TRADE NEWS BULLETIN Volume II Number 64 Tuesday, April 13, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ SIDE AGREEMENTS WON'T INCLUDE ENFORCEMENT STANDARDS Negotiators of the North American Free Trade Agreement (NAFTA) will conclude discussions of side agreements on labor and environmental standards today. During meetings which began in Mexico City yesterday, the U.S. outlined a plan calling for labor and environmental commissions to act as "watchdogs" over businesses operating within the free trade zone. But the U.S. did not support enforcement of the supplemental trade pacts, as demanded by labor unions, environmental groups, and some Congressional members. The U.S. plan defines "watchdog" commissions as including government representatives from each of the three countries, and a secretariat with commission staffs. Each commission would be responsible for issuing reports on violators, while governments from each of the three countries would be required to pledge support and cooperation with commissions' inquiries, according to a U.S. administration official. However the commissions' conclusions would not be binding. "What I'm describing is not going to make everybody happy," said the official. The Clinton Administration hinted it would not support sanctions against violators or the creation of an enforcement mechanism because it could threaten Mexican sovereignty. "It would be very disappointing if they use sovereignty as an excuse for failing to establish enforceable rules on labor rights and standards," said Mark Anderson, director of the trade task force at the AFL-CIO, one of America's largest labor unions. U.S. labor leaders fear the failure to include a trinational enforcement mechanism could accelerate the exodus of U.S. businesses to Mexico in search of cheaper wages and weaker environmental standards. While U.S. labor unions are concerned the current NAFTA text could result in a downward pressure on U.S. wages because of lower Mexican wage rates, some Mexican labor leaders say their workers worry about losing current job security and benefits. Allegedly the Mexican system of benefits are more comprehensive than those established in the U.S. The Mexican government has mandated profit-sharing, paid maternity leave, and vacations. Christmas bonuses equal to 15 days pay are also mandatory, in addition to a three month severance pay for any dismissed worker, plus 20 days pay for each year of service. Mexican experts say approximately 90 percent of large businesses comply with the regulations, while smaller independents usually violate the laws in one way or another. Sources: N. Dunne, "Haggling on NAFTA Unlikely to Satisfy Opponents," FINANCIAL TIMES, April 13, 1993; D. Solis, "Mexicans, Too, Fear Weaker Labor Laws With Trade Accord," WALL STREET JOURNAL, April 13, 1993; Asra Q. Nomani, "Clinton Offers Mexico, Canada Change in NAFTA," WALL STREET JOURNAL, April 12, 1993; P. Behr, "White House Speeds Push for Trade Pacts," WP, April 10, 1993; R. Beamish, "U.S.-Mexico," AP, April 9, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ CLINTON ASKS CONGRESS FOR EXTENSION OF FAST-TRACK U.S. President Bill Clinton asked Congress last Friday for a nine month extension of the "fast-track" negotiating authority to complete the current round of the General Agreement on Tariffs and Trade (GATT)negotiations. Congress is expected to approve the December 15 deadline, which would require a "yes" or "no" vote on global trade reforms without amendments. "This is excellent news for the Uruguay Round," saiia. If fast-track authority is granted, U.S. lawmakers would have until April 15, 1994 to debate and vote on the proposed GATT deal. Clinton's request for fast-track has been anticipated since it expired on March 2nd. Trade negotiators, anxious for the announcement, view it as the necessary tool to speed and secure conclusion of the Uruguay Round. Japan's Vice-Minister of International Trade Yuji Tanahashi said of Clinton's announcement, "We welcomed it because we now can clearly see that the new administration wants to conclude the deadlocked Uruguay Round talks by the end of this year." Sources: "Japan Lauds Clinton Plan to Extend GATT Fast-Track," REUTER, April 12, 1993; D. Solis, "Mexicans, Too, Fear Weaker Labor Laws With Trade Accord," WALL STREET JOURNAL, April 12, 1993; P. Behr, "White House Speeds Push for Trade Pacts," WP, April 10, 1993; L. Griffiths, "Clinton Injects New Life into Long-Stalled GATT Talks," REUTER, April 9, 1993. ________________________________________________________ JAPAN ANNOUNCES STIMULUS PLAN DAYS BEFORE U.S. VISIT The Ruling Democratic Party in Japan released a fiscal stimulus package days before Prime Minister Kiichi Miyazawa is to meet with President Clinton. The plan to spend a record $114.9 billion, on a broad range of programs, was announced in response to recent global criticism of Japan's allegedly weak participation in the GATT concessions, and for its growing trade surplus with GATT partners. Japan's trade surplus with the U.S., which reached $49 billion last year, is expected to rise as Japan's recession continues to slow demand for U.S. imports. The new spending plan is expected to boost the Japanese economy and the consumer demand for imports. "Looking back on the past, it has been rather exceptional for Japan to make concrete proposals," said a Japanese foreign ministry official. "This time Prime Minister Miyazawa is willing to do so." However according to other Japanese officials, it is unlikely that Japan would agree to any specific targets or quotas on U.S. imports when Miyazawa meets with Clinton for the first time on Friday. There were some expectations that Clinton would press for trade resolutions similar to those in the U.S.-Japan semiconductor trade agreement, which designated targets for a 20 percent increase in American market share. "It is fortunate that we did achieve 20 percent," said Miyazawa. "But we never agreed to managed trade." Sources: D. Sanger, "Japanese Premier Takes Tough Line on Trade Surplus," NEW YORK TIMES, April 13, 1993; T.R. Reid, "Tough U.S. Stance Invited By Japan," WP, April 13, 1993; J. Bussey, "Japan Unveils $114.9 Billion Spending Plan," WALL STREET JOURNAL, April 13, 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 ________________________________________________________