TRADE NEWS BULLETIN Volume II Number 71 Thursday, April 22, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ TB IN MEXICAN CATTLE SPURS CONCERN OVER NAFTA REGULATION A new report issued by the U.S. Department of Agriculture (USDA) reveals that most live cattle with tuberculosis (TB) came from Mexico. Nearly 83% of the 635 cases of bovine TB found in the United States last year came from Mexican cattle. TB is a contagious disease which can be transmitted by infected animals to healthy cattle and humans. Because U.S. meatpacking plants in the southwest currently process one million head of Mexican cattle per year, the industry is pushing for stronger safeguards than those contained in the draft North American Free Trade Agreement. The Farmers Union Milk Marketing Cooperative (FUMMC) along with seven other farm and rural organizations recently sent a letter to President Bill Clinton demanding that animal health laws and other agricultural safety provisions be negotiated as part of supplemental accords. The FUMMC said it will pressure Clinton to keep his campaign promise to "support a free trade agreement with Mexico so long as it provides adequate protection for workers, farmers and the environment." Thus far, labor, environmental and import protections have been the only areas identified for further discussions between the U.S., Mexico and Canada. Source: "Bovine TB in Mexican Cattle Raises Big Concern About NAFTA," FUMMC MILK MATTERS, Vol. 9, No. 7, April 16, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ EC COMPROMISE ON CONTRACTS, U.S. WILL IMPOSE MILD SANCTIONS After two days of talks and three phone calls the U.S. and EC agreed to open their government procurement markets for purchases of power-generating equipment. However, U.S. Trade Representative Mickey Kantor said both the U.S. and EC will continue to allow preferential treatment to domestic companies bidding for telecommunications contracts. EC Trade Commissioner Sir Leon Brittan said, "I think we have achieved a breakthrough, but not a full solution." The U.S. will proceed with plans to impose trade sanctions on the EC in hopes of speeding a telecommunications settlement. Although specifics were not given, Kantor said sanctions would take several weeks to implement and would be smaller than threatened. American Telephone & Telegraph officials said they had hoped for more progress over telecommunications, but seemed confident that Kantor's proposed measures would push negotiations forward. "If these sanctions won't get it done, (the U.S.) will figure out something else," said AT&T Vice Chairman Randall Tobias. The U.S. and EC said they would expect to liberalize government purchases of a variety of services by bidding strictly according to rules set by the General Agreement on Tariffs and Trade (GATT). GATT procurement rules currently outline guidelines for manufactured goods but not services. Once procurement rules for services are set, they will only apply to U.S. and EC companies. Both would then try to encourage other countries to make similar commitments. Kantor described the decision as "an important momentum-creating event." Other countries seemed pleased with the partial settlement, anticipating more progress in the Uruguay Round of GATT negotiations. "Hopefully, (Wednesday's partial accord) is a step towards a wider government procurement agreement that could be reached alongside a multilateral accord inside the Round," said one official. "It looks as though they will be trying to quarantine the dispute and get on with the major job -- fixing the Round," added another official. Global trade talks have been stalled over agriculture, public procurement, steel and other issues. Now officials speculate the U.S. and EC will work toward solutions while pressuring Japan to concede on other issues which have recently caused friction at GATT talks. "We have bought on to the European strategy that the U.S. and European Community could have a demarche on Japanese practices," said Gary Hufbauer, trade analyst at the Institute for International Economics. Sources: Bob Davis, "U.S. Prepares Mild Sanctions Against the EC," WALL STREET JOURNAL, April 22, 1993; Andrew Hill, "U.S.-EC Trade War Averted by Partial Deal on Contracts," FINANCIAL TIMES, April 22, 1993; Robert Evans, "U.S.-EC Truce Could Help World Trade Round," REUTER, April 22, 1993; Peter Behr, "U.S., Europe Reach Partial Settlement," WASHINGTON POST, April 22, 1993; Martin Crutsinger, "U.S.-Europe Trade," AP, April 21, 1993. ________________________________________________________ OTHER COUNTRIES URGED TO MAKE FARM CONCESSIONS IN GATT According to a senior EC official, the U.S.-EC farm deal is no longer the main agricultural obstacle to a GATT conclusion. Japan, South Korea and Canada have refused to convert non-tariff barriers to tariffs. "These three countries up to now have avoided action by hiding behind the U.S. and EC (farm dispute)," said Rolf Moehler, a deputy director general of agriculture, at the annual meeting of the EC grain trade lobby COCERAL. Although the farm deal, struck last November between the U.S. and EC, has not been accepted by all Community members, Moehler seemed confident it would pass. "I'm firmly convinced the ways and means we have calculated market access were agreed in the draft final text," Moehler said. "Blair House cannot be reopened." Source: "Japan, S.Korea, Canada Block GATT Farm Deal," April 22, 1993. ________________________________________________________ Events: "Not This NAFTA: A Rally and Concert for Fair Trade," sponsored by the Washington Coalition for Fair Trade and Social Justice. Saturday, May 1st, 12:30 pm at Westlake Mall, Seattle, WA. ________________________________________________________ Produced by: Kai Mander and 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 ________________________________________________________