TRADE NEWS BULLETIN Volume 2 Number 74 Wednesday, April 28, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ WHITE HOUSE SAYS NAFTA STILL ALIVE The White House is insisting that the North American Free Trade Agreement (NAFTA) is alive and well, explaining that Budget Director Leon Panetta was having "a bad day" yesterday when he called the pact "dead" for now. Panetta's remark triggered immediate concern from pro-NAFTA groups. "I just think he's been working 60 to 70 hours a week and got discouraged," President Clinton said. "He had a bad day." Many members of the White House staff acknowledged that NAFTA would face serious problems in Congress if submitted for ratification now. But U.S. Trade Representative Mickey Kantor said he was "very confident" that side deals on the environment, labor and import surges would shore up support. "With the supplementals the NAFTA will pass and it will be good for American workers and for American jobs," Kantor said. Canada's chief negotiator, John Weekes, said yesterday that he is seeking side accords which would not require changes in Canadian laws. "My instructions are to seek an agreement that will not need a change in laws at a federal or provincial level," said Weekes. Speaking at the first day of public hearings on the NAFTA before a committee of parliament, Weekes said that most Canadians feel environment and labor laws in Mexico are satisfactory but "there are some questions about the manner in which they are enforced." U.S., Mexican and Canadian discussions on supplemental accords are currently underway. Sources: Jurek Martin, "White House Shrugs Off Panetta's NAFTA Doubts," FINANCIAL TIMES, April 28, 1993; "Kantor: Panetta's Comments Do Not Reflect U.S. Government," UP, April 27, 1993; "Canada Wants NAFTA Side Deals Without Law Changes," REUTER, April 27, 1993; "U.S. Trade Chief Optimistic of NAFTA Passage," REUTER, April 27, 1993; Lyndsay Griffiths, "Clinton Team Scrambles to Defend NAFTA in U.S.," REUTER, April 27, 1993; Thomas Ferraro, "Clinton Says Panetta Had 'Bad Day,'" UP, April 27, 1993. ________________________________________________________ COCA-COLA PREPARES FOR NAFTA In preparation for NAFTA, the Coca-Cola company will spend $195 million for a 30 percent share of Fomento Economico Mexicano SA (FEMSA). The Mexican bottling company holds the largest Coca-Cola franchise in the world. New York analyst Carlos Laboy said Coke's purchase was "in some respect a defensive measure against the recent consolidation of Pepsi Cola in Mexico." Grupo Embotelladora, Pepsi's largest bottler outside the U.S., recently completed a $190 million stock offering to finance its move to south-east Mexico. Pepsi announced in March that it would invest $750 million over the next five years in Mexican soft-drink operations. To counter that plan, Coke vowed last week to spend $635 million over the same period to expand operations in Mexico. Coke currently maintains over 50 percent share of the Mexican market. Pepsi, its number one rival, commands 20 percent of the market share. Sources: Tim Golden, "Coke Plans to Buy 30% Stake in Mexican Soft Drink Unit," NEW YORK TIMES, April 27, 1993; Damian Fraser, "Coca- Cola Buys 30% Stake in Mexican Bottler," FINANCIAL TIMES, April 27, 1993; "Mexico-Coca-Cola," AP, April 27, 1993. ________________________________________________________ U.S. AND CANADA SUPPORT CHILE MEMBERSHIP TO NAFTA The U.S. and Canada recently said they support adding Chile to the North American Free Trade Agreement. President Clinton indicated that a free trade pact that would include Chile and other South American countries could greatly benefit the U.S. economy. "I think that we'll win big if we have a fair agreement that integrates more closely the Mexican economy and the American economy and leads us from there to Chile to other market economies in Latin America," Clinton said. Canadian Trade Minister Michael Wilson voiced similar support after returning from a five-day meeting with Chilean Finance Minister Alejandro Foxley. "In view of the government's policies under Foxley, I would suggest Chile is a country with much more possibility of joining (NAFTA) than others," said Wilson. Under the "accession clause" of the current NAFTA text, other countries are eligible to join the trade pact providing they agree to all its provisions without amendments. Chile reported a 10.4 percent growth in Gross Domestic Product for 1992 and expects another five to six percent this year. Venezuela and Argentina would likely follow if Chile is added to the pact. "These are the next countries," USTR Mickey Kantor said yesterday. Sources: Lyndsay Griffiths, "Clinton Team Scrambles to Defend NAFTA in U.S.," REUTER, April 27, 1993; "Canada Would Back Chilean Entry to NAFTA," REUTER, April 26, 1993; "NAFTA Should be Extended to Chile-Clinton," REUTER, April 23, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ GATT SAYS ANTI-DUMPING CASES ON THE RISE The General Agreement on Tariffs and Trade (GATT) reported a 35 percent increase in the number of anti-dumping cases filed from 1991 to 1992. Dumping is usually defined as the sale of goods in a foreign market at a price below the domestic cost of production. "Anti-dumping action is probably the most widely-used trade policy instrument at the moment," said an official after two days of talks by GATT's anti-dumping committee. There were a total of 237 cases filed. Industrialized countries commited the most violations: Australia led with 76 anti-dumping inquiries, followed by the U.S. with 62, Mexico with 25 and the EC with 23. Only 25 of the 110 GATT members currently comply with the 1980 Anti-Dumping Agreement secured during the Tokyo Round of talks. Sources: Frances Williams, "Dumping Complaints Rising Rapidly," FINANCIAL TIMES, April 28, 1993; "Anti-Dumping Investigations Rise, GATT Says," REUTER, April 27, 1993. ________________________________________________________ Resources: "A Statistical Profile of GATT Dispute Settlement Cases: 1948-1989," MINNESOTA JOURNAL OF GLOBAL TRADE, Winter 1993, Volume 2, Issue 1, $20.00. Contact: Minnesota Journal of Global Trade, 285 Law Center, 229 - 19th Avenue South, Minneapolis, MN 55455. ________________________________________________________ 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 ________________________________________________________