administration to Take Additional Tough Trade Stances," REUTER, February 8, 1993; Asra Q. Nomani, "Import Curbs on Steel Said to Cost Billions," WALL STREET JOURNAL, February 11, 1993. _________________________________________________________ JAPAN MAY OPEN RICE MARKETS AS CONCESSION IN TALKS Recent statements by the Japanese government and the leading opposition Social Democratic Party indicate that Japan is close to lifting its ban on foreign rice imports. The Japanese Agriculture Ministry has already begun investigating means of compensating rice farmers affected by the move. The policy will likely include more funds for co-operatives and subsidies to encourage farmers to switch crops. Trade officials speculate that rice market concessions may be used as a negotiating tool in upcoming trade talks between the Clinton Administration and Japan. U.S. Ambassador Michael H. Armacost suggested that Michio Watanabe, Japan's deputy prime minister, bring something with him to defuse tensions that have deepened in recent weeks." Japanese officials are eager to define a new relationship with the U.S. before the Clinton Administration rules on other pending U.S.-Japan trade disputes. Sources: "Japan to U.S. Trade Imbalance Is A Two-Way Street," REUTER, February 10, 1993; "Japan, U.S. Talks to Set Tone for Critical Relationship," REUTER, February 10, 1993; "Japan Official Plans No Initiatives in U.S. Visit," NEW YORK TIMES, February 11, 1993. _________________________________________________________ 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.apc.org _________________________________________________________