TRADE NEWS BULLETIN Volume II Number 55 Monday, March 29, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ GREENSPAN SAYS NAFTA MEANS NO NET JOB LOSS, GEPHARDT SUPPORTS SIDE ACCORDS Alan Greenspan, U.S. Federal Reserve chairman said the North American Free Trade Agreement (NAFTA) should not result in a net loss of U.S. jobs, as contended by many U.S. labor organizations. He said that a lower wage rate will mean lower productivity levels, and therefore U.S. businesses will not be lured south of the border to take advantage of cheap labor. "The presumption that this (NAFTA) is a major devastating effect to the American economy just does not make much sense to me," said Greenspan. AFL-CIO leaders however continue to oppose the agreement, citing half a million manufacturing jobs already lost to Mexico as cause for concern, and anticipate that the agreement will only accelerate this movement. Meanwhile, U.S. House Majority Leader Richard Gephardt (D-MO) said he is willing to negotiate problems withi~ OAFTA through side agreements. After meeting with Mexican President Carlos Salinas de Gortari last week, Gephardt was more supportive of : e trade pact than he has been in the past. He was reassured by Salinas' strong commitment to the border region clean-up. "President Sallinas and I openly and honestly discussed how to successfully conclude supplemental agreements that our countries are currently negotiating, "said Gephardt. Sources: "Greenspan Sees No Net Job Loss From NAFTA," REUTER, March 25, 1993; Bill Cormier, "Mexico-Free Trade," AP, March 24, 1993. ________________________________________________________ CANADIAN PARLIAMENT MEMBERS OPPOSE NAFTA PROCESS Last week Canada's Parliament erupted in strong opposition to the Conservative government's attempt to push NAFTA speedily through the legislative approvalprocess. Conservative 's have promised to approve NAFTA before Prime Minister Brian Mulroney steps down in June, and plan to pass the second reading of the draft in less than two days. Opposition members yelled and pounded on tables during last week's session in an attempt to disrupt the debate. "We think it is an outrage that the Parliament will only have one and a half days at a second reading," said Bill Blake, deputy House Leader of the opposition New Democratic Party. After a second reading, NAFTA must move into a committee stage, and then to a third reading before it can receive royal assent, which finalizes the agreement. Source: "Canadian Parliament Erupts Over NAFTA Ratification," REUTER, March 25, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ GATT REPORT SAYS WORLD TRADE UP IN 1992 World trade expanded in 1992 for the first time in three years, according to figures released by the General Agreement on Tariffs and Trade (GATT) annual report. The report said the volume of merchandise trade on the world market rose 4.5% last year, up 1.5% from 1991. The overall value of world trade rose 5.5% last year, reaching $3,700 billion. "If the forecasts of a modest pickup in world economic growth in 1993 turn out to be correct, it is plausible to expect an expansion of world trade in real terms of at least equal to the 4.5% recorded last year," the report stated. The recession in western Europe and Japan could dampen that outlook. World trade grew. maintained its first place position in world trade with export sales up 6% and imports up 8.6% last year. The strongest showing in exports came from China, Hong Kong, South Korea, Malaysia, Singapore, Thailand and Taiwan. Combined export figures for China and Hong Kong demonstrate their potential to overtake the UK and become the world's fifth largest exporter. Latin America experienced the greatest rise in imports which were up 18.5%. The Eastern European economies of Bulgaria, the Czech and Slovak Republics, Hungary, Poland and Romania achieved unprecedented growth in export and import volumes in 1992. Imports by the EC and European Free Trade Association (EFTA) from these countries grew by 20% while exports climbed 24%. This is the first time Eastern Europe has registered such significant growth since privatization began following the collapse of communism in the region in 1989, GATT said. The GATT report recommended that world markets be kept open and pushed for a new attempt to complete the stalled Uruguay Round of world trade talks. "Trade has been a source of relative strength in an otherwise mostly weak economic environment," the report concluded. Source: David Dodwell, "Growth In World Trade Speeds Up After Three Years," FINANCIAL TIMES, March 29, 1993; Robert Evans, "World Trade Turned Upwards in 1992, GATT Says," REUTER, March 28, 1993. ________________________________________________________ AUSTRIA AND HUNGARY SIGN FARM TRADE PACT Austria and Hungary signed a farm trade agreement late last week which will allow Hungary to pursue membership in the EFTA. The agreement will lower duties and raise quotas, resulting in better market access for both countries, according to Austrian Economy Minister Wolfgang Schuessel. "It is a realistic assumption that in the next three years trade volume will increase by 20-25%," said Hungary's Minister for International Economic Relations Bela Kader. Negotiators for the two sides experienced great difficulties as each country sought to protect its farm sectors from the other's imports. "We expect our trade volumes will be stimulated," Schuessel concluded. Source: "Austria, Hungary Sign Farm Trade Agreement," REUTER, March 26, 1993. ________________________________________________________ Produced by: Gigi Boivin The Institute for Agriculture and Trade Policy (IATP) 313 Fifth Street SE_______________________________________________________