TRADE NEWS BULLETIN Volume II Number 65 Wednesday, April 15, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ NESTLE LOCKS OUT CANADIAN WORKERS, UNIONS WORRY At the Nestle Swiss food and beverage factory in Ontario, 220 union members were recently locked out after refusing to accept more flexible job hours. Nestle said it has excess instant-coffee capacity at its Canadian and U.S. plants where they needed to adjust working hours commensurately. Workers at two Nestle plants in the U.S. accepted offers similar to the one made in Ontario. Since 1989, when the U.S.-Canada Free Trade Agreement took affect, 70 percent of the Ontario plant's output has been exported. Nestle also owns a coffee plant in Mexico, where import tariffs restrict its production to mainly domestic consumption. Union groups worry that the Nestle incident will mark the first of many future conflicts as workers from Canada, the U.S. and Mexico are forced to adjust to a more competitive trading environment under the North American Free Trade Agreement (NAFTA). Officials from the three nations meet today in Mexico City to discuss U.S. President Bill Clinton's proposed side accords to NAFTA on labor and environmental regulations. U.S. Senator Pete Domenici (R-New Mexico) said he believes NAFTA will be ratified by the Senate as soon as the supplemental agreements are negotiated and allayed concern that Clinton's economic stimulus package would absorb too much time on the floor. He said a decision on the U.S. domestic economic package would be made by July, leaving plenty of time for the Senate and Congress to focus on NAFTA ratification by January 1994. Sources: Bernard Simon, "NAFTA Tremors Shake Canadians," FINANCIAL TIMES, April 14, 1993; "U.S. Sen. Domenici Optimistic Senate to Pass NAFTA," REUTER, April 13, 1993; "New Talks on NAFTA Accords Begin in Mexico City, "REUTER, April 13, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ FRANCE WILLING TO MAKE DEAL, FNSEA STILL WANTS FARM VETO According to aides of French Prime Minister Edouard Balladur, he is willing to make concessions at upcoming negotiations of the General Agreement on Tariffs and Trade (GATT) if the U.S. reciprocates. Since French Conservatives replaced the former socialist ruling party, French leaders have hinted that they would be willing to work out a farm deal to conclude the long-stalled Uruguay Round of world trade talks. Meanwhile Luc Guyau, leader of the French farmers' union FNSEA, continues to reject the U.S.-EC farm deal ironed out last November, warning that France will veto the accord. "We will press for a rejection by the European Community of the deal on farm policies, which we consider to be lopsided and flawed," Guyau said in a FINANCIAL TIMES editorial. Guyau represents the opinion of many farm unions who argue that the farm deal, which aims to cut oilseed production, will result in lower prices and incomes as French export production is reduced. France, who currently exports 60 percent of their total grain output, reportedly has the most at stake. Britain, who sells only 30 percent of total production in the world market, would be the next hardest hit by current U.S.-EC farm deal. Sources: "France Ready to Make GATT Concessions if U.S. Will," REUTER, April 13, 1993; Luc Guyau, "Seeds of Crisis in a Flawed Farm Deal, " FINANCIAL TIMES, April 14, 1993; Stewart Taggart, "JOURNAL OF COMMERCE, April 8, 1993. ________________________________________________________ EC PROMISES OPEN MARKETS TO E EUROPE, ARGUE OVER MEAT BAN During a meeting of top foreign ministers, the EC promised to gradually open its markets to East European goods. According to the final draft of the conference's communique, the EC and the European Free Trade Association (EFTA) have pledged to progressively open markets, but only on a "mutually advantageous basis." EC Trade Commissioner Sir Leon Brittan reaffirmed the EC's tough position on dumping, saying the Community has built up a "powerful armory of commercial instruments" which it will use against violators of GATT rules. "I won't hesitate to use those powers where imports are dumped or increasing in such quantities as to cause proven damage to our companies," Brittan said. Net EC exports to Eastern Europe grew nearly 5 percent during 1992, running a $1.3 billion trade surplus with Hungary, Poland, Bulgaria, and the Czech and Slovak republics. Friction between the East and West on trade barriers has recently escalated over a month-long ban imposed on East European livestock, meat and dairy products by the EC last week. Brittan defended the ban, saying it was not a move toward more trade barriers, but was instituted in response to a foot-and-mouth disease outbreak in Italy, which originated from Croatia. But East European leaders say the ban is a smoke screen to protect the EC farmers. Defending the bans Brittan said, "I won't use them in vain attempt to ward off recession or simply to suit the political mood of the moment." Some East European countries, including Poland and Bulgaria, announced this week a retaliatory ban on similar EC products. Officials worry the new ban could trigger conflict over larger trade disputes about steel, textiles and farm products. Sources: "Britain Bangs Drum For E European Trade," FINANCIAL TIMES, April 14, 1993; "East Europe Digs in on Trade," WALL STREET JOURNAL, April 14, 1993; Alister Doyle, "EC Tells E Europe It Won't Resort to Protectionism," REUTER, April 13, 1993; "Bulgaria Bans EC Met Imports," REUTER, April 13, 1993; Lars Foyen, "EC, E Europe Argue Over Trade Liberalisation," REUTER, April 13, 1993; "Poland Bans Meat and Dairy Imports From EC," REUTER, April 10, 1993. ________________________________________________________ Resources: "How a Log Export Ban Became an Unfair Trade Practice," presented by GREENPEACE discusses the recent resolution by the U.S. Department of Commerce (DOC) to impose trade sanctions against Canadian lumber imports. For information or a copy contact: GREENPEACE, 1436 U Street NW, Washington, D.C. 20009. Tel: (202)462-1177. Fax: (202) 462-4507. ________________________________________________________ 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 ________________________________________________________