TRADE NEWS BULLETIN Volume 2 Number 80 Thursday, May 6, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ KANTOR SAYS U.S., MEXICO WILL SUFFER IF NAFTA DEFEATED If the U.S. Congress votes down the North American Free Trade Agreement (NAFTA) and its supplemental accords, Mexico's economy will likely suffer "profound" negative consequences, according to U.S. Trade Representative Mickey Kantor. "We are deeply concerned about what would happen to stability in Mexico, what would happen in the continent of South America in those emerging market economies, in democracy, if we were unable to have a NAFTA with these supplemental agreements," Kantor told a National Press Club audience. The United States, Mexico and Canada are currently negotiating side accords on labor, the environment and import surges. Kantor claimed U.S. jobs would be lost if the pact is rejected. He estimated that 900,000 new U.S. jobs would be created by 1995 if NAFTA is implemented, and only 500,000 if not. "I would suggest that we can ill-afford to lose 400,000 jobs in what is right now not the strongest economy we have had in this country," Kantor. He maintained that President Bill Clinton will campaign hard to win approval of the trade pact once side agreements are completed. "The President will go out to the country and support those efforts," Kantor said. Source: Juliana Gruenwald, "Kantor Said U.S. Facing Major Consequences if NAFTA Fails," UP, May 5, 1993; "U.S. Says NAFTA Loss May Affect Mexican Stability," REUTER, May 5, 1993. ________________________________________________________ FARMERS SEEK REGULATORY CHANGES THROUGH SIDE ACCORDS Farm organizations gathered at the National Farmers Union (NFU) annual convention in March to discuss their concerns about the present text of the NAFTA. Alan Bergman, president of the North Dakota Farmers Union, said farmers, particularly durum producers, were out-negotiated in the U.S.-Canada Free Trade Agreement (FTA), and argued that NAFTA will only accelerate problems. Bergman said U.S. imports of Canadian durum have risen from no imports in the mid-1980s to the point where they currently occupy 25 percent of the domestic U.S. market. He said Canadians can better compete with the U.S. domestically for some commodities because the U.S. Export Enhancement Program has boosted U.S. domestic prices. Panelists expressed concern that "rules of origin" provisions in NAFTA would fail to adequately protect against Mexico becoming a springboard for exports to the U.S. from other countries. Under the current text, any questions or concerns regarding commodity imports must be taken to the country of origin, creating extensive legal costs. "Strong rules of origin exist, but how do we enforce them?" asked Tom Mahr, legislative aide to Senator Kent Conrad (D-North Dakota). Katherine Burnett, a legislative aide to Senator Alan Simpson (R- Wyoming), urged the unions "to tell President Clinton to come up with a domestic program before reaching any trade agreement." Other members said lower health and inspection standards for Mexican cattle exports and other goods could endanger consumers. Source: "NAFTA Presents Problems for Agriculture," KANSAS FARMERS UNION, March-April, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ "FOOLISH" ENVIRONMENTAL DEMANDS THREATEN GATT The U.S. environmental movement threatens the future success of the General Agreement on Tariffs and Trade (GATT), according to Anne Veneman, former U.S. deputy secretary of agriculture. In a speech to the world meat congress in Sydney, Australia, Veneman said that "foolish demands" by U.S. environmental groups could derail global trade negotiations. Veneman said national environmental legislation is often "protection in disguise," and cited the ten percent tax on beer cans in Canada as an example. Veneman said she agreed with GATT Director-General Arthur Dunkel's assessment that environmental issues would eventually have to be dealt with under GATT, but she said the Uruguay Round must be completed first. Environmental and consumer advocates fear GATT could threaten national environmental safety and protection laws. Source: Julie Power, "Green Issues Seen as Biggest Threat," FINANCIAL REVIEW, April 15, 1993. ________________________________________________________ Other Trade News ________________________________________________________ STUDY INDICATES TRADE LIBERALIZATION HAS HURT EMPLOYMENT A recent study concludes that trade liberalization, an essential component of loans by the World Bank and the International Monetary Fund (IMF) during the 1980s, had a negative effect on economic performance and employment growth in many developing countries. The study, "Impact of Trade Liberalization of Industrial Sector and Labor Market Performance," by C. Kirkpatrick and B. Evers, monitors trade policy reform required by the IMF from countries applying for structural loans. In 98 out of 143 loans, Kirkpatrick and Evers said they failed to find convincing empirical evidence on the positive impact of trade liberalization programs on economic performances. In many countries, the study notes, there was a significant increase in unemployment during the liberalization periods. Advocates of trade liberalization say low employment figures are not a result of IMF programs. They claim government intervention and domestic labor unions are to blame for failing to generate higher employment. Source: "Study Questions IMF Trade Prescriptions," BUSINESS TIMES (New Delhi, India), February 20, 1993. ________________________________________________________ Resources: "Which Way for the Americas: Analysis of NAFTA Proposals and the Impact on Canada," by the Canadian Centre for Policy Alternatives, November 1992. Contact: Canadian Centre for Policy Alternatives, 804-251 Laurier Ave. W., Ottawa, Ontario K1P 5J6. Tel: (613) 563- 1341. Fax: (613) 233-1458. ________________________________________________________ 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 ________________________________________________________