TRADE NEWS BULLETIN Volume II Number 68 Monday, April 19, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ MEXICAN CONGRESS TO RESUME STUDIES OF NAFTA Last week the Mexican Congress began a three month legislative session expected to include debate on a host of economic issues, including the North American Free Trade Agreement and a foreign investment law. Both the Chamber of Deputies and the Senate will resume their studies of NAFTA. The trade pact is expected to pass easily in Mexico, where President Carlos Salinas de Gortari's ruling Institutional Revolutionary Party (PRI) dominates the legislative branch. "They have decided for political reasons to allow at least a form of debate," said one western diplomat. Meanwhile, Trade Minister Jaime Serra Puche announced last week that preliminary duties of up to 1,105 percent would be placed on a variety of Chinese imports, covering approximately 75 percent of Chinese sales to Mexico, which totaled $300 million in 1992. Representatives of the toy, footwear, clothing and textile industries welcomed the decision, saying that China's dumping of goods in Mexico had led to the closing of 850 firms with a loss of 200,000 jobs in the last three years. Source: Janet Duncan, "Mexican Congress to Mull Foreign Trade, Investment," REUTER, April 16, 1993; "Mexican Companies Welcome Chinese Dumping Duties," REUTER, April 16, 1993. ________________________________________________________ TEN BILLION NEEDED TO CLEAN UP TEXAS BORDER FOR NAFTA A study conducted for Texas Governor Ann Richards concludes it would cost as much as $10 billion over 16 years to bring health, education, environment and roads along the Texas/Mexico border up to state averages. Additional millions would be needed to improve health care along the border and to cover charity care that is likely to increase with new levels of trade. The governor's Office of State- Federal Relations prepared the report after House Majority Leader Richard Gephardt (D-Missouri) asked states along the Mexican border to examine what it would cost to prepare the borders for NAFTA. "The important thing to make clear is that the needs in the draft report exist with or without NAFTA," Richards wrote in a letter to Gephardt. She said that NAFTA would provide "us with a chance to address" the problems while improving trade. Source: "Study Reports on NAFTA's Effect on Border Cost," UPI, April 17, 1993. ________________________________________________________ BANK SAYS NAFTA WILL HURT ASIAN EXPORTERS The Asian Development Bank (ADB) said Friday that NAFTA could hurt Asian manufacturers, especially in labor intensive industries, and divert investment from the region. "Since trade restrictions between the three NAFTA countries would be eliminated, all other countries would be discriminated against," the bank said in its annual Asian Development Outlook. The report said reductions in tariffs, falling wages in Mexico, and rising wages in Asia would, "enhance Mexico's competitiveness." The ADB said industries making higher quality products would be less vulnerable. A study conducted by the Philippines earlier this year reached similar conclusions. Source: "ADB: NAFTA to Squeeze Asian Exporters," UPI, April 16, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ BRITTAN, KANTOR MEET TODAY IN WASHINGTON European Trade Commissioner Leon Brittan and U.S. Trade Representative Mickey Kantor will meet today and tomorrow in a final attempt to avert a trade war over a government contracts dispute. The U.S. has threatened to impose trade sanctions on EC businesses unless the EC withdraws a public utilities directive favoring EC companies over foreign bidders. Brittan, Kantor and other trade officials are expected to deal mainly with public procurement and market access in the Uruguay Round of GATT. Kantor agreed in March to postpone threats to ban EC companies from bidding on U.S. government contracts until after Brittan's visit to Washington this week. "If there is going to be a way out of this problem, it will not be through intransigence, dogma and retaliation, but it will be through negotiations," a Commission spokesman said. If Brittan does not waive Article 20 of the EC Utilities Directive, Kantor will likely impose sanctions and file a complaint claiming the article violates GATT because it extends government rules to private sector activities. The EC wants the discussions to move beyond utilities procurement to consider all U.S. Buy America provisions, which apply to defense, transportation, airports, waterways and other services. Source: Stephen Nisbet, "U.S., EC Set for Make-Or-Break Trade Talks," REUTER, April 16, 1993; "EC Urges U.S. to Negotiate, Shun Sanctions," REUTER, April 16, 1993; Nancy Dunne, "Showdown in US-EC Procurement Row," FINANCIAL TIMES, April 19, 1993. ________________________________________________________ GATT THREATENS FOOD QUALITY, UK GROUP SAYS If a new GATT accord is ratified, the UN group Codex Alimentarius will have unprecedented influence over the way nations establish food safety standards worldwide, threatening food quality and public health, according to a report by the U.K. National Food Alliance. Alliance spokeswoman Natalie Avery said many food companies would aim to use Codex "to downgrade national standards in the disguise of free trade." The Alliance, an independently-funded association of British voluntary and professional organizations, is asking for a radical reform of Codex if the current GATT draft is implemented. Source: "U.K. Group Sees GATT Threat to Food Standards," REUTER, April 18, 1993. ________________________________________________________ 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 ________________________________________________________