TRADE NEWS BULLETIN Volume 2 Number 81 Friday, May 7, 1993 ________________________________________________________ NAFTA News Summary ________________________________________________________ REPERCUSSIONS OF PANETTA COMMENT STILL FELT IN MEXICO The Mexican economy is still reeling from U.S. Budget Director Leon Panetta's statement last week that the North American Free Trade Agreement (NAFTA) is in danger of being defeated. The Mexican stock market dropped immediately after Panetta called the pact "dead" for now, and has continued to fall slowly since. Despite attempts by Mexican President Carlos Salinas de Gortari to downgrade Panetta's statements, NAFTA's possible defeat continues to dominate Mexican news columns and commentary. At a May Day rally, Salinas said the trade pact would cure unemployment, low wages and Mexico's $28 billion annual balance of payments deficit with the United States. The Salinas government has reportedly spent almost $20 million to hire public relations firms to promote NAFTA to members of Congress. On a trip to Mexico City with nine other congresswomen, Representative Marcy Kaptur (D- Ohio) confirmed NAFTA would be defeated if Congress voted on the treaty now. A wide range of individuals and groups are now advising Canada, the United States and Mexico to prepare for the possibility of a future without NAFTA. Lewis Preston, president of the World Bank, told reporters in Washington last week that Mexico suffers "an excess of optimism" regarding NAFTA and that Mexican leaders should begin making economic decisions independent of the trade pact. Sergio Sarmiento, a financial columnist in Mexico, argued that Salinas has placed too much economic emphasis on a successful accord, and as a result, a defeat of the trade pact would devastate Mexico's economy. "Certainly he must have some sort of plan in case this whole thing collapses," Sarmiento said. Source: Tod Robberson, "Panetta's Poke at Trade Pact Lands Hard in Mexico," WASHINGTON POST, May 6, 1993. ________________________________________________________ CANADIAN COALITION DEMANDS DEFEAT OF NAFTA A coalition of 80 Canadian environmental groups demanded Wednesday that the NAFTA be abandoned. "NAFTA repeats the environmental mistakes of the FTA (the Canada-U.S. Free Trade Agreement) by accepting the growth-led development model which is accelerating our planet's demise," the coalition said in a letter to Trade Minister Michael Wilson. The coalition, which includes the Canadian Environmental Law Association and Greenpeace Canada, among others, contends that NAFTA is anti-environment and anti- democratic. They argue the trade pact would restrict federal and provincial sovereignty while undermining the authority of the nationally elected government to set environmental standards. Meanwhile, a recent binational panel ruling may fuel arguments from U.S. lawmakers and groups opposed to similar panels under NAFTA. A U.S.-Canadian review panel ruled temporarily in favor of a Canadian complaint concerning a U.S. tariff on imports of softwood lumber. The panel found that a 6.5 percent U.S. tariff on softwood lumber to adjust for alleged Canadian subsidies on log exports was a violation of the FTA. The U.S. Chamber of Commerce claims that British Columbia's ban on certain log exports enables lumber producers on Canada's western coast to lower their prices and indirectly subsidize exports. A second panel, scheduled to vote on June 27, will hear testimony from the Chamber of Commerce on whether the Canadian policies actually affect U.S. lumber sales. "We are confident that after this review, the Commerce Department will fully justify their conclusions and in the end, the countervailing duty will be maintained or even increased," said senators Max Baucus (D-Montana) and Bob Packwood (D-Oregon) in a joint statement. Sources: Asra Q. Nomani and Rosanna Tamburri, "Review Panel Tells U.S. to Reconsider Penalties of Canadian Lumber Imports," WALL STREET JOURNAL, May 7, 1993; James Rusk, "Dump NAFTA, Coalition Demands," GLOBE AND MAIL, MAY 6, 1993; Scott Sonner, "Canadian Lumber," AP, May 6, 1993. ________________________________________________________ GATT News Summary ________________________________________________________ BRITTAN WILL SEEK TARIFF REDUCTIONS IN GATT DEAL Representatives from the European Community and the United States meet in Washington today to discuss the Uruguay Round of GATT negotiations. EC Commissioner Sir Leon Brittan is expected to ask U.S. President Bill Clinton and Trade Representative Mickey Kantor for greater access to textile and service markets. Brittan said he hopes a market access deal will persuade EC member states to accept the entire Uruguay Round package, including the controversial U.S.-EC farm deal. "We want to show people in Europe that we gain something from an agreement," Brittan said. Negotiators are hoping to complete a GATT deal by December 15, the date that a renewed U.S. "fast track" negotiating authority will probably expire. "I really do believe this deadline is the last one," said Brittan. The FINANCIAL TIMES says Brittan appears to be ignoring French government demands for a renegotiation of the agriculture agreement. Meanwhile, French Prime Minister Edouard Balladur told French farm leaders that plans to release 1.5 billion francs in aid to farmers does not indicate the government will soften its stance in world trade talks. "We do not intend to give in on GATT as a trade off for the 1.5 billion francs help plan," Balladur told reporters after four hours of talks with four of France's main farm groups. France is expected to announce today the details of an aid package to farmers to adapt to the European Community's farm policy reform. Sources: "Balladur Reassures Farmers on France's GATT Stance," REUTER, May 7, 1993; Quentin Peel, "Brittan's Plan for GATT Deal," FINANCIAL TIMES, May 6, 1993. ________________________________________________________ Resources: "Free Trade: The Ifs, Ands & Buts," is the topic of the Spring 1993 edition of RESOURCE CENTER BULLETIN, produced by the Inter- Hemispheric Education Resource Center. This double issue, which is entirely devoted to the effects of free trade, provides alternative solutions to NAFTA and GATT. Available for $2.00 each or group of 25 for $12.00. Contact: Inter-Hemispheric Education Resource Center, Box 4506, Albuquerque, NM 87196-4506. Tel: (505) 842-8288. Fax: (505) 246-1601. ________________________________________________________ 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 ________________________________________________________