TRADE NEWS BULLETIN Volume 2 Number 31 Thursday, February 18, 1993 _________________________________________________________ NAFTA News Summary _________________________________________________________ MEXICO GOVERNMENT BANK WITHDRAWS INVESTMENT FUNDS An hour after meeting with U.S. Trade Representative Mickey Kantor, Mexican Trade Minister Jaime Serra Puche announced that Mexico's government development bank will withdraw investment in a fund set up to buy U.S. firms and move them to Mexico to take advantage of cheap labor. Mexico was sharply criticized for providing $3.75 million, nearly 25% of total funding, for the Delaware based investment group, AmeriMex Maquiladora Fund L.P. Kantor reportedly told Serra that "it would not be productive" to begin talks on side agreements to NAFTA until the issue was resolved. Serra's quick response to the funding issue reveals Mexico's eagerness to complete the North American Free Trade Agreement, and suggests that Mexico may be willing to make considerable concessions in establishing the supplemental accords. "The government of Mexico did not realize that any such arrangement would have put the entire NAFTA in jeopardy," said Senator Patrick Moynihan (D-New York), chair of the Senate's Finance Committee. Kantor announced Mexican, Canadian and American officials will meet March 15 in Washington to begin discussion on the side accords. Kantor repeated the U.S. will not reopen the NAFTA text itself. Sources: Tim Golden, "Mexico Pulls Out of Fund That Has Roiled Trade Issue," NEW YORK TIMES, February 18, 1993; "U.S. Weakens Fund to Lure US Jobs to Mexico," REUTER, February 17, 1993; Vicki Allen, "U.S.-Mexican Trade Talks Set for Mid-March," REUTER, February 17, 1993. _________________________________________________ AFL-CIO SAYS U.S. SHOULD RECONSIDER NAFTA, JOIN EC Labor leaders have asked President Bill Clinton to renegotiate NAFTA to "stop the flight of jobs" to Mexico. Following the AFL-CIO's annual winter meeting, the 14-million member union released a list of nearly two dozen conditions it wants addressed in the NAFTA. Top priorities include raising working conditions, living standards and enforcement of environmental standards, especially along the U.S.- Mexico border. AFL-CIO President Lane Kirkland even suggested the U.S. try to join the European Community instead of NAFTA. "If broader access to markets is to be a priority, then it would make sense to me that instead of putting Mexico first in our order of priorities, that we should seek to enter the European Community and make the Atlantic Alliance economically meaningful," Kirkland said. One side proposal drafted by the Economic Policy Institute suggests gradually increasing Mexico's minimum wage -- currently at 60 cents an hour -- to match U.S. levels. If Mexico becomes less competitive as its wages increase, the think tank proposes a new "social tariff" that would tax non-NAFTA imports an amount equal to the difference between non-NAFTA wages and the U.S.-Mexico minimum wage. Sources: Jane Sutton, "AFL-CIO Chief Calls on Clinton to Scrap NAFTA," UPI, February 18, 1993; "U.S. Unions Soften NAFTA Opposition, Seek New Pact," REUTER, February 17, 1993; Robert Burns, "Labor-Trade," AP, February 17, 1993; Tim Shorrock, "Labor Shifts Stance, Warms Up To NAFTA," JOURNAL OF COMMERCE, February 16, 1993; "NAFTA Must Protect Workers Think Tank Report Says," JOURNAL OF COMMERCE, February 16, 1993. _____________________________________________________________ BC TEACHERS' FEDERATION OPPOSES NAFTA The British Columbia Teachers' Federation, representing 40,000 public school teachers, announced its opposition to NAFTA. In a presentation to the Select Standing Committee on Economic Development, Science, Labor, Training and Technology, the federation argues that education, a social service, should not be included in the trade deal. "This treatment of services as economic commodities presents a clear and present danger to the education and social services that have brought Canada to its comparatively high quality of life." The Federation urges for government funding to allow the public to conduct more studies on NAFTA's implications on education. Source: Statement by the British Columbia Teachers' Federation, January 1993. _________________________________________________________ GATT News Summary _________________________________________________________ TAIWAN PREPARES FOR GATT - WILL REVIEW BEEF TARIFFS Taiwan will review its beef import duty structure as it prepares to become a member of GATT. Currently Taiwan applies a lower import duty to high-grade beef than lower-grade cuts. Australia, New Zealand and Canada contend the practice is inconsistent with GATT rules and that it has allowed U.S. beef imports to dominate the market. Almost all beef products from Australia, New Zealand and Canada are classed low-grade and face higher levies than the high- grade U.S. beef. "The difference in opinion arises from different beef grading standards used by the four countries ... there will be an adjustment of policy in view of the pending GATT application," said a Taiwan official. Taiwan announced last week that it would restructure and open wine, spirits and cigarette markets to comply with GATT. Sources: Peter Wickenden, "Taiwan to Review Beef Tariffs in Preparation for GATT Entry," JOURNAL OF COMMERCE, February 12, 1993. _________________________________________________________ Resources: The Winter 1993 edition of RESOURCE CENTER BULLETIN discusses the impact of NAFTA on labor conditions in the U.S. and Mexico. It details current proposals of the AFL-CIO and the response of Mexican labor unions. For a copy of the bulletin, contact the Inter- Hemispheric Resource Center, Box 4506, Albuquerque, NM 87196. Tel: (505) 842-8288. Fax: (505) 246-1601. _________________________________________________________ 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 _________________________________________________________