TRADE NEWS BULLETIN Volume II Number 63 Thursday, April 8, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ CANADIAN CHAMBER OF COMMERCE LEERY OF SIDE AGREEMENTS The Canadian Chamber of Commerce recently said in a statement that supplemental agreements on the environment, labor and import surges should not be used to disguise trade protectionism. The Chamber, which traditionally represents conservative business and professional organizations, also opposes with using trade sanctions as a tool to enforce regulations. "They could evolve into a new set of non-tariff barriers," said a Chamber committee . Many members believe the environmental provisions already embodied in NAFTA will promote environmentally sustainable development. U.S. Trade Representative Mickey Kantor similarly said in a statement last month that trinational co-operation among businesses and governments would maintain enforcement based on political pressure alone. These ideas have sparked wide opposition from environmental and labor groups demanding enforcement provisions. Source: "Canada Business Group Wary of Environmental Barriers," REUTER, April 7, 1993. ________________________________________________________ CONSUMER ECONOMIST SEES NAFTA AS EROSION OF WAGES, BENEFITS Eileen Trzcinski, consumer economist with Cornell Cooperative Extension, recently described NAFTA as having an inevitable negative impact on U.S. wages and benefits. "Because wages are much lower in Mexico, wages in the U.S. and Canada may continue to erode, as they have done in recent years," Trzcinski said. She explained that the downward pressure on wages and benefits is not fully understood by most U.S. citizens. "American workers need to know how they will be affected by this. And so far, they don't," she said. Reportedly Canadians, who have already experienced negative impacts on health care as a result of the U.S.-Canada Free Trade Agreement (FTA) signed in 1989, are strongly against NAFTA ratification. Trzcinski, citing Canadian opposition to NAFTA, urges U.S. workers to examine the trade pact and its clauses in order to fully understand its true ramifications, before accepting it on the economic principle of "free trade." Source: Carol K. Wixson, "Free Trade Agreement May Erode U.S. Wages and Benefits," NEW ENGLAND COUNTRY FOLKS, February 8, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ FRENCH AG GROUPS HOLD MIXED VIEWS ON NEW FARM DEAL IDEA After the French government hinted at plans to conclude the current round of General Agreement on Tariffs and Trade (GATT) talks through a negotiated agriculture deal, some farm leaders voiced strong discontent. A leader from the Coordination Rurale, France's most outspoken farm organization, was not invited to a farm meeting with French Prime Minister Edouard Balladur Tuesday, during which the idea of a new agriculture proposal was discussed. "The new government has stabbed us in the back," said Phillipe Arnaud, secretary general of the Coordination Rurale. "Those who courted us during the campaign are ignoring us today." Most other farm groups seemed satisfied with Balladur's intentions. "I am convinced of the new government's seriousness," said Pierre Cormoreche, president of the Permanent Assembly of Agricultural Chambers. Among other groups, the French animal feed industry union, SNIA, said the 29 percent price cuts proposed in the EC's Common Agriculture Program (CAP) last May will boost demand for EC grain by eight to twelve million tons per season. The SNIA criticized the government for its conservative estimates of only a five million ton increase in demand from the CAP program. "Calculations which tend to prove the potential rise is at best five million tons, and conclude the CAP reform and the Washington GATT deal are incompatible, is a plea and a prejudice against the GATT deal rather than an objective study," said the SNIA. The U.S.-EC farm deal, struck last November in effort to push the stalled trade talks forward, has been opposed by many farm groups. The SNIA is reportedly unusual in supporting the accord. Sources: "French Feed Industry Supports EC Views on CAP/GATT," REUTER, April 8, 1993; Nelson Graves, "French Farm Leader Accuses New Cabinet of Betrayal," REUTER, April 6, 1993; David Buchen, "Paris Tackles GATT as Urgent Priority," FINANCIAL TIMES, April 3, 1993. ________________________________________________________ INDUSTRIES COMPLAIN ASEAN HURTS MORE THAN HELPS Many industries earmarked for accelerated tariff reductions by the Association of Southeast Asian Nations (ASEAN) complained at a seminar in Bangkok that removal of tariffs hinders their ability to compete. Tariff reductions on non-agricultural goods from other ASEAN nations were planned by the ASEAN Free Trade Area (AFTA) to hurry a conclusion of the Uruguay Round. The reduction program took effect January 1st for 15 product groups and will aim to lower tariff barriers of up to five percent over the next ten years. Pharmaceutical, electronics and electrical goods are among the most affected industries. They claim to have difficulty competing with products imported from countries who maintain lower costs of production. A Mitsubishi air-conditioning manufacturing representative said the company has had to make serious adjustments to compete, and Thai businessmen reportedly were not convinced of any benefits from the AFTA. But Karum Kittisataporn, director of Thailand's International Trade Coordination, said AFTA was not created for the benefit certain specific countries, but aims to provide benefits for every ASEAN nation. ASEAN nations include Singapore, Thailand, Malaysia, Indonesia, the Philippines and Brunei. Meanwhile, regional trade officials in Hong Kong discussed the concept of forming an Asia-Pacific free trade zone to boost Asian trade over the next five to ten years. "It would be a considerable distance down the road," said William Bodde, executive director of the Asia-Pacific Economic Cooperation (APEC). "It would require a degree of harmonization that's a long way away." APEC was founded in 1989 and has 15 members -- Australia, Canada, China, Taiwan, Hong Kong, Japan, New Zealand, South Korea, the United States, Thailand, the Philippines, Malaysia, Indonesia, Singapore and Brunei. According to Bodde, Mexico and Papua New Guinea have shown interest in joining the group. Sources: "Trade Officials Mull Asia-Pacific Free Trade Zone," REUTER, April 8, 1993; "Range of Industries Hit by ASEAN Free Trade Area," BANKOK JOURNAL, March, 1993. _______________________________________________________ Produced by: Gigi Boivin 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 * The next TRADE NEWS bulletin will be on Tuesday, April 13, 1993. ________________________________________________________